HealthSouth Reaches a Settlement With UBS Securities LLC

BIRMINGHAM, Ala., Oct. 23 /PRNewswire-FirstCall/ -- HealthSouth
Corporation (NYSE: HLS) announced today that the Company and derivative
stockholder plaintiffs have reached an agreement in principle with UBS
Securities, LLC and UBS AG, Stamford Branch (together, "UBS"), as well as
UBS's insurance carriers, to settle litigation filed by the derivative
plaintiffs on the Company's behalf, captioned Tucker v. Scrushy, in the
Circuit Court of Jefferson County, Alabama. This settlement agreement relates
only to UBS and does not affect the Company's claims against Richard Scrushy
and the other defendants in the Tucker action, or against the Company's former
independent auditors Ernst & Young. The settlement agreement is subject to
approval of the Court, and HealthSouth estimates that the process for approval
will take approximately 60 days.
Under the settlement, HealthSouth will receive $100 million in cash and a
release of all claims by UBS including the release and satisfaction of a
judgment in favor of UBS, which is currently on appeal before the U.S. Court
of Appeals for the Second Circuit. HealthSouth will be obligated to pay the
reasonable fees of the derivative plaintiffs' attorneys to be approved by the
Court. After deducting all of the Company's costs and expenses in connection
with the Tucker litigation, HealthSouth, pursuant to the previously disclosed
settlement agreements in the consolidated federal securities litigation, will
pay 25 percent of the net proceeds, to plaintiffs in the federal securities
litigation. The balance of the proceeds will be used by HealthSouth to reduce
long-term debt.
"This settlement represents another milestone in HealthSouth's recovery of
damages sustained by the Company under prior management," said John
Whittington, Executive Vice President, General Counsel and Corporate
Secretary. "HealthSouth and the derivative plaintiffs intend to diligently
and vigorously pursue the claims against the remaining defendants including
Scrushy and Ernst & Young."
About HealthSouth
HealthSouth is the nation's largest provider of inpatient rehabilitative
services. Operating in 26 states across the country and in Puerto Rico,
HealthSouth serves more than 250,000 patients annually through its network of
inpatient rehabilitation hospitals, long-term acute care hospitals, outpatient
rehabilitation satellites, and home health agencies. HealthSouth strives to be
the nation's preeminent provider of inpatient rehabilitation services and can
be found on the Web at www.healthsouth.com.
Statements contained in this press release which are not historical facts
are forward-looking statements. In addition, HealthSouth, through its senior
management, may from time to time make forward-looking public statements
concerning the matters described herein. All such estimates, projections, and
forward-looking information speak only as of the date hereof, and HealthSouth
undertakes no duty to publicly update or revise such forward-looking
information, whether as a result of new information, future events, or
otherwise. Such forward-looking statements are necessarily estimates based
upon current information and involve a number of risks and uncertainties.
HealthSouth's actual results may differ materially from the results
anticipated in these forward-looking statements as a result of a variety of
factors. While it is impossible to identify all such factors, factors which
could cause actual results to differ materially from those estimated by
HealthSouth include, but are not limited to, any adverse outcome of various
lawsuits, claims, and legal or regulatory proceedings that may be brought
against us or any adverse outcome relating to the settlement of the federal
securities class action previously disclosed by us; significant changes in
HealthSouth's management team; HealthSouth's ability to continue to operate in
the ordinary course and manage its relationships with its creditors, including
its lenders, bondholders, vendors and suppliers, employees, and customers;
changes, delays in, or suspension of reimbursement for HealthSouth's services
by governmental or private payors; changes in the regulation of the healthcare
industry at either or both of the federal and state levels; competitive
pressures in the healthcare industry and HealthSouth's response thereto;
HealthSouth's ability to obtain and retain favorable arrangements with third-
party payors; HealthSouth's ability to attract and retain nurses, therapists,
and other healthcare professionals in a highly competitive environment with
often severe staffing shortages; general conditions in the economy and capital
markets; and other factors which may be identified from time to time in the
Company's SEC filings and other public announcements, including HealthSouth's
Form 10-Q for the quarter ended June 30, 2008 and Form 10-K for the year ended
December 31, 2007.
Media Contact
Andy Brimmer, 205-410-2777

Investor Relations Contact
Mary Ann Arico, 205-969-6175
maryann.arico@healthsouth.com

SOURCE HealthSouth Corporation

Media, Andy Brimmer, +1-205-410-2777; or Investors, Mary Ann Arico,
+1-205-969-6175, maryann.arico@healthsouth.com