Prospect has managed to silence one prominent group of Rhode Island critics by reversing course and, on Dec. 30, agreeing to settle multiple fraud lawsuits with a $27.25-million payment. Lee decided to hold off on a sale. Andrews said Prospect marketers insisted that elderly mental health patients from nowhere near Culver City be admitted through the emergency room even when no psychiatric beds were available in the hospital. The lawsuit on behalf of Medical Properties Trust investors has been commenced in the United States District Court for the Southern District of New York. Prospect denied it ever lacked PPE at any of its hospitals. According to her suit, these patients were brought from nursing homes and other senior facilities, many well over 100 miles away, when their Medicare benefits there, capped at 100 days, were about to expire. Prospect is lying in claiming that theyve complied with the order, union general counsel Chris Callaci said. What it will have to offer patients is less clear. You have to send the next closest ambulance. WebProspect Medical Holdings, Inc. | 14,513 followers on LinkedIn. (Moss Adams declined to comment.). (For example, yesterday can be changed to last week, and Portland, Ore. to Portland or here.), You cannot republish our photographs or illustrations without specific permission. (In recent years, his wifes Facebook account has shown him celebrating holidays with her and their three college-age sons; family vacations in Maui, Aspen and Las Vegas; and pilgrimages to the Super Bowl and the American Music Awards.). The rest was distributed in the form of stock options to Prospects top executives, to whom Lee dangled the possibility of a big future payoff. When GOP Attorneys General Embraced Jan. 6, Corporate Funders Fled. Crozer Health, the struggling four-hospital system in Delaware County, and its parent company Prospect Medical Holdings, have at times been unable to pay vendors and contractors who provide vital services to patients at Crozer-Chester Medical Center in Upland, according to staff. The matter remains pending. Investors Extracted $400 Million From a Hospital Chain That Sometimes Couldnt Pay for Medical Supplies or Gas for Ambulances Prospect Medical, which mostly serves low-income patients, has suffered a litany of problems: broken elevators, dirty surgical gear, bedbugs and more. Last year, Prime Healthcare agreed to pay $65 million in penalties to settle a lawsuit brought by the Department of Justice alleging that it filed false claims and made At the companys flagship Los Angeles hospital, persistent elevator breakdowns sometimes require emergency room nurses to wheel patients on gurneys across a public street as a security guard attempts to halt traffic. Lawsuit Recognizing that the bad numbers would surely blow up the deal, Leonard Green and Lee decided to hold off again. The deal paid off Altas debt and netted Lee and Topper $50 million each in cash and Prospect stock. But that tension is particularly acute in the case of Leonard Green and Prospect, where private equity has extracted hefty profits from a business that acquires struggling hospitals and relies on Medicaid and other government programs to pay the bills for its impoverished patients. Paramedics for Prospects hospital near Philadelphia told ProPublica that theyve repeatedly gone to fuel up their ambulances only to come away empty at the pump: Their hospital-supplied gas cards were rejected because Prospect hadnt paid its bill. The plan was declared insolvent and placed in receivership in 2017. Then we suffer and the patients suffer., Paramedics have repeatedly gone to fuel up ambulances using a hospital credit card, only to have it rejected, according to Larry Worrilow, assistant chief for the Crozer-Keystone EMS system. But a Jan. 29 deadline for the state to approve the deal has been extended indefinitely and other obstacles remain. (A Prospect spokesman disputed the claim, insisting that the company had ample liquidity. The companys 2020 financial results have not been made public yet.). Itll be fine for six or eight months. The exodus isnt necessarily good news, according to Batt and other experts. Hospital workers have regularly reported staffing shortages, sometimes forcing delays of scheduled medical procedures. It also said it would have been economically impossible for Prospect to take over liability for the retirement system and called the receivers allegations about the companys actions false and unsubstantiated. Both Prospect and the diocese deny concealing the pension systems condition. Four states approved it but Rhode Island is holding out. The Justice Didnt Disclose the Deal. Leonard Green, a firm known for its investments