HealthSouth Corporation, one of the largest providers of outpatient surgery, diagnostic imaging, and rehabilitative healthcare services, announced yesterday that it had reached a $445 million preliminary agreement to settle the federal securities and fraud claims brought in the class-action lawsuit against HealthSouth and its former directors and officers. Under the proposed settlement, HealthSouth will pay $215 million in common stock and warrants and insurance carriers will pay $230 million in cash. In addition, the class- action investors will receive 25% of any net recoveries from future judgments obtained by HealthSouth in its lawsuit 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. The proposed settlement does not contain any admission of wrongdoing by HealthSouth. Although 15 former HealthSouth executives pleaded guilty in the fraud case, a federal jury last year acquitted Scrushy of all charges.
