As Los Angeles-based Prospect Medical Holdings works to sell off nine of its hospitals, more information has been unveiled regarding the Justice Department's Nov. 3 civil investigation into the hospital chain.
Unsealed May 28 court documents, filed Aug. 13 by Yale New Haven (Conn.) Health and obtained by Becker's, shared that the DOJ's investigation was initiated over "concerning allegations that Prospect violated the False Claims Act by upcoding certain secondary diagnoses on claims for patient care that were submitted to federal healthcare programs."
A spokesperson for Prospect told Becker's in an Aug. 14 statement that the hospital chain will continue to cooperate with the investigation, but feels that the allegations have no merit.
The spokesperson also shared that Prospect has provided Connecticut Attorney General William Tong with sufficient information regarding the data security incident that disrupted operations temporarily across the company's facilities in August 2023.
"We provided the Connecticut Commissioner of Consumer Protection with extensive information about our accounts payable approximately one year ago," the spokesperson said.
In late June 2024, Prospect revealed that it was under investigation by the DOJ. The company remains in a legal battle with Yale New Haven Health, who filed a lawsuit in early May against Prospect to get out of a deal acquiring three of its Connecticut hospitals, Waterbury (Conn.) Hospital; Manchester (Conn.) Memorial Hospital, part of Prospect's Manchester-based Eastern Connecticut Health Network; and Rockville General Hospital in Vernon, Conn.
"The unfounded issues raised in Yale New Haven Health’s legal documents about our response to the cyberattack are part of the Yale New Haven Health board’s blatant attempt to drive down the purchase price that they agreed to pay for our Eastern Connecticut Health Network facilities and Waterbury Hospital more than two years ago," aProspect spokesperson said in the Aug. 14 statement. "Prospect remains committed to completing the transaction in a timely manner."
Prospect has also faced setbacks in working to offload Providence, R.I.-based CharterCare Health Partners, which owns and operates two Rhode Island hospitals: Our Lady of Fatima Hospital in North Providence, R.I., and Roger Williams Medical Center, also in Providence.
Rhode Island Attorney General Peter Neronha filed a motion in mid-July for Prospect to be held in contempt for refusal to comply with a court order to pay $17 million to hospital vendors in unpaid bills — the motion has since been canceled because of Prospect's compliance.
Prospect recently shared that it has signed a letter of intent for CHA Partners to acquire Upland, Pa.-based Crozer Health, which would transition Crozer's four hospitals back to nonprofit status.
Becker's has reached out to Yale New Haven Health and the Justice Department and will update this story should more information become available.