In a newly unsealed Superior Court lawsuit against Prospect Medical Holdings, Rhode Island Attorney General Peter Neronha said Prospect is violating a number of conditions from his 2021 decision and he said his concern about Prospect’s two Rhode Island hospitals “is greater than it has ever been.”
Prospect owns CharterCARE Health Partners, owner of Roger Williams Medical Center in Providence and Our Lady of Fatima Hospital in North Providence.
In a statement, Neronha said his office alleges that as Oct. 31, “Roger Williams and Fatima together owed more than $24 million in accounts payable to vendors that were 90 days or more past due, jeopardizing the financial health and stability of the hospitals, and ultimately patient care.”
Prospect has closed and degraded hospitals across the country while directing hundreds of millions of dollars in dividends to top executives and other investors.
Amid a proposed change in the company’s ownership in 2021, Neronha ordered Prospect to provide $80 million in escrow as a form of leverage to ensure the operation of Roger Williams and Fatima.
The Public’s Radio reported last week on how Neronha, through a sealed court document, and the state Health Department took separate, initiated disconnected actions against Prospect Medical.
On Friday, Neronha said, “As it stands today, our concern is greater than it has ever been, which is why we took decisive action in court last week. We need to ensure the continued viability of these hospitals for as long as we can. They are integral to our community network of care and employ thousands of Rhode Islanders. Prospect needs to fulfill their legal, and frankly ethical, obligations to Rhode Islanders.”
Other violations of conditions alleged by Neronha’s office include “failing to provide notice of regulatory investigations, and on multiple occasions delays providing required information.”
Neronha said his office is working to make public more information about the situation, and that the lawsuit was filed to get Prospect Medical to comply with his 2021 decision.
A hearing on his lawsuit is scheduled for Nov. 28.
Roger Williams and Fatima are among the largest employers in their respective communities.
In a statement, Otis Brown, spokesman for Prospect Medical’s Rhode Island properties, blamed a data breach for negatively affecting the company’s financial operations.
“Over the past several months, Prospect has been working diligently to resolve the impact of a data security incident that disrupted the financial and clinical systems at all our facilities across the country for approximately six weeks,” Brown said. “During this time, we were unable to bill or collect payment for the medical services we continued to provide during the disruption. In Rhode Island, more than $30 million of cash collections have been delayed as a result of the cyber incident. These systems are now fully restored, our operations are back to normal, and our catch-up billings and collections from the cyber incident will rectify over the coming months. “
Brown said Prospect and CharterCARE hope to return the Rhode Island to not-for-profit status.
An Atlanta-based foundation submitted this week a revised application to buy CharterCARE from Prospect Medical.
Ian Donnis can be reached at idonnis@thepublicsradio.org