Welcome to the HealthSouth Securities Litigation - Ernst & Young Settlement website.

The following is a summary of information presented in more detail in the Notice of Proposed Settlement of Class Action With Ernst & Young LLP (the "Notice"), which Stockholder Settlement Class Members should have received in the mail, and which you can access by clicking on the box with that name to the left. Since this is just a summary, you should read the full Notice for additional details. The Notice describes the rights you may have in connection with the Settlement and what steps you may take in relation to the Settlement and this Litigation.

If you are a Stockholder Settlement Class Member (as defined below), your rights will be affected by these proceedings and you may be entitled to receive benefits under the proposed settlement with Ernst & Young:

The Court’s Settlement Hearing

The Notice was sent  pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order of the United States District Court for the Northern District of Alabama, Southern Division (the "court"). The purpose of the Notice is to inform potential class members of the proposed partial settlement of the Litigation, as set forth in the Stipulation of Settlement With Ernst & Young LLP ("Stipulation" or "Settlement"), and of the hearing to be held by the court to consider the fairness, reasonableness, and adequacy of the Settlement.

A Settlement Hearing will be held on June 11, 2009, at 10:00 a.m., in Courtroom 5A, before the Honorable Karon Owen Bowdre, United States District Judge, at the United States Courthouse, Northern District of Alabama, Southern Division, Hugo L. Black United States Courthouse, 1729 Fifth Avenue North, Birmingham, Alabama (the "Settlement Hearing"). The purpose of the Settlement Hearing will be to determine: (1) whether the Settlement consisting of $109,000,000 in cash should be approved as fair, reasonable and adequate and the proposed Judgment entered; (2) whether the proposed plan to distribute the settlement proceeds (the "Plan of Allocation") should be approved; (3) whether the Stockholder Settlement Class should be certified; and (4) whether any applications for attorneys’ fees and/or expenses should be approved. The court may adjourn or continue the Settlement Hearing without further notice to the Stockholder Settlement Class.

What is the lawsuit about?

Terms of the Settlement

Ernst & Young has paid, or caused to be paid, cash in the amount of $109,000,000 into an escrow account, which will earn interest for the benefit of the Stockholder Settlement Class, pursuant to the terms of the Stipulation. In exchange for such payment, the Released Claims will be released, discharged and dismissed with prejudice as against each of the Released Persons. The Settlement does not release any claims of the Stockholder Class against the Non-Settling Defendants or any claims of the Bondholder Class. The Settlement also does not change or modify any of the terms of the HealthSouth Settlement.

A portion of the Settlement Fund will be used for certain administrative expenses, including the costs of printing and mailing the Notice, the cost of publishing newspaper notices, payment of any taxes assessed against the Settlement Fund and costs associated with the processing of claims submitted. In addition, a portion of the Settlement Fund may be awarded by the court to reimburse Stockholder Lead Plaintiffs for their costs and expenses and to award counsel for the Stockholder Lead Plaintiffs attorneys’ fees and expenses. The balance of the Settlement (the "Net Settlement Fund") will be distributed according to the Plan of Allocation to Authorized Claimants.

The Net Settlement Fund will be distributed to Stockholder Settlement Class Members who submitted valid and timely Proofs of Claim in connection with the earlier HealthSouth Settlement or who submit valid and timely Proofs of Claim in connection with this Settlement, and have an allowable recognized loss under the Plan of Allocation. You will be eligible to participate in the distribution only to the extent you have a net loss on all your transactions in HealthSouth equity securities, after all profits from transactions in HealthSouth equity securities during the Settlement Class Period are subtracted from all losses.

The Rights of the Stockholder Settlement Class Members

If you are a Stockholder Settlement Class Member, you have the following options:

• If you have NOT previously submitted a Proof of Claim in connection with the HealthSouth Settlement, you may file a Proof of Claim, postmarked no later than August 11, 2009. If you submit (or have already submitted) a Proof of Claim, you will remain a Class Member, you will share in the proceeds of the proposed settlement if your claim is timely and valid and if the proposed settlement is finally approved by the court, and you will be bound by the Judgment and release described in the Notice.
  
