HealthSouth Corporation (OTC Bulletin Board: HLSH.OB – News) announced today that it has entered into definitive agreements with the lead plaintiffs in the federal securities class actions and the derivative actions, as well as certain of its insurance carriers, to settle litigation filed against HealthSouth, certain of its former directors and officers and certain other parties in the United States District Court for the Northern District of Alabama and the Circuit Court in Jefferson County, Alabama relating to financial reporting and related activity that occurred at the company during periods ended in March 2003. These agreements memorialize the preliminary settlement previously announced on February 23, 2006.

Under the settlement agreements, federal securities and fraud claims brought in the class action against HealthSouth and certain of its former directors and officers will be settled for consideration consisting of HealthSouth common stock and warrants valued at $215 million and cash payments by HealthSouth’s insurance carriers of $230 million, or aggregate consideration of $445 million. In addition, the federal securities class action plaintiffs will receive 25% of any net recoveries from future judgments obtained by or on behalf of HealthSouth with respect to certain claims against Richard Scrushy, the company’s former chief executive officer, Ernst & Young, the company’s former auditors, and UBS, the company’s former primary investment bank, each of which remains a defendant in the derivative actions as well as the federal securities class actions. The settlement is subject to the satisfaction of a number of conditions, including final approval of the U.S. District Court. The settlement agreement is also conditioned upon the approval of bar orders in the federal securities and derivative litigations by the U.S. District Court and the Circuit Court that would, among other things, preclude certain claims by the non-settling co-defendants against HealthSouth and the insurance carriers relating to matters covered by the settlement agreements. The settlement agreement also requires HealthSouth to indemnify the settling insurance carriers for any amounts that they are legally obligated to pay to any nonsettling defendants.

“This settlement represents another significant milestone in HealthSouth’s recovery and is a powerful symbol of the progress we have made as a company,” said HealthSouth President and CEO Jay Grinney. “I would like to thank the many people who have worked tirelessly over the last three years to settle this litigation and help us continue to put the past behind us.”

The settlement does not contain any admission of wrongdoing by HealthSouth or any other settling defendant. Securities to be issued by HealthSouth in connection with the settlement will consist of an aggregate of 25,118,656 shares of its common stock and eleven-year warrants to purchase an aggregate of 40,756,326 additional shares of HealthSouth common stock at an exercise price of $8.28 per share, in each case, as the same will be adjusted by the proposed 1-for-5 reverse stock split of HealthSouth’s common stock, which, subject to stockholder approval, is expected to become effective before the end of October.

The settlement does not include Ernst & Young, UBS, Mr. Scrushy or any former HealthSouth officer who entered a guilty plea or was convicted of a crime in connection with the company’s former financial reporting activities.

About HealthSouth
HealthSouth is one of the nation’s largest providers of outpatient surgery, diagnostic imaging and rehabilitative healthcare services, operating facilities nationwide. HealthSouth can be found on the Web at www.healthsouth.com.

Related Health News:

1. Medical Provider Class Action Certified against Safeco An Illinois Circuit Court certified a class action case against Safeco Insurance Company of America and Safeco Insurance Company of Illinois. The case covers medical...
2. Mylan Announces Clarinex Settlement Agreement PITTSBURGH, April 8 /PRNewswire-FirstCall/ — Mylan Inc. (NASDAQ:MYL) today announced the settlement of all patent litigation relating to Desloratadine Tablets, 5 mg, the generic version...
3. Kerlan Jobe Orthopaedic Clinic Settles Kickback Allegations The Kerlan Jobe Orthopaedic Clinic, a sports medicine clinic in Los Angeles, has agreed to pay the United States $3 million to settle allegations that...
4. Clinical Trials of the America’s Inc. Enters into Binding Letter of Intent with Next Fuels, Inc. CAREY, N.C., April 8 /PRNewswire-FirstCall/ — Clinical Trials of America Inc. (“Clinical Trials” of the “Company”) (OTC:CLLL) (BULLETIN BOARD: CLLL) announced that it has entered...
5. NxStage and Dirinco Sign Distribution Agreement For System One in Netherlands LAWRENCE, Mass., March 2 /PRNewswire-FirstCall/ — NxStage Medical, Inc. (NASDAQ:NXTM) , a leading manufacturer of innovative dialysis products, today announced that it signed a five-year...