02. Aaron Beam and the HealthSouth Fraud

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Ethics and Organizations

Case Study 1

Vernon Tilly Jr.

University of Central Oklahoma


In reference to the Aaron Beam and the HealthSouth Fraud case in our text Velasquez

(2012), the following questions from the text and my answers to these questions are provided as


1. Which of the "obstacles to moral behavior do you see at work in Aaron Beam's behavior and thinking? In Scrushy's?

The obstacles I see in Aaron Beam's behavior are "Rationalizing Our Actions and

Displacement of Responsibility". Rationalizing his actions is supported by comments he made

in reference to the actions he had or was about to take in supporting his employer. Aaron Beam

stated in Velasquez (2012), "He described the move to himself as aggressive accounting but

definitely not fraudulent" (p 68). In the continual cooking of the books, each time Beam was

press or directed by Scrushy to do so. Aaron Beam possibly considers that to be his get out of

jail free card, by pointing the finger back at his employer, as displacement of his responsibility.

We see clearly what he was thinking in Velasquez (2012), as he "felt it was technically

within the bounds of accounting rules and investors would be sophisticated enough to understand

what was happening" (page 68). This would relate to "Biased Theories about Others", as he

believed this group of investors was sophisticated. You cannot help but think he also felt

secretly an investor(s) would question their actions and bring them to account for their actions

considering the situation he was in with his employer.

The obstacles I see in Richard Scrushy's behavior are "Disregarding or Distorting Harm,

Euphemistic Labeling, and Rationalizing Our Actions". In reference to "Disregarding or

Distorting Harm" based on the belief he...