HealthSouth Securities Settlement Funds

 

Frequently Asked Questions and Answers

The SEC and Class Actions Settlements with HealthSouth

  1. What are the details of the HealthSouth Securities Settlement Funds?

Questions about Eligibility for Cash Payments and Other Benefits

  1. Who is eligible to receive a payment?
  2. What is the process to apply for a payment from the Settlement Funds?
  3. Must I have suffered some type of loss on my investment(s) to receive settlement benefits?
  4. Can I receive benefits from the SEC settlement as well as the Stockholder and Bondholder class actions?
  5. I inherited (or received as a gift) HealthSouth securities. Am I eligible?
  6. How will the payments in the settlement funds be allocated?
  7. How will the money from the SEC settlement be allocated?
  8. I received a determination that my claim is ineligible for payment. If I disagree with my determination, what can I do?

Questions about the Claim Form

  1. When was the deadline to submit the Claim Form?
  2. What was required in addition to the Claim Form?
  3. Did all co-owners need to sign the form?
  4. Will the information I submitted be kept confidential?
  5. Why did the Claim Form ask for my email address?
  6. I purchased or acquired HealthSouth securities, but they were held in my broker's name. Who should have completed the Claim Form?

After You Submit Your Claim Form

  1. Will I be notified if my Claim Form is rejected?
  2. What if my address changes after I submitted my Claim Form?
  3. What do I need to do to request a review of the determination that my claim is ineligible for payment?

Effect of Submitting a Claim

  1. Did I give up any legal rights by submitting a Claim Form?
  2. What if I did not submit a Claim Form?

Your Legal Representation

  1. Do I have a lawyer in the HealthSouth Settlements?
  2. How will the attorneys be paid?
  3. When and where was the hearing held?
  4. What if I disagree with the proposed Plan of Allocation or the request for attorneys' fees in the class action?
  5. How do I object to the Plans of Allocation or the request for attorneys' fees?

Questions about Payment

  1. When will I receive my payment?
  2. Will I have to pay taxes on my payment?
  3. Will I receive a 1099 form?
  4. Why did I receive two checks?
  5. How long do I have to cash my check(s)?
  6. Why are the amounts different on the two checks I received?
  7. How can I have my check(s) reissued in the correct name?
  8. I received a payment but wish to ascertain whether it is accurate, what can I do?
  9. What if I have a question about my payment(s)?
  10. What if I disagree with the amount of my payment(s)?
  11. What was the pro rata factor used to calculate my SEC payment?
  12. What was the pro rata factor used to calculate my consolidated class actions payment?
  13. I have not received my payment. What should I do?
  14. I was told my claim was not being paid because the calculated payment was less than $10. Why was my claim not paid?

Getting More Information

  1. I still have questions. Whom may I contact?

 

The SEC and Class Actions Settlements with HealthSouth

 

1. What are the details of the HealthSouth Securities Settlement Funds?

The HealthSouth Securities Settlement Funds were created by the settlement of separate cases against HealthSouth Corporation brought by the U.S. Securities and Exchange Commission (SEC) and plaintiffs in class actions in U.S. District Court. The lawsuits claim that HealthSouth and others provided investors with false and misleading financial information that artificially inflated the value of HealthSouth securities.

On behalf of HealthSouth investors in the class actions, the Court has approved a settlement valued at the time it was reached at approximately $445 million (in cash and securities). The Court approved the consolidated class actions settlement on January 11, 2007. An appeal of the class action settlement was filed by a class member and denied by the court of appeals on June 17, 2009. No further appeals have been filed. A separate $100 million fund was approved by the Court overseeing the SEC case on April 12, 2006. Notice of the settlements and claim packets were mailed on November 1, 2007 to known potential claimants. Claim forms were also available on this website. The deadline to file a claim for payment from the funds was February 28, 2008.

The Court overseeing the HealthSouth Securities Settlement distributions has given approval to distribute checks to valid claims eligible for payment. Checks began mailing on July 23, 2010.

Francis E. McGovern is the court appointed Distribution Agent for the SEC. Rust Consulting is the court appointed third-party Claims Administrator for processing claims, answering questions, and issuing payments and other benefits.

Further information is available from the Case Documents and the Background on the cases page on this site.

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Eligibility for Cash Payments and Other Benefits

 

2. Who is eligible to receive a payment?

Investors who sustained net losses on purchases and other acquisitions of HealthSouth securities during the periods covered by the settlements, and who filed valid claims by the deadline are eligible to receive a payment. You must have sustained losses on your investments to qualify for a payment.

