CBIZ, provider of financial, insurance and advisory services, has announced an agreement to settle the previously disclosed University of Pittsburgh Medical Center (UPMC) and UPMC Altoona v. CBIZ, Inc., CBIZ Benefits and Insurance Services, Inc. and Jon S. Ketzner lawsuit filed in the U.S. District Court for the Western District of Pennsylvania.
CBIZ said the case was brought in connection with actuarial services provided by a former employee and relates to a transaction that occurred eight years ago.
Plaintiffs sought compensatory damages of between $124m and $266m, plus interest and punitive damages.
Under the terms of the settlement, CBIZ revealed it will pay a one-time total settlement amount of $41m, the impact of which will be mitigated by available errors and omissions insurance proceeds and applicable reserves of approximately $11.1m.
After taking into account insurance and reserves, CBIZ said it expects to record a one-time after-tax charge to earnings of approximately $22.8m that will impact 2021 second-quarter and full-year diluted earnings per share by approximately $0.42.
CBIZ also confirmed the settlement does not constitute an admission of liability, culpability, negligence, or wrongdoing on the part of CBIZ.
It said it believes the settlement is “in the best interests” of the company and its shareholders, adding the settlement reflects the company’s “desire to forgo further litigation uncertainty, risk, expense, and potential damages, and to eliminate further distraction from business focus associated with continuing lengthy and complex litigation and appeals”.
Jerry Grisko, president and CEO of CBIZ, said: “We are pleased to have the risk and uncertainty of this lawsuit behind us and to focus our time, attention and resources on opportunities to continue to build and support our team, serve our clients and invest in initiatives to accelerate the growth of our business.
“As of the end of May, our business continues to perform very well with earnings in line with expectations (aside from the impact of this settlement), strong cash flows, and a healthy balance sheet. After payment of this settlement, the unused capacity on our $400 million credit facility will be approximately $200m.”
He added: “ Our strong and steady cash flow and access to borrowing provide us with more than sufficient capital to support ongoing operations, fund foreseeable acquisitions and continue with planned share repurchases. We look forward to providing further details and updates on our upcoming second-quarter earnings release and conference call.”