MMP&S Obtains a Full “No Cause” Defense Verdict in a $15 Million Federal Accounting Malpractice Action

After a five-day jury trial in the U.S. District Court for the District of New Jersey, MMP&S partners Andrew Pisanelli and David Montag obtained a full “no cause” defense jury verdict in favor of an accounting firm that had audited a not-for-profit entity that operated the struggling Hoboken University Medical Center before the operator filed for bankruptcy in 2011, entirely avoiding alleged damages in excess of $15 million.

In the trial in the action, entitled Bernard A. Katz, in his capacity as Debtor Representative and Liquidating Trustee of the Estate of Hudson Healthcare, Inc. v. Harvey Holzberg, et al., the jury unanimously found that, although the accounting firm’s 2007 and 2008 audits of the operating entity may not have complied in all respects with the standard of professional care, the accounting firm’s work was not the proximate cause of the hospital’s operator’s ultimate insolvency.

“The full ‘no cause’ defense verdict of this type is rather unusual and is considered the ‘unicorn’ of defense verdicts,” MMP&S partner, Andrew Pisanelli, who tried the case, commented. “Typically, if a jury finds fault or a departure from the professional standard of care, it also finds proximate causation. Here, this jury was clearly listening closely to the testimony, and appropriately evaluated the full picture of the hospital’s ongoing operations during the period of the alleged deepening insolvency, claims by the bankruptcy trustee against the hospital’s executives, its board of directors, and the hospital’s subsequent auditors, and the opinions of auditing expert witnesses. Our accounting firm client is exceedingly pleased with the jury’s verdict and result of the trial.”


Practice Area: Accountants