The Circuit Court of Jefferson County, Birmingham, Ala., has approved an agreement involving Birmingham-based HealthSouth Corp., its shareholders and investment bank UBS to settle a shareholder lawsuit that alleged UBS helped former HealthSouth executives falsely boost the rehabilitation providers profits.
In the settlement agreementwhich becomes effective Feb. 25HealthSouth will receive $100 million from UBS, of which it will pay $25 million in attorneys fees and about $1.2 million in expenses. HealthSouth and its shareholders still have claims against defendant Ernst & Young, the companys independent auditor at the time of the $2.6 billion accounting fraud, as well as Richard Scrushy, HealthSouths former chief executive officer.
According to a Securities and Exchange Commission filing, counsel for the plaintiffs will be awarded 11% of any future recovery from Ernst & Young, and 35% of any recovery from Scrushy. HealthSouth expects the Ernst & Young case, which is in arbitration, to be settled this year, said Mary Ann Arico, senior vice president of investor relations and corporate communications for the company. Meanwhile, the trial against Scrushy is scheduled for late March, Arico said.
Anything we recover from UBS, E&Y and Scrushyafter paying legal fees25% goes to the SEC litigation claimants, said Arico, who added that monies will also be used to pay down the company's debt.