Universal Health Services (NYSE: UHS) intends to challenge a recent verdict that would require the company to pay $535 million in damages related to a sexual assault suit.
Pavilion Behavioral Health System, a subsidiary of UHS, denied any liability in a case that alleged that an underage patient was sexually assaulted by another underage patient in 2020.
The case, which included negligence and misrepresentation claims, went to trial in March. The jury awarded the plaintiff $60 million in compensatory damages and $475 in punitive damages.
The verdict was described as “unprecedented,” according to a report filed by UHS and signed by Steve Filton, the company’s executive vice president and chief financial officer.
Pavilion, located in Champaign, Illinois, is a 122-bed behavioral health facility offering services for children ages 4 to 11, adolescents ages 10 to 18, adults and seniors. Its services include acute inpatient, intensive outpatient and partial hospitalization, residential and addiction recovery services.
The provider’s pediatric and adolescent unit is housed in a “secure, nurturing environment,” according to its website.
Pavilion intends to challenge the verdict in post-judgment trial court proceedings and on appeal. Although Pavilion has professional liability insurance, if the provider’s challenge is unsuccessful, the payout would have a “material adverse effect on the company,” according to the report.
Most of UHS’ subsidiaries are self-insured for professional liability exposure up to $10 million for events that occurred in 2020, according to a note by investment banking firm Stephens. They are also provided with several excess insurance policies through commercial payers for coverage. The total insurance coverage including the excess policies is approximately $250 million during each year from 2014 to 2022. UHS may also have elected to buy additional commercial insurance for its businesses.
The analyst note from Stephens reiterated that severe claims may adversely affect UHS’ future operations.
UHS has previously faced significant lawsuits. In 2020, UHS paid out $122 million in a lawsuit that alleged the company had billed for unnecessary inpatient behavioral health services and received illegal kickbacks. The company denied all allegations from the suit.
UHS isn’t the only behavioral health provider that has faced a large lawsuit recently. In July 2023, a jury in New Mexico ruled that Acadia Healthcare (Nasdaq: ACHC) pay $405 million in damages to a plaintiff involving a case of sexual abuse of a child.
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