Court unseals Attorney General’s lawsuit against owners of Fatima and Roger Williams to enforce HCA conditions

Complaint filed last week demands Prospect fully fund operations at the two safety-net hospitals

 

 

PROVIDENCE, R.I. – Attorney General Peter F. Neronha announced today that the Superior Court has granted his motion to unseal the lawsuit the Office filed last week against Prospect Medical Holdings (Prospect), seeking to enforce the conditions of a 2021 decision imposed to ensure the continuity of health care services and operations at Fatima and Roger Williams Hospitals.

 

As alleged in the Petition to Enforce, filed under seal on November 8, 2023 in Providence County Superior Court, Prospect violated a series of conditions of the Attorney General’s 2021  Hospital Conversions Act (HCA) decision, raising significant concerns about continuity and quality of hospital operations. The Petition was filed under seal pursuant to Prospect’s legal right to claim that information contained in the Petition is confidential. On the Attorney General’s motion, the Court gave Prospect until November 10 to make those confidentiality claims.

 

Today the Court granted the Attorney General’s motion for the filing to be unsealed with limited redactions, and the Office is actively seeking to make more redacted information publicly available.

 

“For nearly three years, this Office has had significant concerns with the financial health of Prospect Medical Holdings and its impact on the continued operation of Roger Williams and Fatima hospitals. Prospect’s financial condition continues to deteriorate; they are closing and otherwise disinvesting in their hospitals across the country. We saw this train coming in June 2021, which is why we imposed unprecedented financial conditions on our approval of the ownership change, including an $80 million escrow. That escrow has provided significant leverage to ensure compliance and continued operation at these two community hospitals, and we have retained a substantial portion,” said Attorney General Neronha.

 

“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 - and our lawsuit is the next step in making sure they do so,” continued Attorney General Neronha.

 

As alleged in the filing, Prospect has violated a series of conditions of the decision, including failure to ensure that vendors serving the hospitals are paid on a timely basis. As alleged, as of October 31, 2023, 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.

 

The filing alleges further violations of conditions, including failing to provide notice of regulatory investigations, and on multiple occasions delays providing required information to the Attorney General’s Office.

 

In the filing, the Attorney General asks the Court to order that Prospect comply with all conditions under the Attorney General’s 2021 HCA decision, including to immediately adequately fund the operations of the Fatima and Roger Williams hospitals.

 

The Court has scheduled a hearing on the Attorney General’s petition for a temporary restraining order seeking immediate compliance with decision for November 28, 2023.

 

Attorney General’s 2021 HCA Decision

 

Pursuant to the HCA, the Attorney General regulates, along with the Department of Health, transactions involving the charge in ownership of hospitals.

 

On June 1, 2021, Attorney General Neronha issued a decision to conditionally approve a transaction that would allow Prospect to take ownership of Fatima and Roger Williams hospitals. To ensure the continuity of healthcare services and operations at the hospitals for the benefit of Rhode Islanders, the Attorney General placed strong conditions in approving the change of ownership transaction, which included a full financial commitment to the Rhode Island hospitals to cover operational and capital expenses through 2026. For a full list of conditions, refer to the decision.