NEW YORK, Sept. 5, 2002 (PRIMEZONE) -- The law firm of Kirby, McInerney & Squire LLP announces that a class action lawsuit was filed on September 5, 2002, on behalf of purchasers of the securities of Healthsouth Corporation ("Healthsouth" or the "Company") (NYSE:HRC) between January 14, 2002 and August 26, 2002 inclusive (the "Class Period"). The action is pending in the United States District Court for the Northern District of Alabama.
The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market between January 14, 2002 and August 27, 2002. According to the complaint, throughout the Class Period, Healthsouth issued press releases and filed reports with the SEC announcing impressive revenue and earnings growth and repeatedly assuring the market that the Company was well on its way to meeting its financial targets for the year 2002 and that its fundamentals were strong. According to the complaint, these and other statements were materially false and misleading because they failed to disclose that the Centers for Medicare and Medicaid Services ("CMS") had issued directives reclassifying certain categories of reimbursements, which would have a materially negative impact on Healthsouth's business. The Complaint further alleges that defendants failed to disclose these facts, which had been known to them for many months, in order to allow certain Healthsouth executives to sell (collectively) millions of shares of the Company's stock at artificially inflated prices and so that the Company could commence a $998 million note exchange/offer on more favorable terms than if the truth regarding the CMS directives and their impact on the Company was known publicly. The note exchange/offering was commenced on August 27, 2002 -- one-day before the Company disclosed the negative developments for the first time. According to the complaint, on August 27, 2002, Healthsouth shocked the market by issuing a press release announcing that CMS directives issued on July 1, 2002 concerning reimbursements may result in a $175 million shortfall in EBITDA from previously issued financial guidance for 2002 and that it could not provide further guidance for 2002 and 2003 because of uncertainties posed by the directives. In addition, the Company announced that it would spin-off its surgery-center division as part of a massive restructuring undertaken to deal with the developments and that defendant Richard Scrushy would be replaced as CEO by defendant William Owens. In response to this disclosure, Healthsouth stock plummeted by over 43% to close at $6.71 per share in a single day on extremely high trading volume.
Plaintiffs are represented by Kirby McInerney & Squire, LLP, which specializes in complex litigation, including securities actions. The firm has repeatedly demonstrated its expertise in this field, and has been recognized by various courts which have appointed the firm to major positions in consolidated and multi-district litigation. The firm's efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling hundreds of millions of dollars, and its achievements and quality of service have been chronicled in numerous published decisions. More information about the firm, representative actions in general or about the role of the lead plaintiff in a securities action can be obtained through Kirby McInerney & Squire's website at http://www.kmslaw.com.
If you invested during the period described above, you may, no later than October 28, 2002, move the Court to serve as lead plaintiff in the litigation, if you so choose, pursuant to the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), 15 U.S.C. section 78u-4(a). A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. Your ability to share in any recovery is not, however, affected by the decision whether or not to seek appointment as a lead plaintiff. For more information about the case, its claims, and your rights, please contact:
Ira M. Press Mark A. Strauss Kirby, McInerney & Squire 830 3rd Ave. New York, NY 10022 Tel: (212) 371 6600 Fax: (212) 751 2540
More information on this and other class actions can be found on the Class Action Newsline at http://www.primezone.com/ca