Please see the Plans of Allocation and Clarifications for information about the periods covered by the settlements and other eligibility criteria.

You are a member of the Stockholder Class in the class actions if you purchased or otherwise acquired the stock or options of HealthSouth between April 24, 1997 and March 18, 2003, including HealthSouth securities received in exchange for the stock or options of certain companies that were acquired by HealthSouth, and you did not request exclusion.

You are a member of the Bondholder Class in the class actions if you purchased or otherwise acquired HealthSouth bonds, notes or other debt instruments between March 31, 1998 and March 18, 2003, and you did not request exclusion.

Claimants may be entitled to receive money or benefits from the SEC Settlement or the class actions, or both. Only one Claim Form was required to file a claim in both settlements.

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3. What is the process to apply for a payment from the Settlement Funds?

You must have completed a proof of claim form to be eligible for a payment. However, the deadline for submitting a claim was February 28, 2008. Late claims were processed through February 1, 2010. In accordance with Court Orders, claims filed after February 1, 2010 will not be accepted for any reason.

If you have any questions about the deadline for filing, or correspondence you have received recently from the Claims Administrator, please contact the Claims Administrator by calling 1-888-952-9108 toll-free or by sending an email to hlssettlement2@rustconsulting.com.

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4. Must I have suffered some type of loss on my investment(s) to receive settlement benefits?

Yes. Payments will be based upon losses on HealthSouth securities investments. Your losses on HealthSouth securities transactions will figure into your eligibility for settlement benefits as follows:

  • Awards from the SEC settlement will vary; there will be a baseline award for all eligible investors, but the maximum amount you can receive is your actual losses on HealthSouth securities, i.e., the difference between the purchase price and the sale price of those securities.
  • You will receive benefits (cash and/or otherwise) from the Stockholder and Bondholder class actions settlement only if you had a net loss after all profits from transactions in HealthSouth securities are subtracted from all losses on your HealthSouth transactions.

No payments will be made on claims under $10 after aggregation across claims for the purpose of meeting the floor of $10. To obtain more detailed information on the Plans of Allocation, please click here

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5. Can I receive benefits from the SEC settlement as well as the Stockholder and Bondholder class actions?

Yes, if you submitted a valid, timely Claim Form and provided copies of any required supporting documentation, you will receive benefits from all the settlements for which you qualify, unless you excluded yourself from the class actions settlement. If you submitted a valid, timely exclusion form for the class actions settlement, you are only eligible to participate in the SEC settlement. Either way, only one Claim Form is required to apply for a payment from the HealthSouth Securities Settlement Funds.

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6. I inherited (or received as a gift) HealthSouth securities. Am I eligible?

Yes. If you obtained HealthSouth securities that were originally purchased or otherwise acquired during the qualifying period by someone else, and you have the authority to act on behalf of these securities, you may qualify for a claim. As outlined in Question #2 ("Who is eligible to receive a payment?") above, qualifying securities are HealthSouth common stock, bonds, and options.

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7. How will the payments in the class actions settlement be allocated?

Counsel for the Stockholder and Bondholder Classes in the class actions have proposed a Plan of Allocation that was approved by the Court overseeing the class actions. That Plan provides that a portion of the Settlement Fund (less Court-awarded attorneys' fees and costs) will be allocated to the Bondholder Class by multiplying the fund by a percentage equal to: (a) the total dollar value of all eligible Bondholder Class claims divided by the total dollar value of all eligible Bondholder and Stockholder Class claims, plus (b) 500 basis points.

The remainder will be allocated to the Stockholder Class, of which (a) $4.45 million will be allocated to claims related solely to claims relating to HealthSouth options, (b) $22.5 million will be allocated solely to claims for the acquisition of HealthSouth stock and/or options in HealthSouth's mergers with Horizon/CMS, The Company Doctor, or National Surgery Centers (the "merger subclasses"), and (c) the balance will be allocated pro-rata among all claimants who purchased or otherwise acquired HealthSouth stock, including the merger subclasses.

Payment amounts to Class Members will be determined based on a formula that considers various factors, including the numbers of shares or bonds purchased, and the timing of the purchases and sales. You can click here to read the entire Plan of Allocation in Appendix I to the Notice.

However, please remember that claimants are eligible to receive a payment only if they submitted a valid claim and had a net loss, after all profits from transactions in HealthSouth securities are subtracted from all losses on your HealthSouth transactions.

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8. How will the money from the SEC settlement be allocated?

