Settlement near in $142 million UPMC Altoona lawsuit

Randy Griffith, The Tribune-Democrat, Johnstown, Pa.
·2 min read

Jun. 25—A settlement appears imminent in a $142 million lawsuit involving UPMC Altoona.

The lawsuit, filed by UPMC in September 2016, accuses a Cleveland-based financial company of mismanaging and under-reporting the pension debt of the former Altoona Regional Health System prior to the Pittsburgh system's July 2013 acquisition of the hospital.

The suit names CBIZ Inc. and actuary Jon S. Ketzner, who handled Altoona Regional Health System's two largest pension plans from at least 2008 through 2014, the court papers say.

A trial in the case began June 1 in U.S. District Court, Western District of Pennsylvania, in Johnstown.

On Thursday, Judge Kim R. Gibson's office confirmed the jury has been excused, ending the trial.

"Both parties are working toward a resolution," a staffer for Gibson said Thursday.

The two sides have 21 days to finalize the settlement, which will be made public at that time, Gibson's office said.

When UPMC acquired the former Altoona hospital, CBIZ subsidiary CBIZ Benefits & Insurances Services Inc. made "multiple errors" that led to the pension plans' projected long-term costs to be "falsely stated on Altoona's balance sheet at $240 million, UPMC alleged.

In fact, Altoona's projected benefit obligation was then $373 million: Defendants had understated the liability by approximately $132.5 million," the civil complaint says.

Because the CBIZ report did not show the true liability, the Altoona hospital's profit was at least $18 million less than the earnings statement showed for the year leading up to the sale, the lawsuit says.

"Had the true state of affairs been known, UPMC likely would not have acquired Altoona, or in the very least, would have negotiated and structured a different deal for Altoona. Now, UPMC owns an entity, Altoona, whose obligations are substantially greater than UPMC had bargained for," the court papers say.

Responding to the lawsuit, lawyers for CBIZ have held that their reports were strictly for Altoona's former owners and were not meant to be relied on by another entity with interest in purchasing the hospital.

Lawyers for CBIZ did not respond to requests for comments. UPMC vice president Paul Wood, chief information officer, said the health system would have no more information at this time.