Exhibit 99.1

NEWS FROM_____________________________________________________________________

[HEALTHSOUTH GRAPHIC OMITTED]


                                                                  June 8, 2005



                    HEALTHSOUTH REACHES AGREEMENT WITH THE
                      SECURITIES AND EXCHANGE COMMISSION

Birmingham, Alabama - HealthSouth Corporation (OTC Pink Sheets: HLSH) today
announced it has reached an agreement with the Securities and Exchange
Commission (the "SEC") to resolve claims brought by the SEC against the
Company in a civil action on March 19, 2003. The agreement does not address
claims brought against any other party in that action. As a result of the
agreement, HealthSouth will pay the SEC $100 million in five installments over
a two year period beginning in the fourth quarter of 2005, which may be used
by the SEC to establish an investor fund pursuant to the Fair Fund provision
of the Sarbanes-Oxley Act of 2002.

"This agreement is both a major milestone in HealthSouth's recovery and a
powerful symbol of the progress we have made as a company over the course of
the last two years," said HealthSouth President and CEO Jay Grinney. "I would
especially like to recognize Greg Doody, our General Counsel, and Skadden
Arps, our outside counsel, for their hard work and contributions in reaching
this important settlement. With the support of our employees across the
country, HealthSouth has successfully put another issue behind us. We look
forward to re-focusing our time and resources on what we do best - serving the
needs of our patients."

"HealthSouth has faced several legal obstacles in the past two years as the
result of the massive fraud perpetrated against us," said Greg Doody,
HealthSouth General Counsel and Secretary. "This settlement with the SEC -- in
conjunction with our Bondholder consent agreement in June of 2004 and our
previous settlement with the U.S. Department of Justice - Civil Division, the
Office of Inspector General, and the Centers for Medicare & Medicaid Services
in December 2004 -- puts a substantial portion of our legal issues behind us
and allows us to move forward."

The Company stated that provisions for this settlement amount have been
incorporated in its long-term financial projections and that the payments will
be made without compromising the resources necessary to manage its facilities
in a quality manner.

The agreement resolves litigation brought by the SEC in 2003 regarding
allegations of violations of the federal securities laws. As part of the
settlement, HealthSouth also agrees to retain the services of consultants in
the areas of governance, internal controls and accounting to review policies
and practices implemented under the new management team; provide training and
education to appropriate officers; and continue to cooperate with the SEC and
Department of Justice in their respective, ongoing investigations. A copy of
the agreement is being filed today with the SEC as an exhibit to HealthSouth's
Form 8-K.

About HealthSouth
HealthSouth is one of the nation's largest providers of outpatient surgery,
diagnostic imaging and rehabilitative healthcare services, operating
facilities nationwide. HealthSouth can be found on the Web at
www.healthsouth.com.

Statements contained in this press release which are not historical facts 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. Such forward-looking statements are
necessarily estimates based upon current information, involve a number of
risks and uncertainties and are made pursuant to the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995. HealthSouth's actual
results may differ materially from the results 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
results to differ materially from those estimated by HealthSouth include, but
are not limited to: the investigations by the Department of Justice and the
Securities and Exchange Commission into HealthSouth's financial reporting and
related activity calling into question the accuracy of the Company's
previously filed financial statements; HealthSouth's statement that as a
result of the investigations, the Company's previously filed financial
statements should no longer be relied upon and may result in the Company
restating its prior financial statements; the withdrawal by HealthSouth's
former accountants of their audit reports on all of the Company's previously
filed financial statements; the outcome of pending litigation relating to
these matters; significant changes in HealthSouth's management team;
HealthSouth's ability to successfully amend, restructure and/or renegotiate
its existing indebtedness or cure or receive a waiver of the events of default
under such agreements, the failure of which may result in HealthSouth filing a
voluntary petition for bankruptcy; HealthSouth's ability to continue to
operate in the ordinary course and manage it's relationships with its
creditors, including it's lenders, bondholders, vendors and suppliers,
employees and customers; changes, delays in or suspension of reimbursement for
HealthSouth's services by governmental or private payors; changes in the
regulation of the healthcare industry at either or both of the federal and
state levels; changes to or delays in the implementation of the prospective
payment system for inpatient rehabilitation services; competitive pressures in
the healthcare industry and HealthSouth's response thereto; HealthSouth's
ability to obtain and retain favorable arrangements with third-party payors;
general conditions in the economy and capital markets; and other factors which
may be identified from time to time in the Company's SEC filings and other
public announcements.

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Media Contact
- -------------

Andy Brimmer, 205-410-2777