The Court has approved a Plan of Allocation for the $100 million to eligible investors in the SEC settlement. If you are eligible, the amount of your payment will be calculated through a formula that applies a baseline compensation amount to each HealthSouth stock or bond you purchased between August 14, 1996 and March 18, 2003 that you still held on September 29, 1998, August 26, 2002 and/or March 18, 2003. The baseline compensation amounts vary, depending on when you purchased and sold or held the securities. You can click here to review the baseline compensation calculations by reading the SEC settlement Plan of Allocation and Clarifications.

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9. I received a determination that my claim is ineligible for payment. If I disagree with my determination, what can I do?

Both the SEC case and the consolidated class actions provide for a review of the determination with respect to your claim. If you believe there was an error in determining your claim's eligibility, please submit your written request for review, including any documentation to support your request, to the Claims Administrator. The address is:

HealthSouth Securities Settlement
201 S. Lyndale Avenue, Suite S-3
P.O. Box 2355
Faribault, MN 55021-9055

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Questions About the Claim Form

 

10. When was the deadline to submit the Claim Form?

The deadline for submitting a claim was February 28, 2008. Late claims were processed through February 1, 2010. In accordance with Court Orders, claims filed after February 1, 2010 will not be accepted for any reason.

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11. What was required in addition to the Claim Form?

Pre-printed Claim Forms did not require documentation, unless you changed information printed on the form.

If you did not receive a pre-printed Claim Form, your claim required documentation for the transactions you listed on your Claim Form. Acceptable documentation included:

  • Monthly stock brokerage or other investment account statements;
  • Trade confirmation slips;
  • A signed letter from your broker on firm letterhead verifying the information you are providing;
  • A Deposit or Escrow Receipt showing your holdings;
  • HealthSouth transaction information on Schedule D forms and on Forms 1099-B; and/or
  • Other equivalent proof of your transactions.

Each document should have been clearly identified with your name and the account number it pertained to.

If you have any questions, please call 1-888-952-9108.

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12. Did all co-owners need to sign the form?

Yes. All co-owners or their legal representatives should have signed the Claim Form.

Payments on qualifying claims will be mailed to the names and address indicated on the Claim Form. Update your address by calling 1-888-952-9108, or by writing to:

HealthSouth Securities Settlement
201 S. Lyndale Avenue, Suite S-3
P.O. Box 2355
Faribault, MN 55021-9055

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13. Will the information I submitted be kept confidential?

Yes. Claim Forms and supporting documentation will be used only to process claims.

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14. Why did the Claim Form ask for my email address?

The Claims Administrator may need to contact you for further information in order to process your claim. Providing your email address allows the Claims Administrator to contact you promptly and to process your claim and payment more quickly.

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15. I purchased or acquired HealthSouth securities, but they were held in my broker's name. Who should complete the Claim Form?

You should. The beneficial owner of the securities should complete the Claim Form. If you purchased the securities but they were registered in your broker's name, you are the beneficial owner.

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After You Submit Your Claim Form

 

16. Will I be notified if my Claim Form is rejected?

If your claim is ineligible to receive a payment, you will be notified in writing. An explanation will be provided and you will be allowed to request that your claim be reconsidered.

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17. What if my address changes after I submitted my Claim Form?

Be sure the Claims Administrator has your current contact information, including your current address, to ensure that you receive any payment to which you are entitled. Update your address by calling 1-888-952-9108, or by writing to:

HealthSouth Securities Settlement
201 S. Lyndale Avenue, Suite S-3
P.O. Box 2355
Faribault, MN 55021-9055

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18. What do I need to do to request a review of the determination that my claim is ineligible for payment?

You have 20 days from the date on the letter you received to submit a detailed written statement of the basis of your challenge of the Claims Administrator's determination.

Any supporting documentation must be marked with the claim number that appears on the letter.

Your request for review may be submitted by letter to the Claims Administrator: HealthSouth Securities Settlement, 201 S. Lyndale Avenue, Suite S-3, P.O. Box 2355, Faribault, MN 55021 or faxed to 1-866-591-7219.

Your request for review must also include claim number and claimant identification; claimant representative or agent information, if applicable; and a certification that the information provided in the request is true and correct.

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Effect of Submitting a Claim

 

19. Did I give up any legal rights by submitting a Claim Form?

No. The deadline to exclude yourself from the Stockholder and Bondholder class actions has already passed; unless you already excluded yourself, you will be bound by the terms of the class actions settlement regardless of whether you filed a claim or not. If you did exclude yourself, then you were ineligible to file a claim for the class actions settlement, but you were still eligible to file a claim from the SEC Settlement by filling out and submitting a Claim Form before the deadline.

