HealthSouth’s $100 Million UBS Settlement Wins Judge’s Approval

HealthSouth’s $100 Million UBS Settlement Wins Judge’s Approval - 1/20/2009

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News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

SETTLEMENT NEWS:

HealthSouth’s $100 Million UBS Settlement Wins Judge’s Approval
Carlyn Kolker and Laurence Viele Davidson

Bloomberg. January 20, 2009
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EXCERPT: HealthSouth Corp. won an Alabama judge’s approval for a $100 million settlement with UBS AG over claims the bank didn’t see a fraud that began 13 years ago at the largest U.S. provider of inpatient rehabilitation services. HealthSouth investors sued UBS, accounting firm Ernst & Young LLP and others for allegedly failing to detect a $2.7 billion fraud that began as early as 1996 at the company. UBS had said it didn’t know about the fraud while raising billions of dollars for HealthSouth. The agreement doesn’t affect other company claims against founder Richard Scrushy and Birmingham, Alabama-based HealthSouth’s former auditor, Ernst & Young. The accord calls for plaintiffs’ attorneys to receive $25 million in fees, almost $15 million less than they requested. In addition, lawyers for the plaintiffs are entitled to 11 percent of any arbitration award or settlement with Ernst & Young and 33 percent of any recovery from Scrushy. The suit, brought by individual shareholders on behalf of the company, is known as a derivative action. “It is in the best interests of the parties to this derivative suit, as well as to the court, that future fee disputes be avoided to the extent permitted by law,” Jefferson County, Alabama, Circuit Court Judge Allwin Horn III wrote in his Jan. 13 ruling. “We are happy to have the agreement on fees in the UBS case settled,” HealthSouth spokeswoman Mary Ann Arico said today in an interview. “It represents progress. Everything we do is a little milestone toward getting back the damage that was done.” ‘Most Successful’ After attorney fees and litigation costs, HealthSouth may keep from $50 million to $65 million, Arico said. HealthSouth first announced the agreement with UBS on Oct. 23.

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