Stern’s decision to grant a preliminary injunction requested by Attorney General Peter Neronha follows a lawsuit filed by Neronha against Prospect late last year.
At the time, Neronha alleged Prospect had violated a number of terms from a 2021 agreement with his office that was meant to ensure, at least through 2026, the operation of two safety-net hospitals.
“I appreciate Judge Stern’s decision and careful consideration of this matter,” Neronha said in a statement. “As we argued, and the Court ordered, Prospect Medical Holdings must comply with our 2021 HCA decision, including paying $17 million within the next 10 days for outstanding invoices owed to vendors of Our Lady of Fatima Hospital and Roger Williams Medical Center, to facilitate the continuation of safe, reliable patient care at these two essential safety-net hospitals. The decision unambiguously and correctly concludes that Prospect repeatedly failed to comply with important conditions set in our 2021 decision.”
Neronha’s lawsuit charged in part that Prospect had fallen $24 million behind in paying vendors for Roger Williams Medical Center in Providence and Our Lady of Fatima Hospital in North Providence, jeopardizing them, and that a number of elective surgeries had been canceled.
In his decision, Stern wrote that Prospect’s “use of the hospitals as a private bank and treatment of accounts payable as a credit facility loan in violation of the conditions [from 2021] and the HCA [Hospital Conversions Act] constitutes irreparable harm.”
Neronha added. “The Court also confirmed the wisdom of our requirement that Prospect put $80 million in escrow in 2021, subject to our control, when it noted ‘[the Attorney General’s] trepidation in approving [Prospect’s] purchase of the Hospitals has proven to be well-placed as [Prospect] benefits from the Hospitals’ government assistance while refusing to pay the Hospitals’ expenses.’ “
Neronha and the state Department of Health are expected to make a decision any day now on a proposal by the nonprofit Centurion Foundation, based in Atlanta, to buy the hospitals’ immediate parent, CharterCARE Health Partners.
Stern closed the hearing process in this matter to the public — a situation criticized by Neronha.
CharterCARE spokesman Otis Brown declined a request for comment Last year, he blamed a data breach for affecting Prospect’s financial operations.
