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HealthSouth settles fraud suits for $445 million

[JURIST] HealthSouth [corporate website; JURIST news archive] on Thursday finalized a settlement agreement [press release] with plaintiffs in several federal securities class action suits for a total $445 million. HealthSouth itself will pay defrauded investors $215 million, and its insurance carriers will pay $230 million, pending final approval by the court. Additionally, the settlement agreement will remit to defrauded investors 25 percent of any recovery the company makes in pending civil suits from former CEO Richard Scrushy [JURIST news archive], the company's former auditor Ernst and Young, and its former investment bank.

HealthSouth has restructured since verging on bankruptcy following fraud allegations that began surfacing in 2003, and welcomes the most recent settlement as "a major milestone in HealthSouth's recovery," according to CEO Jay Grinney. The company in 2005 reached a $100 million settlement with the SEC [JURIST report] and in 2004 reached a $325 million settlement with the DOJ [JURIST report] regarding fraudulent Medicare claims that cost taxpayers an estimated $2.1 billion. AP has more.

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