In RI and CT, Owner of Roger Williams and Fatima Hospitals Facing Growing Legal Battles
GoLocalProv News Team
In RI and CT, Owner of Roger Williams and Fatima Hospitals Facing Growing Legal Battles
But the Rhode Island legal issues may be dwarfed by Prospect's problems in Connecticut.
In Rhode Island, Superior Court Judge Brian Stern ordered the company to pay $17 million to unpaid vendors on Wednesday.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThe hospital group has just ten days to make the payment.
In part, Prospect argued the payments were not paid due to a cyberattack that hit the hospital last year, but Stern was having none of it.
Stern wrote in his decision:
“Minutes from an AP Task Force meeting on December 4, 2023 reveal the Hospitals' worsening arrears and Respondent's reluctance to provide necessary funds: "[w]e currently owe $42 million, of that, 22 million are over 90 days and $8 million is over 120 days. 2 weeks ago we only received $730,000 and last week $990,000 for bills. We are currently spending $1.6-1.7 million per week which is adding to the deficit." Accordingly, the Court rejects Respondent's argument that the cyber-attack made performance of the accounts payable condition in the Decision impracticable because there is no contract between the parties, Respondent was in violation of Condition 7.2 prior to the cyber-attack, and Respondent has almost fully recovered from the cyber-attack."
Financial Troubles
On November 9, 2023, RIDOH issued an Immediate Compliance Order requiring Prospect — to ensure the continuity of health services and care at the facilities — by acting immediately to stabilize the two facilities financially.
According to the department, bills for supplies are going unpaid, and a result, nearly 20 surgeries had to be cancelled in October of 2023.
This Immediate Compliance Order was issued to Prospect Medical Holdings and related entities after a thorough, extensive review by RIDOH determined that Prospect’s underfunding of the hospitals is impacting operations.
A RIDOH investigation revealed that, as of October 24, more than 250 of the hospitals’ approximately 830 vendors were operating with the hospitals on a “cash on demand” basis. This means they only deliver supplies if they are paid at the time of delivery. This is generally reserved for payors with a history of non-payment. The average time it takes the hospitals to pay bills (“days payable outstanding,” or DPO), was in excess of the 90-day limit set when the acquisition of the facilities was approved in 2021.
Unpaid vendors have included suppliers of hip joints, catheters, endoscopes, and eye lenses. The procedures that were canceled included endoscopies, eye surgeries, and a spinal surgery. There is no indication that issues with vendors ever prevented emergency procedures from being performed.
And all this while Prospect is trying to sell CharterCare to a Georgia entity.
As GoLocal unveiled in December of 2023, CharterCare, Rhode Island's third-largest healthcare group, is trying to conclude a deal with The Centurion Foundation (Centurion), is a Georgia-based foundation that has just one full-time employee, according to the Foundation’s most recent tax documents.
The Rhode Island Attorney General and the Rhode Island Department of Health are presently reviewing that proposed sale.
However, the $17 million payment in Rhode Island is minor compared to Prospect’s failed sale of three hospitals in Yale New Haven in Connecticut.
Connecticut Litigation
Yale New Haven Hospital was to purchase three hospitals from Prospect, but that deal is now embroiled in litigation.
The deal was set to close this year, but Yale New Haven bowed out.
In recent weeks, the conflict heated last week after Prospect sued the hospital’s would-be buyer, Yale New Haven Health, alleging the health system had “actively worked to prevent” the deal from closing in a bid to get a lower purchase price.
According to Healthcare Dive, "Yale signed a binding agreement to acquire three hospitals from Prospect in 2022 for $435 million. However, the health system alleges Prospect has neglected the properties since that time, driving the facilities into “dire” conditions. Last month, Yale filed its own suit to get out of the deal. Now Prospect is petitioning Connecticut’s Superior Court to hold Yale to its word and force it to complete the deal. The complaint alleges Yale 'knew it was purchasing struggling hospitals' and had agreed to acquire the facilities on an 'as-is' basis.