Prime: Bidder for CharterCARE Turned Around Landmark, and Has Paid $100M in Settlements to Feds
GoLocalProv News Team
Prime: Bidder for CharterCARE Turned Around Landmark, and Has Paid $100M in Settlements to Feds
One is Centurion Foundation, a non-profit located in Georgia, which has a few staffers and refuses to invest any of its own money into the deal. Centurion has little money and its deal has stagnated for more than three years.
According to Centurion’s most recent 990 tax filing for 2023, the company had revenue of just $8 million and negative net income of $255,886 — not exactly the resources to take over a hospital system that has been losing tens of millions annually.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThis deal has floundered.
Enter the second potential purchaser — for-profit Prime Healthcare, through its non-profit arm, Prime Healthcare Foundation. Combined, the two own hundreds of healthcare facilities and operations.
More than a decade ago, Prime Healthcare bought Woonsocket-based Landmark out of receivership and has received good grades for turning the failed hospital around.
But, in 2017, Prime improperly converted Landmark from a for-profit to a non-profit and was fined an unprecedented $1 million by the Rhode Island Department of Health.
And since then, Prime Healthcare has been forced to pay massive amounts — in excess of $100 million to resolve cases with the U.S. Department of Justice — READ MORE BELOW.
In a statement to GoLocal, Noel True, Regional Vice President of Communications & Public Relations of Prime Healthcare wrote, “Across its 18 hospitals nationwide, the Prime Healthcare Foundation, a nonprofit 501(c)(3) public charity, has made sustained investments to strengthen operations, expand services, and ensure award-winning quality care for the patients and communities it serves.”
“Several hospitals have been donated from the Prime Healthcare system to the Prime Healthcare Foundation debt-free and at no cost to the Foundation, giving them to communities so they can serve as nonprofits for generations to come. Both organizations have independent boards and governance structures, with limited shared leadership and a common mission and values,” added True.
As GoLocal was first to report on Tuesday, Prime entered the competition to acquire CharterCARE.
And, GoLocal was the first to report on Friday morning that Chief Judge Stacey Jernigan of the U.S. Bankruptcy Court for the Northern District of Texas approved a series of motions that will keep the two CharterCARE hospitals open for 60 days.
As a part of the motions, Rhode Island functionally has two months to strike a deal with either the fledgling Centurion or the new player in the game, the for-profit Prime Healthcare, the owners of Landmark in Woonsocket.
True adds in her statement to GoLocal, “The [Prime] Foundation’s successful track record across the nation and in Rhode Island as a trusted steward of a valued community hospital led state leaders to approach Prime Healthcare Foundation regarding its potential role in supporting other hospitals now facing financial distress.
In July of 2021, the United States Department of Justice announced a massive settlement with Prime Healthcare.
The headline of the Department of Justice press release was:
Prime Healthcare Services and Two Doctors Agree to Pay $37.5 Million to Settle Allegations of Kickbacks, Billing for a Suspended Doctor, and False Claims for Implantable Medical Hardware
According to the Justice Department:
One of the largest hospital systems in the nation and two of its doctors will pay $37.5 million to resolve violations of the False Claims Act and the California False Claims Act. The settlement is a joint resolution with the U.S. Department of Justice and the California Department of Justice.
The United States and California entered into a settlement agreement with the Prime Healthcare Services system (Prime), Prime’s Founder and Chief Executive Officer Dr. Prem Reddy, and California interventional cardiologist Dr. Siva Arunasalam to resolve alleged violations of the False Claims Act and the California False Claims Act based on kickbacks paid by Prime to Dr. Arunasalam for patient referrals. Prime includes Prime Healthcare Services Inc., based in Ontario, California; Prime Healthcare Foundation Inc.; Prime Healthcare Management Inc.; High Desert Heart Vascular Institute (HDHVI); and Desert Valley Hospital Inc.
