Pennsylvania Attorney General Michelle Henry filed a lawsuit against Prospect Medical Holdings, accusing the health care company of mismanaging and neglecting the Crozer Health System, leading to the closures of two hospitals in Delaware County.
The lawsuit – filed on Tuesday, Oct. 29, 2024, -- accuses Prospect Medical of breaking the 2016 Asset Purchases Agreement by cutting services and closing facilities while diverting funds to private shareholders and investors instead of supporting the health care network. The civil complaint required the company to fund operating costs until a new owner is in place.
“The lawsuit is also seeking a preliminary injunction to preserve existing service lines, the appointment of a receiver to manage the Crozer Health System for the immediate future to avoid additional closures and cuts to services,” a spokesperson for the Attorney General’s Office wrote.
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The Attorney General’s Office said they had initial concerns about the 2016 purchase but agreed to it after “certain conditions of sale” were included in the court order. The purchase agreement included keeping all acute care
“We are taking legal action against a company which agreed to prioritize affordable, accessible healthcare — but instead broke their promise with years of neglectful, self-serving practices that have put lives at risk,” Attorney General Henry said. “My office is the last line of defense for Pennsylvanians who are losing quality, convenient healthcare due to corporate greed. We had no choice but to file suit as Prospect Medical’s conduct will almost certainly result in future closures that will force patients to travel distances for emergency care.”
The initial purchase agreements included keeping all acute care hospitals open for at least 10 years, Henry said. The lawsuit accuses Prospect Medical of mismanaging and diverting more than $450 million to private investors through “sophisticated financial transactions,” including real estate sale-lease agreements of hospital assets. The mismanagement led to the closures of Delaware County Memorial Hospital and Springfield Hospital as well as suspensions of related health care services, according to Henry.
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While Crozer-Chester Medical Center and Taylor Hospital remain open, Prospect Medical anticipated suspensions of trauma, burn, maternal child services and women’s health services at Crozer-Chester, Henry said.
Crozer-Chester and Taylor Hospital both provide services to more than 500 patients each day on average.
A spokesperson for Prospect Medical released a statement in response to the lawsuit, calling it “hasty, ill-considered, and complete unnecessary.”
You can read their entire statement below:
