Michigan Attorney General and Treasurer Continue Fight for Michigan Pensions

To protect Michigan pensions, the State of Michigan is seeking lead plaintiff status in the securities class action lawsuit against HealthSouth Corporation, its former directors and
executives, as well as HealthSouth's investment bankers and former outside
auditors, Attorney General Mike Cox and Treasurer Jay B. Rising announced
today.

If appointed lead plaintiff, Michigan will manage the litigation on behalf
of stockholders, negotiate potential settlement terms, and seek to maximize
the recovery for the class. If the case goes to trial, the lead plaintiff
would make all strategy decisions.

"We have an opportunity to seek a leadership role in redressing one of the
most flagrant securities frauds perpetrated in United States history," said
Cox. "Safeguarding pensions is a top priority for this office. We will do
everything we can to ensure that employees aren't cheated out of the pension
that is rightfully theirs." Of the 38 individual defendants in the lawsuit,
15, including all of HealthSouth's former chief financial officers, have
pleaded guilty to criminal violations of the federal securities laws -- the
largest number of corporate officers from a single company to admit criminal
wrongdoing.

After disclosure of the wrongdoing, HealthSouth dismissed its outside
auditor, Ernst & Young (E&Y), and advised investors not to rely on any of the
E&Y-audited financial statements HealthSouth issued as a public company.
"HealthSouth has admitted it overstated income by more than $2.8 billion, and
wiped out every dollar of profit it ever reported as a public company," said
Rising. "As a result, Michigan's Retirement Systems suffered losses of
approximately $33 million. With today's action, we are taking the appropriate
steps to recoup what is rightly due to our employees and retirees, and to
protect state pension funds."

In addition to overstating its income, certain individual defendants sold
more than 16.7 million shares of their personal holdings of HealthSouth stock,
which resulted in insider trading proceeds of more than $300 million. These
individual defendants also kept millions of dollars in cash bonuses awarded as
a result of the false profits the company reported from 1997 through 2002.

Cox and Rising are committed to protecting Michigan's citizens against
fraud and financial abuse. "A fraud of this magnitude, especially in the
critical area of healthcare, is inexcusable," said Cox. "We intend to do
everything in our power to recover assets lost as a result of the defendants'
wrongdoing," said Rising.

HealthSouth is a provider of outpatient surgery and rehabilitative
services. During the class period, between April 24, 1997 and March 18, 2003,
defendants implemented a scheme to falsify HealthSouth's financial statements
to meet or exceed Wall Street's expectations. As part of the scheme,
HealthSouth's founder and then CEO Richard M. Scrushy allegedly directed
accounting subordinates to "fix" any shortfall in revenue and income through
the use of false accounting entries. The lawsuit alleges that E&Y became
aware of HealthSouth's improper practices no later than 1994, but ignored them
to earn huge fees. It also alleges that HealthSouth's investment banking
underwriters are liable for making materially false and misleading statements
in Registration Statements and Prospectuses used by HealthSouth to raise
billions of dollars of new capital for the company.

Although the class action against HealthSouth and the other defendants has
been pending in the United States District Court for the Northern District of
Alabama since last year, the former lead plaintiff withdrew from the case last
November, and Federal District Judge Karon O. Bowdre invited new parties to
apply for lead plaintiff.

Together, the State of Michigan Retirement Systems (SMRS) hold more than
$48 billion in assets, making the combined fund the 13th largest public
pension fund in the United States. The SMRS invest on behalf of Michigan
Public School Employees, State Employees, State Police, and Michigan Judges.