HealthSouth Corp. (OTC Pink Sheet: HLSH), the largest provider of physical rehabilitation services in the U.S., announced last week the preliminary settlement of the securities class action pending against the company in the N.D. of Alabama. The settlement also covers related derivative suits. The cases stem from the massive accounting improprieties at the company revealed in 2003.
The settlement is for $445 million, including a cash payment from HealthSouth’s insurance carriers of $230 million and HealthSouth common stock and warrants valued at $215 million. Interestingly, “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 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.” Bloomberg has this report.