Prudential is sued by Hopkins

April 02, 1994|By David Conn | David Conn,Sun Staff Writer

The Johns Hopkins Health System has filed a lawsuit accusing the Prudential Insurance Co. of America and one of its executives, Barbara B. Hill, of negotiating in bad faith to sell part of Hopkins' health maintenance organization to Prudential while Ms. Hill was still working for Hopkins.

Ms. Hill, who was president of The Johns Hopkins Health Plan HMO until 1991, negotiated the sale of the HMO's insurance and administrative operations to Prudential, according to the suit, which was filed in Baltimore City Circuit Court on March 4. The medical operations of the HMO remained with Hopkins after the sale.

The suit alleges that Ms. Hill, while president of the HMO, received a promise of future employment from Prudential as well as a guarantee from Hopkins of several hundred thousand dollars in severance payments for her and her executive staff, including her husband.

In return, Ms. Hill persuaded the Hopkins board of trustees to accept Prudential's purchase bid over a competing offer from Aetna Life Insurance Co., even though Aetna's bid was more favorable to Hopkins, according to the suit. The purchase price was not disclosed, either at the time of the sale or in the lawsuit.

The suit accuses Ms. Hill of breaching her fiduciary and contractual duties to Hopkins, and it accuses Prudential of breaching its contracts with Hopkins after the sale of the HMO, in May 1991.

Hopkins seeks more than $50 million in compensatory and punitive damages from Ms. Hill and Prudential, an annulment of the sale to Prudential and "a restoration of the status quo prior to the asset sale."

Both Prudential and Ms. Hill dismissed the suit as groundless yesterday, saying that new leadership at Hopkins, upset with the loss of a valuable business, is trying to reverse the sale through the lawsuit.

"Because I was scrupulous in my dealings with both my former and current employers, I do not fear this suit," Ms. Hill said in a statement.

Prudential said it "will vigorously defend The Prudential's and Barbara Hill's position," according to a statement from William Link, chairman of the company's group insurance operations. "The evidence that Barbara Hill behaved honorably in negotiations with Hopkins is both definitive and voluminous."

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