UBS has settled a long-standing lawsuit brought by

US health company HealthSouth and its derivative stockholders.

HealthSouth, one of biggest healthcare providers in
North America, has been awarded $100 million cash and is also released from all claims by UBS, including an appeal judgment in the bank’s favour pending before the US Court of Appeal.

The case dates back to a 2003 accountancy scandal involving the Swiss bank, Ernst & Young auditors and HealthSouth’s ex-chief executive, Richard Scrushy. Mr Scrushy was accused of directing senior officers and accountants to falsify the company’s earning reports between 1996 and 2002, inflating them by $2.7 billion dollars.

UBS representatives attended HealthSouth board meetings throughout that time and also managed stock and bond offerings for the company. HealthSouth and its stockholders claimed UBS knew the company’s accounts were being overstated and brought claims against the bank in 2003 and 2004. UBS representatives have always denied any knowledge of fraudulent activity. 

A spokesman for UBS Americas told WealthBriefing the bank is pleased to have resolved the matter.

Following a raid on the HealthSouth’s

Alabama headquarters in 2003, a new chief executive was installed and the company was restructured. HealthSouth has avoided bankruptcy and has now recovered.

“This settlement represents another milestone in HealthSouth’s recovery of damages sustained by the Company under prior management,” said John Whittington, executive vice president.

HealthSouth and its derivative stockholders have taken similar cases against Mr Scrushy and HealthSouth’s former auditors, Ernst & Young. Mr Whittington confirmed to WealthBriefing that these cases are still pending.

UBS has been involved in a number of lawsuits this year, including a high-profile tax case concerning its alleged involvement in assisting wealthy

US citizens to avoid paying tax, and a lawsuit concerning the bank's sale of auction rate securities.