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Welcome to the HealthSouth Securities Litigation - Ernst & Young Settlement website.
IMPORTANT UPDATE: June 24, 2011
The Initial distribution of the Net Settlement Fund took place on June 24, 2011.
This distribution is based on 80% of the available balance in the Net Settlement Fund. The initial distribution was approximately $64.1 million. There will also be a subsequent distribution from the remaining Net Settlement Fund to Authorized Claimants.
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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:
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All Persons who purchased or otherwise acquired the stock or options of HealthSouth
Corporation ("HealthSouth") between March 30, 2000 and March 18, 2003 ("Settlement
Class Period") and were damaged thereby ("Stockholder Settlement Class").
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IF YOU ALREADY SUBMITTED A VALID PROOF OF CLAIM IN THE PREVIOUSLY ANNOUNCED HEALTHSOUTH
SETTLEMENT (WITH PURCHASES OF COMMON STOCK OR OPTIONS DURING THE SETTLEMENT CLASS
PERIOD), YOU DO NOT NEED TO SUBMIT ANOTHER PROOF OF CLAIM. PLEASE SEE THE INFORMATION
BELOW AND SECTION IX. "PARTICIPATION IN THE SETTLEMENT" AT PAGES 14-15 OF THE NOTICE,
FOR DETAILS.
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In addition to the HealthSouth Settlement, the Stockholder Lead Plaintiffs recently
reached a settlement with the UBS Defendants. On May 12, 2010, the court preliminarily
approved a $117 million settlement with the UBS Defendants. If you purchased or
otherwise acquired the stock or options of HealthSouth Corporation between September
20, 2000 and March 18, 2003, inclusive, and were damaged thereby, you may be able
to recover from this settlement.
Click here to obtain more information about this settlement.
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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.
The Court held a Settlement Hearing on June 11, 2009, at 10:00 a.m., at the
Hugo L. Black United States Courthouse, 1729 Fifth Avenue North, Birmingham, Alabama
and determined:
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(1)
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The proposed Settlement is fair, reasonable and adequate and is approved by the
Court;
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(2)
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The proposed Plan of Allocation for distributing the Settlement to Class Members
is fair and reasonable and is approved; and
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(3)
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The Stockholder Settlement Class is certified.
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The issuance of the Notice is not an expression of the Court’s opinion on the merits
of any claim in the Action. Although the Court has approved the Settlement, payment
will be made after all appeals, if any, are resolved and after the completion of
all claims processing. Please be patient.
What is the lawsuit about?
The Complaint alleges that during the relevant period, at the direction of senior
HealthSouth management, Defendants implemented a scheme to falsify HealthSouth’s
financial statements in order to meet or exceed Wall Street expectations. Ernst
& Young is alleged to have issued false and misleading audit reports on HealthSouth’s
financial statements during the Settlement Class Period.
In early 2006, Stockholder Lead Plaintiffs, together with the lead plaintiffs representing
a bondholder class negotiated a Stipulation of Partial Settlement that was filed
with the court on September 26, 2006 (the "HealthSouth Settlement"). On January
11, 2007, the court entered a Partial Final Judgment and Order of Dismissal with
Prejudice and approved the proposed partial settlement with HealthSouth.
On or about February 24, 2009, with the substantial assistance of special settlement
counsel for Ernst & Young, former federal judge Layn R. Phillips, and after numerous
months of settlement negotiations, the Stockholder Lead Plaintiffs and Ernst & Young
reached an agreement in principle to settle the Litigation on behalf of stockholders.
Claims against Ernst & Young by bondholders have not been settled and are continuing
to be prosecuted.
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Ernst & Young expressly has denied and continues to deny all charges of wrongdoing
or liability against it arising out of any of the conduct, statements, acts or omissions
alleged, or that could have been alleged, in the Litigation. Ernst & Young also
continues to believe the claims asserted against it in the Complaint are without
merit. Nonetheless, Ernst & Young has agreed to enter into the Settlement solely
to avoid the expense, distraction, time, and uncertainty associated with continuing
the Litigation.
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IMPORTANT DATES & DEADLINES |
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Submit a Claim Form:
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Postmarked on or before August 11, 2009 |
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Exclude Yourself:
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The Deadline has Passed – the request for exclusion needed to be Received on or
before May 28, 2009 |
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Object but Remain in the Settlement:
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The Deadline has Passed – Objections needed to be Received on or before May 28,
2009 |
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Settlement Hearing:
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June 11, 2009 at 10:00 a.m. in the United States District Court for the Northern
District of Alabama, Southern Division |
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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:
- FILE A PROOF OF CLAIM – 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.
- EXCLUDE YOURSELF FROM THE CLASS – (The Deadline Has Passed). If you
did not wish to be included in the Stockholder Settlement Class and you did not
wish to participate in the proposed settlement, you were to request exclusion from
this Settlement even if you previously excluded yourself from the HealthSouth Settlement.
To do so, you the written Request for Exclusion was to be received no later than
May 28, 2009. You were to 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 was to 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 WAS CONSIDERED VALID UNLESS ALL OF THE INFORMATION DESCRIBED
ABOVE WAS INCLUDED IN ANY SUCH REQUEST. If you timely and validly requested 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 did 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.
- OBJECT – (The Deadline Has Passed) Any Stockholder Settlement Class
Member, who did not exclude themselves from the class, could 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 was to be mailed or
hand-delivered so that it was 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 was rejected, you will be bound by the Settlement and the Judgment
just as if you had not objected.
- 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.
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