NEW YORK, Sept. 6, 2002 (PRIMEZONE) -- Wolf Popper LLP has filed a securities fraud class action complaint against HealthSouth Corp. ("HealthSouth") (NYSE:HRC) and three of its senior officers on behalf of purchasers of HealthSouth common stock from January 14, 2002 through August 27, 2002, inclusive. A copy of the complaint is available from the U.S. District Court for the Northern District of Alabama and on Wolf Popper's website (www.wolfpopper.com).
Plaintiff alleges in the class action that during the class period (January 14, 2002 through August 27, 2002) defendants failed to disclose the impact to HealthSouth of certain Medicaid/Medicare reimbursement policies on outpatient therapy. The complaint asserts that defendants were aware as of the beginning of the class period that the federal agency responsible for administering healthcare reimbursements required services provided to two or more patients at a single time to be billed as "group" therapy service at a lower rate rather than as separate "individual" services at higher aggregate rates. This federal policy had been in place since the mid-1990s and yet defendants failed to disclose, or to factor into HealthSouth's publicly disseminated projections, the impact of that policy. The federal agency further confirmed its policies in bulletins and directives dated May 17, 2002 and July 1, 2002.
At the same time as defendants were disseminating materially false and misleading financial information, HealthSouth's CEO and the Chairman of the Board of Directors, Richard M. Scrushy divested approximately 7.7 million shares (75% of his holdings) of HealthSouth common stock and options, for a profit of more than $50 million.
The true facts began to be disclosed on August 27, 2002 when the Company announced that the federal reimbursement rates would result in a decline in pro forma earnings of $175 million a year, and that it was withdrawing its earnings guidance for 2002 and 2003, as a result of changes in Medicare reimbursements for group outpatient therapy.
HealthSouth's announcement of a $175 million shortfall in EBITDA caused its common stock to plummet to a closing price of $6.71 per share on August 27, 2002, down $5.26 per share or 43.9 % from its closing price of $11.97 the day before the announcement. The stock continued to fall and on August 28, 2002, closed at $5.05, hitting a 3-year low.
Any member of the class (who purchased HealthSouth common shares during the period January 14, 2002 through August 27, 2002) who desires to be appointed lead plaintiff in the class action must file a motion with the Court no later than October 28, 2002. Class members must meet certain legal requirements to serve as a lead plaintiff. If you have questions or information regarding this action, or if you are interested in serving as a lead plaintiff, you may call or write:
Wolf Popper LLP, Robert C. Finkel, Esq. 845 Third Avenue, New York, NY 10022-6689
Tel.: 212.451.9620, Toll Free: 877.370.7703; Fax: 212.486.2093, Toll Free: 877.370.7704
Email: irrep@wolfpopper.com; website: www.wolfpopper.com
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca