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JOHNSTOWN -- A civil court jury trial in which the University of Pittsburgh Medical Center was asking for more than $100 million in damages from a financial firm that badly underestimated the UPMC Altoona pension debt came to an abrupt end Thursday when U.S. District Judge Kim R. Gibson said the two sides have agreed to settle the case within 21 days.
UPMC filed the lawsuit nearly five years ago against a nationally known and publicly traded financial services and insurance company known as CBIZ, which is headquartered in Cleveland.
While CBIZ is a large company, the focus of the lawsuit was on Jon S. Ketzner, the lone actuary in its Cumberland, Md., office.
Ketzner, a certified actuary for 40 years, spent more than 20 of those years performing the required annual actuarial reviews of pension funds for employees of the former Altoona Hospital and Altoona Regional Health Systems, the name of the local hospital after it merged with the former Bon Secours Hospital.
When Altoona Regional experienced financial difficulties in the late 2000s, it began to search for a "partner," and UPMC, a nonprofit corporation that includes 40 hospitals and other medical facilities throughout Pennsylvania, stepped forward to merge with the Altoona-based hospital, assuming its debts as well as its assets.
UPMC, during what it called a period of "due diligence" prior to the purchase of Altoona Regional, reviewed a Ketzner actuarial report that concluded that the debt, or projection of future expenses associated with the hospital's union and nonunion pensions, stood at $63.6 million, a figure UPMC found acceptable.
But after assuming control of the local hospital, the pension debt was questioned by an actuary in the Cumberland, Md., CBIZ office who took over Ketzner's position after his retirement.
It turned out that the new estimate of pension debt was more than $214 million.
UPMC brought a lawsuit that charged Ketzner's estimate of pension debt was flawed -- well below industry standards.
It charged that CBIZ did not properly oversee Ketzner's work and eventually tried to cover up his mistake. UPMC sued not only CBIZ Inc. and CBIZ Benefits & Insurances Services Inc., but Ketzner himself.
After nearly five years of legal wrangling that included multiple documents under seal -- the jury trial began June 2 in Gibson's Johnstown courtroom, with the judge relating the case was expected to last six weeks or more.
The jurors spent up to seven hours a day in the courtroom listening to testimony from experts concerning actuarial standards, and reviewing communications regarding the sale of Altoona Regional to UPMC, and charts and financial figures.
UPMC charged CBIZ with professional negligence, breach of contract and negligent misrepresentation.
Earlier this week, Gibson rejected a CBIZ request to dismiss those charges, and on Wednesday, he was presented with a 55-page document prepared by Pittsburgh attorney Jon A. Schwab, a member of the UPMC trial team, outlining instructions to be given to the jury prior to deliberations.
On Thursday morning, the jury was kept waiting for more than two hours beyond the designated start time for the trial to resume.
When the jury was finally seated in the courtroom, Gibson said he had a statement he wanted to read.
He indicated that both sides agreed to work toward a resolution of the case and he stated that the settlement hammered out by the two sides was to be "memorialized" in writing within 21 days.
CBIZ is a publicly-traded company, and because of that, Gibson said, the settlement will be made public.
He told the jurors they did a great job.
"The court is very proud of your service here," he said.
The jurors seemed relieved and began laughing and waving goodbye to the attorneys with whom they had spent so much time in the last month.
After the jury was released, UPMC lead attorney Cyril V. Smith of Baltimore said he could not discuss the case.
Cleveland attorney Ernest E. Vargo Jr., the lead attorney for CBIZ, declined comment, but clarified, "We don't have an agreement yet."
Ketzner also offered no comment.