AG Henry Agrees to Suspend Lawsuit Against Prospect Medical Holdings as Company Pursues Sale of CrozerHealth in Delaware County

October 19, 2023 | Topic: OAG News

HARRISBURG — Attorney General Michelle Henry has agreed to suspend her office’s ongoing litigation against Prospect Medical Holdings, Inc., to allow the company to pursue sale of Prospect Crozer, commonly known as CrozerHealth, in Delaware County.

In 2016, Los Angeles-based Prospect Medical purchased the Crozer-Keystone Health System, the parent company of the Crozer Hospital in Chester, Delaware County Memorial Hospital in Drexel Hill, and two other hospitals in Delaware County. Prospect sought to close Delaware County Memorial Hospital even though it was obligated by its original asset purchase agreement to keep the hospital open until at least 2026. The Attorney General joined litigation filed by the Foundation for Delaware County to enforce the original agreement and keep the hospital open. The Pennsylvania Department of Health closed the hospital in November 2022 after it did not have adequate staffing for several departments. Prospect denies violating the original purchase agreement or engaging in any unlawful conduct. 

The Office of Attorney General’s Charitable Trusts and Organizations section oversees transactions of non-profit entities to for-profit companies.

“Every Pennsylvanian deserves access to affordable and accessible healthcare, and our focus is on maintaining the entire Crozer system as a hub of care in its community, as the sales agreement assured” said AG Henry. 

Subject to court approval, the litigation will be suspended for 270 days from the date of the signed order, though that may be extended.

When Prospect purchased the hospital in 2016, it committed to keeping the former Crozer-Keystone hospitals open for at least 10 years, unless The Foundation for Delaware County consented to any of their closures before then. 

Preservation of the hospital’s critical health care services in the community was a requisite condition upon which The Foundation and the Commonwealth relied in assessing the benefits and/or potential damages of Prospect’s purchase of the Delaware County hospitals. 

The Office of Attorney General played a key part in the preservation of this care during the non-profit to for-profit transition. This case is being handled by Deputy Attorney General Pamela Fingerhut. 

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