Suit Involving Firm’s Discontinued Computer Systems : Award Against Northrop Killed

An $18.3-million civil award won by a Wisconsin medical group in late December from Northrop Corp. was thrown out on legal technicalities Thursday by Torrance Superior Court Judge Morio L. Fukuto.

The original award, which was handed down by Los Angeles arbitrator Joseph Jacob Aron, was ruled invalid because Aron awarded $18 million in punitive damages about three weeks after he had awarded $335,094 in compensatory damages.

The case was brought by Richland Medical Group, a Wisconsin medical practice that alleged that the Los Angeles-based aerospace and electronics firm had fraudulently sold and promoted its now discontinued line of commercial computer systems for medical office bookkeeping.

The suit contended that the system suffered severe software defects and was delivered with a number of programs missing.

Northrop officials could not be reached for comment Thursday but have said little about the case in the past.

Fukuto threw out the award during a confirmation hearing, which is required in arbitration awards and is normally considered a routine procedure.

Herbert Hafif, the attorney representing the doctors, said he intends to file a federal racketeering suit against Northrop within 60 days rather than seek a new arbitration trial or appeal Fukuto’s ruling.

Hafif, who represents 19 doctors or medical groups in such lawsuits against Northrop around the nation, said he “now has very hard evidence of damages due to Northrop’s tactics.”

Hafif alleged in court Thursday that Northrop’s “obstruction-of-justice tactics” were specifically designed to create the very delay in Aron’s procedure that was cited by Fukuto. He indicated that his racketeering suit will be based on Northrop’s allegedly illegal conduct.

Last December, Hafif submitted four volumes of bound evidence to the Los Angeles County district attorney’s office alleging, among other things, that Northrop and its representatives had engaged in perjury, criminal obstruction of justice and intimidating witnesses and the arbitrator.

Northrop sued Aron, which Hafif maintains was an effort to intimidate Aron when it became clear that he was going to rule against Northrop.

Attorneys in the office said the charges are being investigated.