HealthSouth Announces Decision of Ernst & Young Arbitration; Panel Rules Against HealthSouth on Legal Defense

   HealthSouth Announces Decision of Ernst & Young Arbitration; Panel Rules
                     Against HealthSouth on Legal Defense

PR Newswire

BIRMINGHAM, Ala., Dec. 18, 2012

BIRMINGHAM, Ala., Dec. 18, 2012 /PRNewswire/ --HealthSouth Corporation (NYSE:
HLS) today announced that the American Arbitration Association panel that
since July 2010 has been adjudicating the Company's claims against its former
auditor, Ernst & Young LLP, granted Ernst & Young's motion to dismiss the
claims based on legal grounds that do not address the underlying merits of
HealthSouth's claims.

This arbitration has its origin in March 2003 when stockholder derivative
plaintiffs acting on behalf of HealthSouth filed a lawsuit against Ernst &
Young. Ernst & Young served as the Company's auditor during the period when
HealthSouth was a victim of fraudulent and improper accounting practices
directed by certain former officers and employees of the Company. The claims
against Ernst & Young included, among other things, that from 1996 through
2002, Ernst & Young acted recklessly and with gross negligence and failed to
perform reviews and audits of the Company's financial statements with due
professional care as required by law and by its contractual agreements with
the Company. In July 2006 this matter was referred to arbitration by Judge
Allwin E. Horn, III, Circuit Court Judge, Jefferson County, Alabama.

HealthSouth, together with the stockholder derivative plaintiffs, has filed a
Notice of Appeal of the arbitration panel's decision dismissing what the
Company believes are meritorious claims against Ernst & Young. HealthSouth
noted the arbitration panel granted Ernst & Young's motion to dismiss based on
their conclusion that the Company was not permitted to pursue its claims since
certain of its former officers and employees committed fraudulent acts. The
Company maintains that this determination is contrary to Alabama law and the
duties of a public accounting firm to its corporate clients.

"We strongly disagree with the decision of the panel and believe that their
decision does not reflect Alabama law," said John Whittington, Executive Vice
President and General Counsel of HealthSouth. "HealthSouth will diligently
pursue its appellate rights and remains committed to seeking recovery of
amounts from parties involved during the period when improper accounting
practices directed by former officers and employees of the Company occurred."

About HealthSouth
HealthSouth is the nation's largest owner and operator of inpatient
rehabilitation hospitals in terms of revenues, number of hospitals, and
patients treated and discharged. Operating in 27 states across the country and
in Puerto Rico, HealthSouth serves patients through its network of inpatient
rehabilitation hospitals, outpatient rehabilitation satellite clinics and home
health agencies. HealthSouth's hospitals provide a higher level of
rehabilitative care to patients who are recovering from conditions such as
stroke and other neurological disorders, orthopedic, cardiac and pulmonary
conditions, brain and spinal cord injuries, and amputations. HealthSouth can
be found on the Web at

Statements contained in this press release which are not historical facts,
such as future litigation efforts, are forward-looking statements. In
addition, HealthSouth, through its senior management, may from time to time
make forward-looking public statements concerning the matters described
herein. All such forward-looking information speaks only as of the date
hereof, and HealthSouth undertakes no duty to publicly update or revise such
forward-looking information, whether as a result of new information, future
events, or otherwise. Such forward-looking statements are necessarily based
upon current information, involve a number of risks and uncertainties, and
relate to future events or plans. Actual events or results may differ
materially from those anticipated in these forward-looking statements as a
result of a variety of factors. While it is impossible to identify all such
factors, factors which could cause actual events or results to differ
materially from those estimated by HealthSouth include, but are not limited
to, any adverse outcome of various lawsuits, claims, and legal or regulatory
proceedings involving HealthSouth; potential disruptions, breaches or other
incidents affecting the proper operation, availability, or security of
HealthSouth's information systems; significant changes in its management team;
changes in the regulation of the healthcare industry at either or both of the
federal and state levels, including as part of national healthcare reform and
deficit reduction; competitive pressures in the healthcare industry generally
or in a specific market and HealthSouth's response thereto; general conditions
in the economy and capital markets; and other factors which may be identified
from time to time in HealthSouth's SEC filings and other public announcements,
including its Form 10‑K for the year ended December31,2011 and Forms 10-Q
for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012.

Media Contact
Casey Lassiter, 205-410-2777

Investor Relations Contact
Mary Ann Arico, 205-969-6175

SOURCE HealthSouth Corporation

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