The SEC Settlement is not a class action and does not affect your right to sue HealthSouth at a later date, nor any other of your legal rights.

Please contact the Claims Administrator at 1-888-952-9108 if you have further questions about your legal rights.

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20. What if I did not submit a Claim Form?

Your participation in the HealthSouth Settlement is voluntary. You will still be bound by the terms of the class actions settlement, including the release of claims against HealthSouth, if you did not previously exclude yourself.

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Your Legal Representation

 

21. Do I have a lawyer in the HealthSouth Settlements?

The Court has appointed attorneys to represent the Stockholder and Bondholder Classes ("Lead Plaintiffs' Counsel"); lawyers for the SEC represent the government and the public in the SEC Settlement. You do not have to pay anything for representation in either case.

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Effect of Submitting a Claim

 

22. How will the attorneys be paid?

Attorneys in the class actions settlement, both for the Stockholder Class and the Bondholder Class, have been working on these claims since as early as 1998 (in the stockholder lawsuit). When the Court held its hearing on February 7, 2008 to approve the Plan of Allocation for the class actions, the attorneys requested and were awarded fees and reimbursement of expenses, to be paid out of the class actions settlement fund.

No attorneys' fees will be taken out of the $100 million SEC Settlement fund.

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23. When and where was the hearing held?

The hearing on the proposed Plan of Allocation and attorneys' fees in the class actions was held on February 7, 2008, at 1:30 p.m., at:

140 Hugo L. Black United States Courthouse
1729 Fifth Avenue North
Birmingham, Alabama

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24. What if I disagreed with the proposed Plan of Allocation or the request for attorneys' fees in the class actions?

The deadline to file an objection was December 15, 2007. The Court considered the filed objections at the hearing on February 7, 2008.

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25. How do I object to the Plans of Allocation or the request for attorneys' fees?

The deadline to file an objection was December 15, 2007.

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Questions About Payment

 

26. When will I receive my payment?

The Court overseeing the HealthSouth Securities Settlement distributions has given approval to distribute checks to valid claims eligible for payment. Checks began mailing on July 23, 2010.

27. Will I have to pay taxes on my payment?

Individual Circumstances will vary and we cannot provide tax advice. The payment amount may be subject to federal and/or state taxes. Please consult your tax advisor regarding the tax implications of this payment.

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28. Will I receive a 1099 form?

1099 forms will not be mailed for the payments from the HealthSouth Securities Settlements.

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29. Why did I receive two checks?

You received two checks because you submitted a valid claim that was eligible for payment from both the SEC settlement fund and the consolidated class actions settlement fund. Separate funds were set up for the SEC case and the consolidated class actions in accordance with Court Orders.

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30. How long do I have to cash my check(s)?

Checks must be cashed promptly. Checks will become void 120 days after the date on the check.

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31. Why are the amounts different on the two checks I received?

The Plans of Allocation for each of the settlements approved by the Court differ somewhat in terms of the loss calculations, and, therefore, can result in different payment amounts. The Plans of Allocation are available for review on this website.

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32. How can I have my check(s) reissued in the correct name?

If you would like your check(s) reissued, please return the check(s) along with the appropriate documentation to support the name change to the following address:

HealthSouth Securities Settlement
c/o Rust Consulting, Inc., Claims Administrator
201 South Lyndale Avenue, Suite S-3
PO Box 2355
Faribault, MN 55021-9055

Examples of acceptable documentation of names changes include: death certificate, marriage license, divorce decree, or documentation to support a change to the name of the beneficial owner of the account the Proof of Claim was filed for. If you have a question about documentation please contact the Claims Administrator by calling toll-free, 1-888-952-9108, or you may send an email with your question to hlssettlement2@rustconsulting.com.

The Claims Administrator will review your documentation and contact you if there are additional questions.

You should allow four to six weeks after the Claims Administrator receives your returned check and documentation related to your reissue request for the new check to arrive.

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33. I received a payment but wish to ascertain whether it is accurate, what can I do?

The Plans of Allocation provide information about the payment calculation formulas. Payment amounts were calculated based on the Plans of Allocation approved by the Court. You may review these documents on this website by clicking on the link to Plans of Allocation.

Note that all claims approved for payment are receiving a proportion of their eligible loss because the total value of eligible losses exceeded the amount of money in the settlement funds.

If you have additional questions with regard to your SEC payment, please contact the Claims Administrator by calling toll-free, 1-888-952-9108.

