UBS, accountant settle HealthSouth cases for $250M

BIRMINGHAM, Ala. (AP) - Swiss bank UBS AG and accounting giant Ernst & Young have agreed to pay $250 million to settle claims over the financial fraud that nearly wrecked HealthSouth Corp., the Alabama-based rehabilitation chain.

Federal court documents filed Thursday show UBS insurers will pay $117 million to HealthSouth shareholders and another $100 million to bondholders. Ernst & Young agreed to pay $33.5 million to bondholders.

The accountant agreed to a $109 million settlement with HealthSouth stockholders last year.

Both companies denied any wrongdoing and said they were settling because of the continued expense of fighting lawsuits in federal court.

An investigation of HealthSouth revealed a long-running scheme to overstate earnings by more than $2.5 billion.