Pennsylvania Attorney General Michelle Henry files suit against Prospect Medical Holdings, alleging that Prospect Medical Holdings mismanaged and neglected Crozer Health System, leading to the closure of two hospitals in Delaware County. woke up.
The lawsuit, filed on Tuesday, October 29, 2024, alleges that Prospect Medical has cut services and closed facilities while diverting funds to private shareholders and investors instead of supporting the medical network. The lawsuit accuses the company of violating a 2016 asset purchase agreement. The civil lawsuit asked the company to cover operating costs until a new owner is found.
“The lawsuit also seeks a preliminary injunction to maintain existing service lines to avoid additional closures or service reductions, and the appointment of a receiver to manage Crozer Health System in the interim.” wrote a spokesperson for the attorney general’s office.
The attorney general’s office said it initially had concerns about the 2016 acquisition, but agreed after a court order included “certain conditions of sale.” The purchase agreement included the continuation of all acute care
“We are taking legal action against companies that agreed to prioritize affordable and accessible health care, but instead they have committed years of neglect and self-interest,” said Attorney General Henry. “By doing so, they are breaking their promises and putting lives at risk.” “My office is the last line of defense for Pennsylvanians who are losing quality, convenient health care to corporate greed. Prospect Medical’s actions will almost certainly result in future closures and patients in emergency care.” Since I would be forced to travel far for treatment, I had no choice but to file a lawsuit.”
Henry said the original purchase agreement included keeping all acute care hospitals open for at least 10 years. The lawsuit accuses Prospect Medical of mismanaging and diverting more than $450 million to private investors through “sophisticated financial transactions,” including real estate sales and lease agreements for hospital assets. Henry said the failure led to the closure of Delaware County Memorial Hospital and Springfield Hospital, and the suspension of related medical services.
While Crozer-Chester Medical Center and Taylor Hospital remain open, Prospect Medical anticipates the closure of trauma, burn, maternal and child services and women’s health services at Crozer-Chester, Henry said.
Crozerchester Hospital and Taylor Hospital both serve an average of more than 500 patients each day.
A spokesperson for Prospect Medical issued a statement following the lawsuit, calling it “hasty, ill-considered and completely unnecessary.”
You can read their full statement below.
