Harrisburg, PA- Attorney General Michelle Henry announced a lawsuit against Prospect Medical Holdings, Inc., citing mismanagement and neglect of the Crozer Health System, affecting care for hundreds of thousands in Pennsylvania. The lawsuit alleges breach of a 2016 Asset Purchase Agreement by cutting services and funds diversion to shareholders.
The civil complaint was filed Tuesday, aiming to ensure Prospect Medical funds operating costs until a new owner is found. It also seeks a preliminary injunction to maintain service lines and appoint a receiver to manage Crozer Health System.
The Attorney General’s office, which oversees certain non-profit transactions, initially had concerns about the 2016 sale but agreed when specific conditions were met. The lawsuit emphasizes Prospect’s failure to uphold obligations, leading to hospital closures and service suspensions.
The complaint highlights the diversion of over $450 million to investors and inadequate funding of pension accounts. Current operations at Crozer-Chester Medical Center and Taylor Hospital serve over 500 patients daily. The Attorney General seeks immediate judicial intervention.