On Tuesday the shareholders of HealthSouth, represented by lead counsel from Coughlin Stoia Geller Rudman & Robbins, announced a $109 million settlement with Ernst & Young, which was the scandal-ridden company's accountant.
The settlement is about a quarter of the size of the deal that shareholders reached several years ago with HealthSouth itself, but Patrick Coughlin told The Litigation Daily that he's pleased with the result. "As far as accountants go, this is one of the top settlements ever," he said. Ernst & Young has Dan Webb and Bruce Braun of Winston & Strawn and Steven Farina of Williams & Connolly in the HealthSouth litigation.
The settlement comes days before a scheduled class certification hearing in this long-running litigation. And lawyers for the shareholders and for E&Y are still going to have to be in federal district court in Birmingham on Friday for those arguments. Neither is done yet with HealthSouth securities litigation.
The shareholders, Coughlin told us, have pending, which was HealthSouth's bank. Coughlin asserts that UBS is "the most culpable" defendant because "several [HealthSouth] CFOs have testified to UBS's actual knowledge of the fraud." UBS's lead counsel in HealthSouth is Robert Giuffra Jr. of Sullivan & Cromwell, who didn't return a call for comment.
Ernst & Young, meanwhile, still faces claims from a putative class of bondholders, whose arguments for class certification (against UBS as well as E&Y) will be heard at Friday's hearing. "There's significant exposure for E&Y in our case," said John "Sean" Coffey of Bernstein Litowitz Berger & Grossmann, who's lead counsel for the bondholders. "We're going to press ahead on class certification. We're willing to entertain reasonable offers for settlement, but we haven't heard them."
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.