Under the settlement agreement, Dr. Arunasalam will pay $2,000,000; Dr. Reddy paid $1,775,000; and Prime paid $33,725,000. The United States will receive $35,463,057 of the settlement proceeds, and California will receive $2,036,943. Prime and Dr. Reddy paid $65 million to settle previous unrelated allegations of false claims and overbilling in 2018.
“Offering illegal financial incentives to physicians in return for patient referrals undermines the integrity of our health care system by denying patients the independent and objective judgment of their health care professionals,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “Today’s settlement demonstrates the department’s commitment to protect federal health care programs against such violations, as well as other efforts to defraud these important programs.”
“Doctors have a sworn duty to do no harm and to put their patients’ interests first,” said Acting U.S. Attorney Tracy L. Wilkison for the Central District of California. “Kickbacks designed to increase the number of patient referrals corrupt the doctor-patient relationship and needlessly waste this nation’s health care resources.”
“In our cities and neighborhoods, hospitals are where we go for healing and care, which means they have to be a place that the people they serve can trust,” said California Attorney General Rob Bonta. “Today’s settlement should send a message that schemes like those alleged here, that put profits before people and seek to defraud our Medi-Cal program, will not be taken lightly.”
But that case by the Justice Department was not the most significant enforcement action against Prime monetarily.
In August of 2018, Prime resolved another massive enforcement action with the government.
This time the headline was:
Prime Healthcare Services and CEO to Pay $65 Million to Settle False Claims Act Allegations
The Justice Department release read in part:
Prime Healthcare Services, Inc., Prime Healthcare Foundation, Inc., and Prime Healthcare Management, Inc. (collectively Prime), and Prime’s Founder and Chief Executive Officer, Dr. Prem Reddy, have agreed to pay the United States $65 million to settle allegations that 14 Prime hospitals in California knowingly submitted false claims to Medicare by admitting patients who required only less costly, outpatient care and by billing for more expensive patient diagnoses than the patients had (a practice known as “up-coding”), the Justice Department announced today. Under the settlement agreement, Dr. Reddy will pay $3,250,000 and Prime will pay $61,750,000.
“This settlement reflects our ongoing commitment to ensure that health care providers appropriately bill Medicare,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Charging the government for higher cost inpatient services that patients do not need, and for higher-paying diagnoses than the patients have, wastes the country’s valuable health care resources.”
Headquartered in Ontario, California, Prime Healthcare Services and not-for-profit Prime Healthcare Foundation constitute one of the largest hospital systems in the nation, with 45 acute-care hospitals located in 14 states. The following 10 hospital defendants owned by Prime Healthcare Services are parties to the settlement agreement: Alvarado Hospital Medical Center, Garden Grove Medical Center, La Palma Intercommunity Hospital, Desert Valley Hospital, Chino Valley Medical Center, Paradise Valley Hospital, San Dimas Community Hospital, Shasta Regional Medical Center, West Anaheim Medical Center and Centinela Hospital Medical Center. The following 4 hospital defendants, owned by Prime Healthcare Foundation, are also parties to the settlement agreement: Sherman Oaks Hospital, Montclair Hospital Medical Center, Huntington Beach Hospital and Encino Hospital Medical Center. Prime Healthcare Management, a subsidiary of Prime Healthcare Services, provides management, consulting and support services to hospitals owned and operated by Prime.
The settlement resolves allegations that from 2006 through 2013, Prime engaged in a deliberate corporate-driven scheme to increase inpatient admissions of Medicare beneficiaries who originally presented to the Emergency Departments at 14 Prime hospitals in California. The government claimed that the inpatient admission of these beneficiaries was not medically necessary because their symptoms and treatment needs should have been managed in a less costly outpatient or observation setting.
Hospitals generally receive significantly higher payments from Medicare for inpatient admissions as opposed to outpatient treatment; therefore, the admission of beneficiaries who do not need inpatient care, as alleged here, can result in substantial financial harm to the Medicare program. The settlement also resolves allegations that, from 2006 through 2014, Prime engaged in up-coding by falsifying information concerning patient diagnoses, including complications and comorbidities, in order to increase Medicare reimbursement.