in marquee consumer brands like Whole Food Markets and Neiman Marcus, joined the rush. Prospect paid $300 million. Lee couldnt find a buyer, Aleman said: They would have just given East Orange away literally handed over the keys. We were caught with our pants down. Aleman is now CFO of Prime Healthcare. Just three years after investing $3 million, the firm cashed out in 2001 with $5.3 million, a 73% profit. The letter, obtained by ProPublica, reported that Prospect had submitted thousands of claims dating back to 2013 that were not supported by audited medical charts. It added: In many instances, diagnosis codes were submitted for dates of service for which there was no evidence in a medical chart confirming that the [Prospect physician] had a face-to-face visit with the beneficiary. Most of this upcoding involved claims that individual patients had made two visits to Prospect doctors on the same day. In April 2008, Alta restated its 2006 revenues, lowering them by about $4 million. Now Theyre Back. These arent mere anecdotes or anomalies. After an unnecessary hospital admission requalified them for Medicare benefits, the patients were then returned to their facilities, according to the suit, boosting government billings for both Prospect and the senior facilities. That success didnt last long. In 2012, Prospect paid $48 million for San Antonios Nix Health System. Prospect Medical Holdings, DE County Memorial Hospital Facing There is leakage from the ceiling when it rains you can taste the mold in the air.. A second patient attempted suicide by tying hospital socks around his neck after being left unwatched while a nurse went to lunch. The overflow area remained in use until about 2018, when it was permanently locked, hospital employees said. Prospect has a long history of breaking its word: It has closed hospitals it promised to preserve, failed to keep contractual commitments to invest millions in its facilities and paid its owners nine-figure dividends after saying it wouldnt. Just weeks after the deal closed, Prospects audit firm, Ernst & Young, discovered inflated revenues and profits on Altas books. The union, which initially welcomed Prospects acquisition of the two hospitals in 2014, has waged a series of battles with company management in the years since. As Prospect headed toward the September close of its 2018 fiscal year, its business began deteriorating rapidly, torpedoing the projections it had given potential buyers. The company denies the allegations, including that any of its hospitals suffer from staffing shortages. Hed go through three hours of literally just peeling the skin off somebody, Aleman said. You cant use our work to populate a website designed to improve rankings on search engines or solely to gain revenue from network-based advertisements. Learn More / Map The union is responding to Prospects claims with a postcard that is being mailed this week to 4,000 state opinion-makers. The move, made to qualify for extra government subsidies for treating low-income patients, helped Brotman generate profits. But when an email exploring this effort was accidentally sent to Prospect, the company responded by dispatching a letter to Alemans attorney, accusing the former CFO of colluding with others in an attempt to interfere with a Company transaction. It demanded that he immediately cease and desist.. Another of the Medicare Advantage plans that received payments because of Prospects improper claims, CalOptima, said in a statement that Prospect first informed it in March 2016 of an inadvertent and isolated billing error from a single month in 2015. After his death, the hospital failed to notify police. But Brotman has continued to deteriorate. One day youre like a superstar and the future of the company, said Steve Aleman, who became Prospects CFO in 2013. During negotiations over the sale, Prospect was repeatedly briefed on actuarial studies showing that even after a $14 million contribution that Prospect agreed to make, the plan would run out of money by 2036, while still owing about $98 million in retirement benefits. The settlement agreement explicitly requires the receiver to notify state regulators that his objections to the sale are withdrawn. When Leonard Green made its third attempt to exit, the nominal price was a pittance. State officials approved the companys acquisitions on a conditional basis in 2016, while imposing a three-year monitoring regime that health department officials describe as unprecedented. WebWe are hospitals and affiliated medical groups working for the benefit of every person who comes to us for care. As late as Dec. 10, the receivers special counsel told a public hearing that Lee and his partner