A Medical Device Daily
HealthSouth (Birmingham, Alabama) last week said that it is now in position to pursue its claims against its former CEO, Richard Scrushy, its auditors and others, during the period that its books were inflated by millions of dollars.
HealthSouth said it received final court approval of 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 it, certain of its former directors and officers and certain other parties in the U.S. District Court for the Northern District of Alabama and the Circuit Court in Jefferson County, Alabama. The claims relate to financial reporting and related activity that occurred at the company during periods ended in March 2003.
The settlement brought in the class action against HealthSouth and certain of its former directors and officers via payment of HealthSouth stock and warrants valued at $215 million and cash payments of $230 million.
In addition, the federal securities class will receive 25% of any net recoveries from future judgments obtained by or on behalf of HealthSouth with respect to certain claims against Scrushy, Ernst & Young, the company’s former auditors, and UBS, the company’s former primary investment bank. The agreements were previously reported Sept. 27, 2006 (Medical Device Daily, 2006).
Jay Grinney, president/CEO of HealthSouth, said, “We now can focus our legal resources on asserting our claims against the company’s former chief executive officer; former auditors, Ernst & Young; and former primary investment bank, UBS, for the role each of them played in the fraud perpetrated against HealthSouth and its shareholders.”
HealthSouth is a large provider of outpatient surgery, diagnostic imaging and rehabilitative healthcare services.