PROVIDENCE – Prospect Medical Holdings can cross one thing off its list of legal and financial woes.
Brian Hodge and Timothy Rondeau, spokespeople for R.I. Attorney General Peter F. Neronha’s office, both told Providence Business News Monday that the office is no longer pursuing a motion to hold the private equity company in contempt of a court ruling ordering Prospect to pay more than $17 million it owes to vendors.
The ruling came in June after Neronha’s office filed a lawsuit in November stating that Prospect, which owns Roger Williams Medical Center and Our Lady of Fatima Hospital, violated several terms of a 2021 sale agreement that allowed the ownership change of the two hospitals.
The ruling required Prospect to pay within 10 days after June 26. Neronha’s office filed a motion to hold the company in contempt on July 12 saying it had not yet “received sufficient evidence” that Prospect had paid its vendors.
Since the motion was filed, Neronha’s office said it had received information through request, subpoena and deposition – including testimony from a senior financial officer at Prospect – showing the hospitals' owner was in compliance with the court order as of June 30. This came through bank statements, accounts payable reports, "days payable outstanding" calculations, vendor payment allocations and internal documents to support those calculations.
Otis Brown, a spokesperson for Prospect, has maintained the company’s compliance since the motion was filed.
He told PBN the company complied with the order by paying off any vendor balances over 90 days as of Dec. 31, 2023, and reducing days payable outstanding as of June 18, 2024, to less than 90 days. He said Prospect had filed sworn affidavits to show its compliance that were reviewed by Neronha’s office.
According to a Rhode Island Current report, George Pillari, Prospect’s senior vice president and chief performance officer, submitted a sworn affidavit on July 1 saying the company was “in compliance” with the court order and prior agreement with Neronha’s office. But Pillari also wrote Prospect would not be able to provide proof through its second-quarter financial reports until July 30.
Also, Prospect has said paying off its bills could force the company – which has previously revealed it was under investigation by the U.S. Department of Justice – into bankruptcy.
Paying off overdue bills was one of the 85 conditions that Neronha and the R.I. Department of Health added to their approval of the sale of Roger Williams and Fatima Hospital to Georgia-based nonprofit The Centurion Foundation. For years, Prospect has been trying to unload the two Rhode Island hospitals, along with several others it owns nationwide. Like Roger Williams and Fatima, the safety at many Prospect-owned facilities has come under more scrutiny while several others have closed as the company’s financial position deteriorated.
The sale of the two Rhode Island cannot move forward until the 85 conditions are met. Also, Centurion and Prospect must get approval for a licensing change from the R.I. Department of Health.
The status of the transaction was not immediately clear on Tuesday.
Katie Castellani is a PBN staff writer. You may contact her at Castellani@PBN.com.
