HealthSouth Securities Settlement Funds

 

Background on the Cases

Several separate lawsuits filed by private parties and the United States Securities and Exchange Commission ("SEC") claim that HealthSouth Corporation ("HealthSouth") and others provided investors with false and misleading information that artificially inflated the value of HealthSouth securities, in violation of federal securities laws. Some of these lawsuits have been filed as class actions against HealthSouth and other individuals, asking for money damages on behalf of certain purchasers of HealthSouth securities.

The class action lawsuits were consolidated into two cases in the United States District Court for the Northern District of Alabama, Southern Division. The names of the consolidated lawsuits are In re HealthSouth Stockholder Litigation, Master File No. CV-03-BE-1501-S and In re HealthSouth Bondholder Litigation, Master File No. CV-03-BE-1502-S. These consolidated lawsuits are called the "class actions."

Another lawsuit against HealthSouth was filed in the same Court by the United States Securities and Exchange Commission ("SEC"). The name of that lawsuit is Securities and Exchange Commission v HealthSouth Corporation and Richard M. Scrushy, Civil Action No. CV-03-J-0615-S (the "SEC case").

You can read additional information at the Case Documents link of this website.

HealthSouth negotiated two separate settlements in order to resolve these cases: one with the SEC (the "SEC Settlement") and one with the Stockholder and Bondholder Classes (the "class actions settlement"). To settle the SEC case, HealthSouth paid $100 million to be distributed among certain investors. To settle the class actions, HealthSouth negotiated a settlement which was valued at the time it was reached at approximately $445 million (in cash and securities).

The court-approved Plans of Allocation for the SEC case and for the private class actions are available on this website (click here).

On January 11, 2007, the Court approved the class actions settlement. On February 11, 2008, the Court approved a proposed Plan of Allocation for distributing the class actions settlement funds and the proposal for award of attorneys' fees. A Court hearing was held on January 29, 2009 for an appeal that was filed by a class member objecting to certain aspects of the class actions settlement and the Plan of Allocation. The 11th U.S. Circuit Court of Appeals ruled on the appeal, rejecting the objections to the settlement. No further appeals have been filed.

Claim Forms were mailed on November 1, 2007. The deadline for submitting a claim was February 28, 2008. Late filed claims were processed through February 1, 2010. In accordance with the Court's Orders no further claims will be accepted for any reason after February 1, 2010.

Francis E. McGovern is the Court-Appointed Distribution Agent for the SEC HealthSouth Securities Settlement. A court appointed third-party Claims Administrator, Rust Consulting, is processing claims, and issuing payments and other benefits.

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