King of Prussia, Pa.-based Universal Health Services faces $895 million in damages over alleged child abuse at some of its behavioral health subsidiaries, with operations and capital resources expected to be "materially adversely impacted" as a result of the resolutions, the company said in financial documents published Sept. 27.
Seven things to know:
1. New Kent, Va.-based Cumberland Hospital for Children and Adolescents, a UHS subsidiary, is a defendant in lawsuits in Richmond, Va., involving allegations of inappropriate sexual contact by Daniel Davidow, MD, an independent contractor and former medical director at Cumberland. Plaintiffs brought claims against Cumberland, Dr. Davidow and UHS that included negligence, assault and battery, false imprisonment and violations of the Virginia Consumer Protection Act All defendants deny liability.
2. Three plaintiffs' claims were consolidated for trial in September, with UHS and UHS Delaware dismissed from the case.
3. On Sept. 27, 2024, a jury found Dr. Davidow and Cumberland liable, awarding $60 million in compensatory damages, $180 million in trebled damages under the VCPA and $120 million in punitive damages.
4. Cumberland "strongly disagrees with the jury's verdict" and intends to challenge the verdict and damages through post-trial motions and appeal, Joseph Farchione, trial counsel for Cumberland, said in a statement shared with Becker's.
5. About 40 additional plaintiffs have similar claims pending in the Cumberland litigation.
6. Separately, on March 28, a jury ruled that negligence on the part of Champaign, Ill.-based Pavilion Behavioral Health Services was the proximate cause of the rape of a 13-year-old patient by another patient, according to The News-Gazette. The jury awarded $60 million in compensatory damages to the plaintiff, the victim's mother, and $475 million in punitive damages, which the Pavilion is challenging. UHS said a decision on post-trial motions is pending, and an appeal may follow.
7. There is still a "great deal of uncertainty" around how the verdicts against UHS will affect the health system's finances, CFO Steve Filton said. "While professional liability insurance covers part of these amounts, the resolutions could materially affect the company," the health system said in a Sept. 27 SEC filing. "UHS has $221 million in remaining insurance coverage for the 2020 policy year, but significant claims or bond requirements could negatively impact future operations and capital resources."