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11/14/2001

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PITTSBURGH, November 14, 2001 — On Nov. 12, the three-member panel that was convened to arbitrate the dispute between UPMC Passavant and University of Pittsburgh Medical Center rendered its award (the decision of an arbitration panel), thus ending a two-and-one-half year dispute between the two parties. This award reaffirms in every respect the validity and authority of the merger agreement, denies UPMC Passavant’s claim to void it, and underscores the ultimate authority of the University of Pittsburgh Medical Center Board. The ruling also denies UPMC Passavant’s claim that the System has breached the agreement in any material way.

As a result of this award, no changes will be made in any part of the merger document, including the rights and responsibilities of each party and the length of the five-year integration period.

The arbitrators also upheld UPMC’s Passavant’s claim that it is the responsibility of University of Pittsburgh Medical Center to contribute $45 million of its funds to be matched by $45 million from the Passavant Foundation for the purpose of supporting an approved capital improvement plan at UPMC Passavant. Throughout the arbitration process, UPMC repeatedly reassured UPMC Passavant that it would meet all of its financial obligations under the merger agreement.

Jeffrey Romoff, president of University of Pittsburgh Medical Center, in commenting on this decision said, “We fully support the arbitrators’ decision and look forward to working constructively with our colleagues on the board, medical staff and management of UPMC Passavant. While we greatly regret the time, energy and money spent on these proceedings, we are pleased to continue to provide the finest medical care available to the citizens of the North Hills through UPMC Passavant. This always has been the main focus of both parties and has never been an issue of dispute.”