Nov. 20 (Bloomberg) -- UBS AG and HealthSouth Corp. shareholder lawyers discussed “logistics about talking about settlement” during a conference with the judge presiding over a suit related to fraud at HealthSouth, an investor attorney said.

The company’s shareholders sued UBS for allegedly not discovering an accounting scandal that nearly bankrupted the provider of inpatient rehabilitative healthcare services.

Patrick Coughlin, the lead investor attorney, disclosed the talks after the 45-minute meeting today with U.S. District Judge Karon Bowdre in Birmingham, Alabama. Samuel Franklin, an attorney for Zurich-based UBS, said he couldn’t add anything “that can be announced. Something may be coming.”

The shareholder suit stemmed from a $2.7 billion fraud at Birmingham-based HealthSouth in which 15 executives, including five finance chiefs, pleaded guilty. The scheme, which lasted from 1996 to 2002, unraveled in March 2003 when the FBI raided HealthSouth’s offices.

UBS agreed in January to pay the company $100 million over claims that the bank didn’t see the fraud. The U.S. government alleged that HealthSouth founder Richard Scrushy directed the scheme, though he was later acquitted in that prosecution.

Scrushy is serving a federal prison term of six years and 10 months for a separate bribery conviction. A jury convicted him in 2006 of giving Alabama Governor Don Siegelman a $500,000 campaign contribution in return for a seat on a state hospital regulatory board. Siegelman was also found guilty and a federal appeals court upheld both convictions in March.

The case is In Re HealthSouth Securities Litigation, 03cv1500, U.S. District Court, Northern District of Alabama (Birmingham).

To contact the reporter responsible for this story: David Beasley in U.S. District Court for the Northern District of Alabama in Birmingham at dbeasley4@yahoo.com.

Last Updated: November 20, 2009 15:13 EST