NCRIC Group Reports Adverse Verdict in Premium Collection Litigation

NCRIC Group, Inc. reported that a District of Columbia Superior Court jury on Monday returned a verdict in favor of Columbia Hospital for Women Medical Center, Inc. (CHW) in the premium collection litigation between its subsidiary NCRIC, Inc. and CHW.

The verdict came in a civil action stemming from NCRIC, Inc.’s efforts to collect payment for nearly $3 million in premiums that the company alleged it was owed by CHW under a contract with the hospital that expired in 2000. The jury rejected the claim by NCRIC, Inc. and returned a verdict in favor of CHW counterclaims that essentially blamed NCRIC for the hospital’s failure. The jury awarded $18.2 million in damages to CHW.

NCRIC intends to promptly appeal this verdict. NCRIC is consulting with its legal and accounting advisors to determine the appropriate financial reporting for this matter.

“We are extremely disappointed by the verdict,” R. Ray Pate, Jr., NCRIC president and CEO, said. “We believe the verdict is wrong, and we will vigorously appeal.”

“It’s appalling that Columbia’s management targeted NCRIC as a scapegoat for the hospital’s failure,” Pate continued. “This outcome was driven by misguided sympathy for a failed hospital that had been on a downward spiral for many years. As several witnesses testified, the hospital failed because of poor management, persistent financial crises, and industry trends that have resulted in the closure of hundreds of urban hospitals over the last decade. NCRIC has long demonstrated its commitment to healthcare in the District of Columbia by providing reliable insurance that has allowed physicians to continue practicing at hospitals in the city,” he said.

Pate said NCRIC is hopeful the verdict will be overturned on appeal. “We believe we have strong grounds for appeal since this verdict was apparently based on emotion, not facts or the law,” he added.

The company noted that seven of the 11 original counterclaims in the CHW complaint had been dismissed by the judge before the case reached the jury.

NCRIC said an adverse judgment on appeal could have a material adverse effect on the company and could also significantly threaten the healthcare system in the District of Columbia.