If you have any questions with regard to your consolidated class actions payment, please contact the Claims Administrator by calling toll-free, 1-877-552-1278.

You may also send an email with your question to hlssettlement2@rustconsulting.com.

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34. What if I have a question about my payment(s)?

If you have a question about your payment in the SEC case, you may call the Claims Administrator toll-free at 1-888-952-9108, and a call center representative will be happy to assist you. Call center hours are Monday through Friday, from 9:00 AM to 6:00 PM Eastern time, or you may send an email with your question to hlssettlement2@rustconsulting.com

If you have a question about your payment in the consolidated class actions, you may call the Claims Administrator toll-free at 1-877-552-1278, and a call center representative will be happy to assist you. Call center hours are Monday through Friday, from 9:00 AM to 6:00 PM Eastern time, or you may send an email with your question to hlssettlement2@rustconsulting.com

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35. What if I disagree with the amount of my payment(s)?

Please note that many disagreements can be resolved by asking a question.

If you have a question about your payment in the SEC case, you may call the Claims Administrator toll-free at 1-888-952-9108, and a call center representative will be happy to assist you. Call center hours are Monday through Friday, from 9:00 AM to 6:00 PM Eastern time, or you may send an email with your question to hlssettlement2@rustconsulting.com

If you have a question about your payment in the consolidated class actions, you may call the Claims Administrator toll-free at 1-877-552-1278, and a call center representative will be happy to assist you. Call center hours are Monday through Friday, from 9:00 AM to 6:00 PM Eastern time, or you may send an email with your question to hlssettlement2@rustconsulting.com.

SEC Payment
If you do not agree with the calculation of your eligible loss or the calculation of the amount of this check, your disagreement must be made in writing detailing the disagreement, and it must be sent, postmarked no later than sixty (60) days from the date of issuance of the payment to the Claims Administrator, Rust Consulting, Inc., 201 South Lyndale Avenue, P.O. Box 2355, Faribault, MN 55021-9055. Your submission should also reference your claim number. If you do not make your objection in this manner and within the time described, you shall be deemed to have forever waived and forfeited the right to challenge the calculation of your claim.

Consolidated class actions payment
If you do not agree with the calculation of your Allowed Loss or the calculation of the amount of this check, your disagreement must be made in writing detailing the disagreement, and it must be sent, postmarked no later than sixty (60) days from the date of issuance of the payment to the Claims Administrator, Rust Consulting, Inc., 201 South Lyndale Avenue, P.O. Box 2355, Faribault, MN 55021-9055. Your submission should also reference your claim number. If you do not make your objection in this manner and within the time described, you shall be deemed to have forever waived and forfeited the right to challenge the calculation of your claim and all distributions from the HealthSouth Settlement.

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36. What was the pro rata factor used to calculate my SEC payment?

SEC Payments were calculated at approximately 2.42% of eligible loss amounts for Stock and/or Bonds and approximately 19.08% for Options.

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37. What was the pro rata factor used to calculate my consolidated class actions payment?

Consolidated class action Payments were calculated at approximately 7.3% of eligible loss amounts for the Bondholder class, 4.7% for the Stockholder class (includes options) and approximately 24.6% for the Merger Class. Please note the check you received represents your pro-rata share of the initial cash distribution which is 80% of the total distribution.

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38. I have not received my payment. What should I do?

Payments to valid claims eligible for payment began mailing on July 23, 2010. Be sure the Claims Administrator has your current contact information, including your current address, to ensure that you receive any payment to which you are entitled. If you have moved, you may update your address by calling 1-888-952-9108, or by writing to:

HealthSouth Securities Settlement
201 S. Lyndale Avenue, Suite S-3
P.O. Box 2355
Faribault, MN 55021-9055

If you have not received your payment by August 6, 2010 please contact the Claims Administrator at the toll free number above.

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39. I was told my claim was not being paid because the calculated payment was less than $10. Why was my claim not paid?

In accordance with the Plans of allocation, which were approved by the Court; distribution amounts calculated at less than $10.00 will not be paid.

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Getting More Information

 

40. I still have questions. Whom may I contact?

If you have additional questions, you may:

  • Call toll-free 1-888-952-9108, Monday through Friday, between 9:00 a.m. and 6:00 p.m. Eastern Time;
  • Send an email to hlssettlement2@rustconsulting.com; or
  • Write to:

    HealthSouth Securities Settlement
    201 S. Lyndale Avenue, Suite S-3
    P.O. Box 2355
    Faribault, MN 55021-9055

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