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Apr 23, 2010

RSA Announces $100 Million Settlement with UBS Warburg and three individual UBS Defendants and $33.5 Million settlement with Ernst & Young LLP

Featuring: Robert T. Cunningham and Steve Olen

MONTGOMERY, Ala., April 21, 2010 – The Retirement Systems of Alabama (RSA), court appointed Lead Plaintiff of a class of bond purchasers of HealthSouth Corporation (HealthSouth), today announced that it had reached separate class action settlements with UBS AG, UBS Warburg LLC, Benjamin D. Lorello, William C. McGahan and Howard Capek (collectively, UBS) and with Ernst & Young LLP (E&Y).

The total consideration to be paid in the UBS settlement is $100 million in cash and E&Y has agreed to pay $33.5 million in cash, for a total of $133.5 million. These settlements follow an earlier settlement with HealthSouth and its former outside directors valued at approximately $90 million for the bond class. Bond purchasers will also receive approximately 5% of the recovery achieved in Alabama state court in a separate action brought on behalf of HealthSouth against UBS and Richard Scrushy.

To date, the plaintiffs in that action have achieved a $100 million settlement with UBS and a $2.8 billion judgment against former HealthSouth founder Richard Scrushy. The total settlement for injured HealthSouth bond purchasers will be in excess of $230 million. RSA believes that this is an outstanding recovery for the class in that it should recoup over a third of bond purchaser damages. 

The UBS and E&Y settlement funds will be distributed to HealthSouth bond purchasers in a consolidated securities class action presently pending before the Honorable Karon Owen Bowdre in United States District Court in Birmingham, Alabama. 

“We are excited to announce this excellent result for the HealthSouth bond investors we represent,” said RSA’s Chief Executive Officer, David Bronner. “These settlements were achieved after years of vigorous prosecution, resulting in the recent certification of a class of bond purchasers by the court,” said Bronner. “We believe these substantial settlements reflect a great result for bond purchasers who were damaged as a result of the massive fraud at HealthSouth.” 

The UBS settlement was negotiated under the supervision of court-appointed mediator Professor Eric Green. Both the UBS and E&Y settlements must be reviewed and approved by Judge Bowdre, after notice to the class. 

The bond purchaser class is represented in the litigation and settlement proceedings by Cunningham Bounds, LLC of Mobile, Alabama, Bernstein Litowitz Berger & Grossmann LLP of New York and Donaldson & Guin, LLC of Birmingham, Alabama. Bill Kelley, RSA Counsel, supervised these firms throughout the litigation and settlement proceedings. 

CONTACT: William F. Kelley, Retirement Systems of Alabama, (334) 517-7000; 
bill.kelley@rsa-al.gov 

SOURCE: Retirement Systems of Alabama; www.rsa-al.gov

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