  
• If you DO NOT wish to be included in the Stockholder Settlement Class and you DO NOT wish to participate in the proposed settlement, you must request to be excluded. You must request exclusion from this Settlement even if you previously excluded yourself from the HealthSouth Settlement. To do so, you must submit a written Request for Exclusion that must be received no later than May 28, 2009. You must set forth: (a) your name, address and telephone number; (b) the number and type of HealthSouth stock or options purchased and the number sold during the Settlement Class Period and the dates and prices of such purchase(s), and/or sale(s); and (c) that you wish to be excluded from the Stockholder Settlement Class. The exclusion request must be addressed as follows: HealthSouth Corporation Securities Litigation - E&Y, c/o Rust Consulting, Inc., P.O. Box 1375, Faribault, MN 55021-1375.
  
  NO REQUEST FOR EXCLUSION WILL BE CONSIDERED VALID UNLESS ALL OF THE INFORMATION DESCRIBED ABOVE IS INCLUDED IN ANY SUCH REQUEST. If you timely and validly request exclusion from the Stockholder Settlement Class: (a) you will be excluded from the class; (b) you will not share in the proceeds of the Settlement; (c) you will not be bound by any judgment entered pursuant to the Settlement; and (d) you will not be precluded from otherwise prosecuting an individual claim, if timely, against the Settling Defendant based on the matters complained of in the Litigation.
  
  If you do not request in writing to be excluded from the Stockholder Settlement Class as set forth above, you will be bound by any and all determinations or judgments in the Litigation in connection with the Settlement approved by the court, whether favorable or unfavorable, you will not be able to bring, or continue to pursue, an individual claim against Ernst & Young based on the matters complained of in the Litigation, and you shall be deemed to have, and by operation of the Judgment shall have fully released all of the Released Claims against the Released Persons, whether or not you submit a valid Proof of Claim.
  
  
• Any Stockholder Settlement Class Member, who has not excluded themselves from the class, can object to the Settlement or any part of it, the proposed Plan of Allocation, the application for expenses by the Stockholder Lead Plaintiffs and the application by Stockholder Plaintiffs’ Lead Counsel for attorneys’ fees and expenses. Your objection must be mailed or hand-delivered so that it is received on or before May 28, 2009, and be filed with the Clerk of Court and sent to Stockholder Plaintiffs’ Lead Counsel and Counsel for the Defendant as explained in Section XIII of the Notice. However, if your objection is rejected, you will be bound by the Settlement and the Judgment just as if you had not objected.
  
  
• If you wish to attend the Settlement Hearing in person and speak to the court, you must ask the court for permission. To do so, you must submit a written statement noting your intention to appear at the Settlement Hearing so that it is received on or before May 28, 2009 by the Clerk of Court, Stockholder Plaintiffs’ Lead Counsel and Counsel for Defendant as noted in Section XIII of the Notice.
  
  
• You may do nothing at all. If you choose this option, you will not share in the proceeds of the Settlement (unless you previously filed a Proof of Claim in the HealthSouth Settlement), but you will be bound by any Judgment entered by the court in connection with the Settlement, and you shall be deemed to have, and by operation of the Judgment shall have, fully released all of the Released Claims against the Released Persons.
  
  
• If you are a Stockholder Settlement Class Member, you may if you want, but are not required to, enter an appearance through counsel of your own choosing at your own expense. If you do not do so, you will be represented by Stockholder Plaintiffs’ Lead Counsel: Labaton Sucharow LLP and Coughlin Stoia Geller Rudman & Robbins LLP. You will not be charged personally for the services of Stockholder Plaintiffs’ Lead Counsel
  
  

Further Information

Further information regarding the Litigation or the Settlement may be obtained by contacting the Claims Administrator or reading through the Notice and Proof of Claim links at the left.