Settlements resolve investor suits
By Jonathan Stempel |
April 26, 2010, Monday
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Print Edition
Print Edition
SWISS bank UBS AG and accounting firm Ernst & Young LLP have agreed to US$250.5 million in settlements to resolve investor lawsuits over a fraud that nearly destroyed hospital operator HealthSouth Corp.
UBS insurers will pay US$117 million to HealthSouth shareholders and US$100 million to bondholders, and Ernst & Young will pay US$33.5 million to the bondholders, documents filed last Thursday with the federal court in Birmingham in the United States show.
The settlements need US District Judge Karon Bowdre's approval. UBS and Ernst & Young denied wrongdoing, court documents show.
Ernst & Young also had agreed in early 2009 to a US$109 million settlement with HealthSouth shareholders.
UBS in 2008 separately agreed to pay HealthSouth US$100 million to settle a lawsuit filed by shareholders on the company's behalf.
The litigation stemmed from an estimated US$2.7 billion accounting fraud at HealthSouth, a Birmingham-based operator of rehabilitation hospitals and surgical centers.
Fifteen former HealthSouth executives have pleaded guilty over a scheme to artificially inflate earnings and the company's share price.
Richard Scrushy, HealthSouth's longtime chief executive, was acquitted on criminal charges in 2005, but an Alabama state judge last June ordered him to pay US$2.9 billion in a related civil case.
Scrushy, 57, was convicted in 2006 in a separate bribery case. He is serving his six-year and 10-month term in a Beaumont, Texas federal prison, records show.
David Bronner, CEO of the Retirement Systems of Alabama, the lead bondholder plaintiff, in a statement called the bondholder settlements "substantial" and "a great result."
UBS insurers will pay US$117 million to HealthSouth shareholders and US$100 million to bondholders, and Ernst & Young will pay US$33.5 million to the bondholders, documents filed last Thursday with the federal court in Birmingham in the United States show.
The settlements need US District Judge Karon Bowdre's approval. UBS and Ernst & Young denied wrongdoing, court documents show.
Ernst & Young also had agreed in early 2009 to a US$109 million settlement with HealthSouth shareholders.
UBS in 2008 separately agreed to pay HealthSouth US$100 million to settle a lawsuit filed by shareholders on the company's behalf.
The litigation stemmed from an estimated US$2.7 billion accounting fraud at HealthSouth, a Birmingham-based operator of rehabilitation hospitals and surgical centers.
Fifteen former HealthSouth executives have pleaded guilty over a scheme to artificially inflate earnings and the company's share price.
Richard Scrushy, HealthSouth's longtime chief executive, was acquitted on criminal charges in 2005, but an Alabama state judge last June ordered him to pay US$2.9 billion in a related civil case.
Scrushy, 57, was convicted in 2006 in a separate bribery case. He is serving his six-year and 10-month term in a Beaumont, Texas federal prison, records show.
David Bronner, CEO of the Retirement Systems of Alabama, the lead bondholder plaintiff, in a statement called the bondholder settlements "substantial" and "a great result."
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