HealthSouth Corp., said it reached an agreement with UBS to settle a shareholder lawsuit alleging the investment bank helped former HealthSouth executives fraudulently inflate the companys profits.
The settlement calls for UBS to pay HealthSouth $100 million and releases a judgment in favor of UBS on appeal in the 2nd U.S. Circuit Court of Appeals in New York. HealthSouth and its shareholders and bondholders continue to pursue claims against former Chief Executive Officer Richard Scrushy and Ernst & Young, the companys independent auditor at the time.
This settlement represents another milestone in HealthSouths recovery of damages sustained by the company under prior management, John Whittington, HealthSouths executive vice president, general counsel and corporate secretary, said in a news release. HealthSouth will pay 25% of the settlement proceeds to its investors and put the remaining sum toward long-term debt, according to the release.
The agreement is subject to the approval of the Jefferson County Circuit Court in Birmingham, Ala.
UBS issued a written statement regarding the agreement: "We are pleased to have resolved this matter." -- by Gregg Blesch