Ernst & Young LLP has agreed to pay $109 million to HealthSouth Corp. shareholders who sued the firm for failing to detect an accounting fraud involving more than a dozen HealthSouth executives. The settlement, once approved by the court, will create a fund for investors. Rob Riley, a very good Birmingham lawyer, represented the Plaintiffs, and did an outstanding job. Rob says the settlement is a good one for investors who thought they would never see any return of their investment. U.S. District Judge Karon Bowdre was to hear the matter one day after this issue went to the printer. I believe the judge will give the settlement her preliminary approval.
The proposed settlement would pay certified investors during the fraud period, but HealthSouth would get no part of the fund. The company has a separate lawsuit against Ernst & Young that is set for mediation later this year. The $2.7 billion fraudulent accounting scheme took place from 1996 to 2002. Fifteen former HealthSouth officials pleaded guilty in the case. I understand one more corporate Defendant and Richard Scrushy remain as Defendants in the case.
Source: Associated Press
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