What ethical issues existed in Scrushy’s behaviors and company?

Richard Scrushy was a complex, talented man. He had a brilliant business mind but could be callous and cruel in his justifications for success.

Although he started poor, his company’s success eventually allowed him to branch out into sponsoring bands, owning other healthcare companies, and purchasing expensive estates.

Across Scrushy’s 19-year business career, his compensation has been estimated at almost $1 billion. He started out as a respiratory therapist. Married at 17 with a baby on the way, this Selma, Alabama, native joined a band and grew a large, bushy hairdo. He settled down and, after he received his respiratory therapy certificate in 1974, became an instructor in his program and worked evenings at local hospitals. Later he joined Lifemark, a company that managed respiratory therapy departments. He was a great salesperson and was soon promoted to be vice president of Lifemark’s respiratory therapy, physical therapy, and pharmacy division. He oversaw about a hundred contracts.

Scrushy was not well liked by his peers, as he was extremely competitive and they felt he always made them look bad at corporate meetings. He did well, and in 1983 his annual bonus and stock options allowed him to purchase his first Mercedes, a car known for its great quality even when purchased used. Status and money were always important to him.

He was a driven, sharp, clever man. He worked incessantly and even his social contacts were focused on work. He rarely relaxed.

In 1983, Lifemark announced a merger with American Medical International.

Scrushy wanted to start his own company and brought three of his work colleagues together to form their own business. Scrushy put in $25,000 for 500,000 shares of the company, while the others contributed $5,000 for 100,000 shares each. They located their headquarters in Birmingham, Alabama.

They had big plans, with their first business plan projecting they would hit $100 million in revenues in five years. To start, they rented a two-room office and used cheap metal folding tables and chairs.