“Patients and taxpayers who finance health care programs such as Medicare deserve to know that doctors are making decisions solely based on medical need – and not based on a corporate desire to increase billings,” said First Assistant United States Attorney Tracy Wilkison for the Central District of California. “The Justice Department is committed to preserving the integrity of public health programs and preventing improper billing practices.”
Prime also entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) requiring the company to engage in significant compliance efforts over the next five years. Under the agreement, Prime is required to retain an independent review organization to review the accuracy of the company’s claims for services furnished to Medicare beneficiaries.
“When health care companies try to boost their profits by billing federal health care programs for more expensive services than they needed to provide, the Office of Inspector General will ensure they are held accountable for their deceptive schemes,” said Christian J. Schrank, Special Agent in Charge for the HHS-OIG’s, Los Angeles Regional Office.
“Those who engage in health care fraud, including corrupt doctors and medical professionals driven by greed, exploit helpless or unwitting patients in violation of the oath they took to protect us - and often American taxpayers are the victims,” said Paul D. Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “By reaching this settlement, the FBI and our partners are holding Prime Healthcare accountable for exaggerating patients’ needs and inflating the severity of their symptoms while handsomely lining their pockets. This case should send a clear message to others who intend to engage in similar schemes that rout the American healthcare system.”
Prime's Statement on the DOJ Actions to GoLocal
"Regarding Department of Justice matters, the settlements were reached in full cooperation with the DOJ and with no findings of fault and a complete release of liability. The exceptional care and quality for which Prime Healthcare is recognized were never questioned; rather, the matters involved technical billing issues within a highly complex regulatory environment. These matters were concluded successfully, with independent audit verification showing performance better than peers," wrote True on behalf of Prime.
"Settlements of this type are, unfortunately, common in the industry for many health systems given the incredibly complex, ambiguous, and continuously evolving nature of healthcare regulation. In recent years, several prominent academic and community health systems in the region have resolved similar matters, including Care New England Health System, Massachusetts General Hospital, and Brookline’s New England Baptist Hospital, demonstrating that such resolutions are not unusual across the healthcare sector," she added. "Both Prime Healthcare and the Prime Healthcare Foundation continue to be nationally recognized for award-winning care, clinical excellence, social responsibility, and health equity."
But the companies continue to be scrutinized.
In May of this year, U.S. Senate Democratic Whip Dick Durbin (D-IL) and U.S. Senator Tammy Duckworth (D-IL) sent a letter to the CEO of Prime Healthcare, Dr. Prem Reddy, about the company’s recent acquisition of eight Illinois hospitals that were formerly owned by Ascension. Since acquiring these hospitals in March 2025, Prime has suspended or terminated pediatric, trauma, and maternal care services at some of the locations, creating even more barriers for Illinoisans to access health care.
These hospitals, now owned by Prime, a for-profit hospital system operating 51 hospitals across 14 states, provide health care to Illinoisans who rely on federal health programs, and several of these locations serve a population in which more than two-thirds of inpatients are covered by Medicaid or Medicare.
Despite commitments by Prime to “not make any material reductions to, or material changes in, the mix or level of services offered at any Hospital… to meet community needs,” pediatric services have been terminated at St. John’s Medical Center in Joliet; there has been a withdrawal of the Level II trauma designation at Mercy Medical Center in Aurora; and the comprehensive obstetric and maternal care services at St. Mary’s in Kankakee has been terminated.
“We sincerely urge your health system to immediately reconsider these decisions, as the consequences of these reductions hold the potential to strip patients of critical and specialized care, impose additional barriers to accessing care, and exacerbate the existing health care needs in the communities these hospitals serve,” the Senators wrote.
Back in Rhode Island, there are fewer than 60 days for Rhode Island leaders to present a plan to the bankruptcy Judge in Texas to save CharterCARE or see the hospitals closed.