Pittsburgh-based UPMC has agreed to settle a $100 million civil lawsuit accusing a Cleveland-based financial services and insurance company of underestimating the health system's pension liability, according to the Altoona Mirror.
UPMC sued CBIZ, its affiliates and a retired employee, Jon Ketzner of Cumberland, Md., about five years ago.
At issue in the lawsuit is the pension liability that UPMC was accepting when Altoona (Pa.) Regional Health System, now UPMC Altoona, merged with UPMC in 2013.
During a due diligence process before the purchase, UPMC reviewed an actuarial report by Mr. Ketzner that projected $63.6 million in future expenses associated with Altoona Regional's union and nonunion pensions, according to the report.
But, the Altoona Mirror reported, after an actuary in the CBIZ office, who took over Mr. Ketzner's position after he retired, questioned that estimate following the hospital purchase by UPMC, there was a new estimate of pension debt of more than $214 million.
UPMC filed a civil lawsuit seeking more than $100 million in damages, claiming Mr. Ketzner underestimated the pension obligation amount, and alleging professional negligence, breach of contract and negligent misrepresentation.
CBIZ sought to dismiss the case, arguing that UPMC's claims were "speculative", and that the health system did not suffer damages because of Mr. Ketzner's estimates, according to the Altoona Mirror. However, U.S. District Judge Kim Gibson with the Western District of Pennsylvania refused to do so, and a jury trial began June 2.
According to the report, the trial ended when the judge on June 24 said the two sides agreed to reach a settlement within 21 days.
Read the full report here.