were predators, using the hospitals as their private piggy banks. A financial consultant for the receiver also warned in a report that Prospects financial statements through fiscal year 2019 (even preceding the financial stress caused by the COVID-19 pandemic) revealed a worsening state of insolvency and imminent bankruptcy, absent a big capital infusion. Hospital owner to pay $27M settlement in unfunded-pension lawsuit In Culver City, nurses unable to get proper protective gear for a time donned plastic garbage bags. In 2014, a patients wife filed suit after soaked ceiling tiles fell and struck her in the head while she was sitting in the hospital lobby. Big private equity firms were flooding into the hospital business. Other Prospect critics remain undeterred. The founder of Kline Hawkes was an investor named Frank Kline, who told ProPublica that no person named Hawkes was ever involved with the firm. As they see it, this is merely the latest stage in a slow descent to the bottom. In March, Moodys downgraded Prospects debt a notch deeper into junk territory, citing the companys very high financial leverage, shareholder-friendly financial policies, and a history of failing to meet projections.. Aleman said the discussed reasoning was that Prospect could bring a far richer price after mining its pending acquisitions for bigger profits. On August 10, 2017, Stephan Zouras LLP filed a collective and class action lawsuit against Prospect Medical Holdings, Inc. for violations of the Fair Labor Standards Act and the Pennsylvania Minimum Wage Act. Christina DeMauro, an emergency room nurse at Culver City for six years, asserted that a special team of hospital marketers generated a stream of about 20 elderly patients a day, most suffering from chronic dementia, who were admitted through the ER despite having no problems that required hospitalization. Then 49, Topper started Alta after recovering from a fire at his home that left him on a respirator, with third-degree burns over 70% of his body. It also bars any statements to media which would reasonably be expected to cause the reader or hearer thereof to question the solvency or honesty of, or the quality of care or other services provided by Prospect. Circuit Court of Appeals in March 2020. In a letter to Rhode Island officials, Prospect insisted it didnt violate the pledge it made back in 2014 because in 2014, no dividends were planned., That $457 million raised the total in dividends extracted from Prospect since Leonard Green acquired it to $645 million. (The firms have lately turned their sights to outpatient clinics or staffing emergency rooms.) ), Having collected that cash, Leonard Green made a second attempt to exit the investment in June 2018. On February 11, 2021, Plaintiff Godofredo Solsona filed this employment action against Defendant Prospect Medical Holdings, Inc. asserting five causes of action under FEHA and a Tameny claim. After you rattle their chains, they pay part of the bill, get their credit hold lifted, and you can get fuel. (Prospect said the card was rejected because it placed a charge limit on it as a security measure, and when it was brought to our attention that the account was reaching the credit limit frequently, we increased the credit limit to ensure there was not disruption of services.), The systems eight ambulances are so old two have more than 275,000 miles on them that they frequently break down, according to Worrilow. Instead, retirees nervous about Prospects purchase were shown a PowerPoint presentation stating that Prospects one-time contribution would stabilize plan assets. Lee attested in writing that the payment would assure that the pensions and retirement of many former employees, who reside in the community, are protected. Prospect told the attorney general that any necessary future payments would be made based on recommended annual contribution amounts as provided by the Plans actuarial advisors. Remarkably, no one addressed who would actually make such payments. Were talking here about safety-net hospitals that are serving the poor, the unemployed, disproportionately people of color. In 1998, Kline Hawkes was approached by David Topper, a veteran hospital marketing executive who was seeking funding to buy eight struggling little hospitals in the LA area (one would be immediately sold) and assemble them into a company called Alta Healthcare Systems. By January 2019, Prospect had so little cash that it needed an emergency $41 million loan from Leonard Green, Lee and Topper to assuage auditor fears that the company might not remain a going concern and to avoid violating loan covenants, according to Aleman. As Mississippis oyster population continues its freefall, state