PA AG Sues Crozer Health Owner Over 'Corporate Looting' Of System

DELAWARE COUNTY, PA — Amid ongoing turmoil regarding Crozer Health System in Delaware County, the Pennsylvania Attorney General's Office announced it is suing the system's parent company, accusing it of "corporate looting."

Pennsylvania Attorney General Michelle Henry said Tuesday in Delaware County that her office has filed a civil lawsuit against Prospect Medical Holdings, which took over the formerly non-profit healthcare system in 2016.

Henry said during a news conference that Prospect neglected the hospital system, its patients, and its staff since 2016.

"This legal action seeks to ensure accessible, affordable healthcare, which should be available to every Pennsylvanian, including the residents of Delaware County and surrounding areas," she said. "Our legal action shows how corporate greed has severely harmed Delaware County's largest healthcare provider, its patients, its staff, and its community."

Henry said her office has oversight over transactions regarding certain non-profit entities, such as hospitals, being sold to for profit entities. This helps ensure charitable assets retain charitable purposes.

Back in 2016, the AG's office had concerns about the sale, and added conditions to the sale, including no hospital closures and no substantial service cuts for at least a decade. Those conditions were ordered by a court to be applied to the sale.

Despite those conditions, Henry said Prospect sold all Crozer real estate to a private equity buyer, resulting in substantial payouts to Prospect's shareholders.

She said the sales resulted in profits of $457 million. Those funds, she said, should have been reinvested into the system.

After the sale, Henry said the buildings were leased out at "astronomical rates" to the hospitals.

She said Prospect also closed Springfield and Delaware County Memorial hospitals, despite the court-imposed condition to not close the facilities.

Crozer Chester Medical Center, while still open, is "hemorrhaging millions of dollars a month in operating costs," she said. The suit seeks to have Prospect pay those costs while new ownership is sought.

The suit also aims to have an independent third party appointed by a court to oversee the Crozer system until a new owner can be put in place.

Henry said it's unclear who might take over the system, but that the focus now is to keep Crozer Chester and Taylor hospitals open, staffed, and funded.

Delaware County Council President Monica Taylor said Crozer is a cornerstone of healthcare in the county and that Monday's announcement marks a milestone.

She said the decline in quality in the system under Prospect has severely impacted providers' ability to appropriately care for Delaware County residents.

Taylor said the action is not only aimed at holding Prospect accountable, but to give residents the medical services they need and deserve.