The North Dakota Hospital Association and a subsidiary filed for Chapter 11 bankruptcy following a $1 million judgment in an age discrimination lawsuit.
The June 24 filing will protect them from creditors during reorganization. A spokeswoman said the association, which has 50 members, will continue to function as usual.
In February, a Grand Forks County jury awarded $1 million to two former employees of Hospital Services, a for-profit subsidiary that acts as a collection and buying agent for member hospitals.
The employees-a vice president of collections and a vice president of purchasing-were ages 59 and 55, respectively, when they were fired in 1989. They claimed discrimination because they were the oldest employees at the time and the only two to be fired. The association denies any age bias.
The case is on appeal to the state Supreme Court, but the plaintiffs have tried to collect by levying the association's bank accounts.
Under state law, the plaintiffs probably will never recover more than the value of the association's assets, which amounts to $100,000 to $200,000, said attorney Roger Minch, who filed the bankruptcy petition for the association.
"The hospital association and Hospital Services have no power to assess their members to get these judgments paid," he said.
The association's annual revenue from dues is about $500,000.
It has 120 days to file reorganization plans.