HealthSouth Reaches $445 Million Preliminary Settlement to Resolve Lawsuits

By Danielle Briones

Published on February 27, 2006

Attorneys are still working on the final agreement, which will have to be approved by a judge.

If finalized, HealthSouth will pay $215 million in stock and insurance companies will pay the remaining $230 million of the agreement.

According to lawsuits against the company and its founders, HealthSouth was involved in a massive fraud that bilked investors, employees, Medicare and other government health companies of billions of dollars.

After the fraud was revealed, the price of the company's stock fell from a high of $31 a share to 9 cents a share.

Since then, HealthSouth has been involved in various lawsuits.

The company reached a $325 million settlement with the U.S. government in 2004 to resolve charges that it defrauded government health programs.

In 2005, HealthSouth reached an agreement totaling $100 million with the SEC to settle accounting fraud charges.

A $25 million class action settlement was also reached last year to cover losses in employees' retirement fund.

A lawsuit against HealthSouth and founder Richard Scrushy is pending.