BIRMINGHAM, Ala., May 21 /PRNewswire-FirstCall/ -- HealthSouth Corporation (NYSE: HLS) today reported that the United States District Court for the Eastern District of Michigan granted the Company's motion to set aside a consent judgment in the amount of $376 million between Horizon/CMS Healthcare Corporation, a former subsidiary of HealthSouth, and General Medicine, P.C. The court agreed with HealthSouth that the consent judgment was a product of fraud on the court. In granting HealthSouth's motion, the court stated that General Medicine's failure to disclose material facts to the court 'caused a distortion of the judicial process .... the primary purpose of which was to ambush' HealthSouth. Since 2004, General Medicine has been litigating against HealthSouth in an attempt to force the Company to pay the amount of the consent judgment.
'We are extremely pleased with the court's decision in this matter,' said John Whittington, Executive Vice President and General Counsel of HealthSouth. 'It confirms our belief that the secret settlement and the consent judgment were the product of collusion and fraud on the court and that the consent judgment should not be binding on HealthSouth and should be set aside.'
The consent judgment was the result of a suit brought in the United States District Court for the Eastern District of Michigan in 1996 by General Medicine against Horizon, prior to HealthSouth's acquisition of Horizon. HealthSouth was not a party to that suit. HealthSouth learned of the consent judgment only after selling Horizon when General Medicine sued HealthSouth in Alabama seeking recovery of the $376 million consent judgment and claiming allegedly fraudulent transfers involving assets of Horizon. Mr. Whittington added, 'the Company intends to vigorously defend any remaining claims against it and aggressively pursue our counterclaims in the Alabama case.'
The General Medicine litigation in both Michigan and Alabama has been previously discussed in greater detail in HealthSouth's Form 10K for the year ended December 31, 2008 and Form 10-Q for the quarterly period ended March 31, 2009, both of which can be found on the Company's website at www.healthsouth.com in the investor section.
About HealthSouth
HealthSouth is the nation's largest provider of inpatient rehabilitative healthcare services.