leaders turn to a model that has helped in Louisiana. Prospect Medical Holdings withdraws request under pressure How Cigna Saves Millions by Having Its Doctors Reject Claims Without Reading Them, If youre republishing online, you must link to the URL of this story on propublica.org, include all of the links from our story, including our newsletter sign up language and link, and use our. In addition, Prospect made accusations about the conduct or character of seven other former executives and employees critical of the company, including two other former CFOs of Prospect or Alta. But Prospects penchant for scrimping on staff and medical supplies left its hospitals with little margin for error. But a new problem had emerged behind the scenes during this period: improper Medicare billing. Roughly $386 million had gone to Leonard Greens investors and the firm (which gets 20% of all fund profits); $128 million to Lee; $94 million to Topper; and the remaining $37 million was divided among other Prospect executives. MEDICAL PROPERTIES TRUST, INC. (NYSE: MPW) Conflict between Prospect and Neronha flared on Thursday when the hospital chain threatened to close the hospitals, and take legal action, if the state Everyone on Inter Valleys board, he added, accepted that its organization had been reimbursed for false charges. MEDICAL PROPERTIES TRUST, INC. (NYSE: MPW) Their moves intensified a shift to for-profit ownership among the nations 5,200 general hospitals: from about 15% for-profit in 2000 to 25% for-profit in 2018, the most recent year for which data is available. Lee was eager to expand, too, confident that his business model could be applied to many more struggling hospitals, multiplying the companys revenues from about $470 million in 2010 to several billion. ), The situation grew dire. Six members of the environmental services staff, responsible for cleaning patient floors, also got sick. Sign up to receive our biggest stories as soon as theyre published. Established in 1996, Prospect Medical Holdings, Inc., is a national leader in fully integrated healthcare. Theres plenty of times when we went to go on an emergency call and the ambulance wouldnt start, he said. It had effectively replaced its debt payments with rent payments. CBS News submitted detailed questions to Prospect Medical about these financial decisions, including about the $457 million dividend and the lease-back Proposed legislation in Rhode Island threatens to further stall the deal. In one case, staff returned a belt to an actively suicidal psychiatric patient who then used it to hang himself in his hospital bathroom. Doris Burke is a senior research reporter at ProPublica. The business model for private equity firms like Leonard Green involves stripping cash out of the organization, loading down operations with debt and reducing every conceivable expense. Other firms, facing growing losses, have placed some hospitals into bankruptcy and closed others, offering up their real estate while seeking to sell the rest of their medical operations at bargain-basement prices. And it said it is not uncommon for hospitals to utilize a mobile MRI, but plans are underway to relocate the MRI inside a nearby building. In October 2015, the firm hired Morgan Stanley to find a new private equity buyer for Prospect. Prospect Medical Holdings, Inc. ("Prospect") leases and operates 13 of MPT's facilities. Prospect Medical The next day youre absolutely in the doghouse., (Last fall, Lee abruptly terminated Aleman, who then filed suit claiming he is owed for unpaid compensation and canceled company stock options. As it turns out, Prospect hasnt earned stellar grades in Connecticut either. Prospect Medical Holdings Just over two decades ago, Sam Lee and the private equity firm where he then worked were among the first such firms to invest in hospitals and it started almost by accident. Nursing assistant Doreena Duphily, who worked in the geriatric mental-health ward, where 19 of 21 patients were infected, was out sick for three weeks with COVID-19 herself. Prospect Medical Holdings is a healthcare system that provides compassionate, accessible, quality healthcare and physician services, the statement asserted. In February, Aleman, whod been stripped of his stock options when he was suddenly fired last fall, filed suit in California, seeking restoration of his shares and payment of his 2018 bonus. In 2015, inspectors shut down all elective surgery at the hospital for eight days, citing a widespread pattern of poor infection control and sterility; the problems resulted from inadequate heating and cooling systems. The saga of Leonard Green and Prospect embodies a broader trend. They include United Nurses & Allied Professionals, the union for hospital workers at Our Lady of Fatima; elected officials, including five Democratic members of the U.S. Congress, Rhode Islands state treasurer and its senate majority leader; and the Private Equity Stakeholder Project, a union-backed research group that has produced critical reports about Leonard Greens conduct and lobbied the firms public pension fund investors. Inter Valley began investigating, with help from a law firm and outside consultant. You are are free to republish it so long as you do the following: Copy and paste the following into your page to republish: (Courtesy of California Nurses Association), New Law Aims to Save Oysters on the Mississippi Coast, In Secret Recording, a Top City Library Official Calls Alaska Natives Woke and Racists. Two medical employees at Delaware County Memorial Hospital are lead plaintiffs in a national class action against Prospect, claiming insufficient staffing regularly forces hospital employees to work, unpaid, through meal breaks. Those shares were enough to give Lee and Topper control of Prospect. It was mismanaged at the corporate level, Aleman said. The company has little cash, weighty pension debts and lease commitments, and uncertain future earnings. We havent closed hospitals, and we dont close services, Dr. Mitchell Lew, Prospects president, said at a Connecticut public hearing in March 2016. The company has also waged a four-year battle to halve the tax assessments on all its hospital properties. Billionaire Harlan Crow Bought Property From Clarence Thomas. Before his death, the physician told a friend hed become sick after being forced to reuse a single mask for four days. Detailed management presentations to the two 2015 finalists were followed by dinners in Beverly Hills, leading to informal discussions with CVC, which was contemplating a considerably richer offer this time, according to Aleman. Lee disputed some of Whites claims, but acknowledged in the companys written responses that this was a difficult time, resulting in some bounced checks and some payables being missed. He insisted that ultimately, all the vendors were paid., Shedding those money-hemorrhaging operations helped Alta turn a financial corner. It is leaving a mess behind at Prospect. Nix was an unusual acquisition for Prospect. Owner threatens to close Roger Williams Medical, As always, the plan envisioned funding that payment through debt. Prospect and Leonard Green declined to comment on the bill. You cant state or imply that donations to your organization support ProPublicas work. You cant state or imply that donations to your organization support ProPublicas work. MPW LAWSUIT ALERT: Levi & Korsinsky Reminds Medical Kline was skeptical. With all that Prospect has done for Rhode Island, and will continue to do, we hope the state will recognize the benefits and approve this request. The company issued a press release noting that an outside monitor for the state had found that Prospect had met the commitments it had made for capital spending at the two hospitals. A similar penury afflicts medical supplies. Before the monitoring period expired, two of Prospects newly acquired Connecticut hospitals were slapped with immediate jeopardy findings. The lawsuit on behalf of Medical Properties Trust investors has been commenced in the United States District Court for the Southern District of New York. Responding to questions through an outside spokesman, they said they have no intention of abandoning their plans for the companys sale. Both made offers around $1.2 billion, according to sources familiar with the talks. Prospects about-face, a Rhode Island official responded, couldnt remove the initial taint of the original receipt of threatened litigation. (Prospect declined to comment on this matter.). It sought, unsuccessfully, to reduce nurses accrued vacation time and to cut pension benefits for all employees who didnt work full time. We have official accounts for ProPublica on. Prospect Medical Holdings, a for-profit company based in California, has had a majority stake in the two hospitals since 2014. The state has sought details on topics such as COVID-19s impact on the companys finances and has requested interviews with multiple company officials, including the CEO. Prospect AG letter - PA Private equity firm Leonard Green and other investors extracted $645 million from Prospect Medical before announcing a deal to sell it and leave it with $1.3 billion in Meanwhile Prospect sought to cut costs by reducing the workforce, trimming benefits and tightly monitoring each hospitals patient count throughout the day from its LA headquarters, sending nurses and aides home whenever possible in mid-shift.