The Pennsylvania Supreme Court has agreed to hear arguments on the Commonwealth Court’s decision overturning a Common Pleas Court order barring Delaware County Memorial Hospital from closing its emergency department and ending general inpatient services.
At issue is whether the appeals court erred when it disregarded a legal principle to apply a “highly deferential” standard of review when it overturned the injunction on a record that was not fully formed on the grounds that there was insufficient evidence of irreparable harm to the community, according to an order granting the petition Wednesday.
The petition is being brought by Crozer-Keystone Health System and the Foundation for Delaware County against California-based Prospect Medical Holdings Inc., Prospect Crozer LLC and the Commonwealth of Pennsylvania.
Lori Bookbinder, manager of communications and media relations for Crozer Health, provided this statement:
“The Pennsylvania Supreme Court merely asserted jurisdiction over the appeal but did not rule on anything substantively. The decision by the Pa Commonwealth Court denying the preliminary injunction remains in effect. The Supreme Court will render its decision on this appeal many months from now. We look forward to advancing our position before the Supreme Court as we did successfully before the Commonwealth Court.”
Rocco Imperatrice III, an attorney for the plaintiffs, said the case is only one of many, many issues that have sprung up in the past two years concerning Delaware County Memorial Hospital and the Crozer Health system generally.
The case to this point
Prospect Medical Holdings Inc., a private, for-profit company headquartered in California, purchased the non-profit Crozer Keystone Health System in 2016 for $300 million. Prospect agreed as part of that sale not to close any hospitals within 10 years.
Crozer Health, a part of Prospect, announced Jan. 4, 2022, that it would be closing its obstetrics unit at Delaware County Memorial Hospital and moving it to Crozer-Chester Medical Center by Jan. 21.
In March, Crozer Health announced it would “temporarily close” the intensive care unit and surgery unit at DCMH by May 31, 2022, and that hospital-based outpatient services would be located within the hospital by April 5.
ChristianaCare Health System Inc. had sought to acquire Crozer-Chester Medical Center in Upland with 499 certified beds; Delaware County Memorial Hospital in Upper Darby with 215 certified beds; Springfield Hospital in Springfield and Taylor Hospital in Ridley Park, but walked away from the deal in August.
On Sept. 21, 2022, Crozer announced that DCMH would convert to a behavioral health hospital adult inpatient, geropsychiatric inpatient, acute detox/rehab and crisis unit in 60 days as part of a “Stabilization/Transformation Plan.”
Crozer Health CEO Anthony Esposito said at the time that the changes were needed as part of a necessary “evolution process” to transform underutilized facilities into centers that address areas of greatest community need: urgent care, outpatient and behavioral health services.
Crozer Health was reportedly hemorrhaging about $7 million monthly and DCMH was losing about $2 million of it at that time. Esposito said the total losses amounted to roughly $97 million annually.
Esposito also said that approximately 200 DCMH employees would be laid off while the hospital was realigned under this plan, but would be offered employment elsewhere in the system along with retention bonuses.
The Foundation for Delaware County, Crozer Keystone Health System and Delaware County Council filed an emergency injunction Sept. 28 to temporarily stop the closure, arguing it violated the “no-close” provision of the 2016 contract.
Chester County Court of Common Pleas Senior Judge Robert J. Shenkin granted that petition Oct. 11 and directed Crozer Health to “immediately suspend any actions materially altering the present operation” of the hospital.
Prospect Medical Holdings Inc. and Prospect Crozer LLC filed an appeal to the Commonwealth Court the following day. Shenkin denied a subsequent request from Crozer to dissolve or stay the preliminary injunction Nov. 2.
The Pennsylvania Department of Health ordered Delaware County Memorial Hospital to suspend emergency department services and imposed a ban on admissions Nov. 4 due to lack of staffing coverage in radiology. The hospital was still ordered to be “prepared to institute essential life-saving measures … and transfer patients requiring emergency services or an inpatient admission as necessary.”
Then-Pennsylvania Attorney General Josh Shapiro, now governor, filed a motion in Delaware County Court Nov. 15 to hold Prospect Crozer in contempt of Shenkin’s order with a $100,000 per day fine, retroactive to the state health department’s order for admissions to stop at the hospital.
While the health department order required DCMH to remain closed until staffing shortages were resolved, Shapiro said: “Prospect’s failure to resolve its staffing shortages violates the injunction that the trial court imposed to maintain the hospital’s service lines and Prospect cannot be permitted to forgo resolving the Department of Health’s order to avoid meeting the staffing demands of the trial court order.”
Esposito disagreed with that reading, arguing that violating the health department’s order would come with its own penalties.
Commonwealth Court Judge Ellen Ceisler on Dec. 8 granted Prospect Medical Holdings and Prospect Crozer’s stay of the preliminary injunction, finding the hospital’s emergency room services could remain suspended as long as Prospect made a “good faith” effort to adequately staff the facility.
The Commonwealth Court heard actual arguments on the injunction in March and issued a ruling May 3, penned by Ceisler, which found that the Foundation and county had failed to present concrete evidence that Crozer’s plan to stop providing acute care services at DCMH constituted the necessary “irreparable harm” for an injunction to remain in place, based on the record to that point, and reversed the trial court’s Oct. 11 order.
The Foundation and CKHS filed a petition for appeal to the Pennsylvania Supreme Court, which agreed to hear the case Wednesday.
Denied or delayed
Imperatrice said Thursday that the court may take up the case as early as the first quarter of next year. He does not expect it to drag out to 2025, but added that at this point, even if the petitioners are successful, the reopening of the DCMH emergency room after so much time would be extremely difficult.
“We have made inquiries of a Texas company which would be able to staff an entire emergency in the event that Prospect was willing to engage them,” he said. “Prospect has indicated to us that the cost of doing so would be prohibitive. Of course, we don’t have any numbers of on that, we just have their statement. We have no ability to look at their books. We have no ability to look at their financials.”
Imperatrice noted the state Supreme Court operates very much like the U.S. Supreme Court in that it does not have to accept every petition that comes its way and is “very picky” about the cases it does hear, about 1 in 500.
“We were not convinced the Commonwealth Court ruling was not in accord with the facts and law of this case,” he said. “We had been waiting for the Pennsylvania Supreme Court decision and when we received it yesterday — particularly given the language of the order, which is somewhat unusual — we were elated, and we believe that we are back on track for getting medical services to the residents surrounding (DCMH), which we’ve been told number at least 85,000 people.”
Imperatrice said many of those people cannot afford to have a primary care physician and tend to use the emergency room for that purpose, as well as emergencies. The closure of the hospital’s emergency room constituted denied or delayed medical care, he said, which could mean the difference between life or death.
While emergency services at the hospital were ostensibly closed by the Department of Health order, Imperatrice said that was because Prospect terminated many employees of its own volition, then self-reported that it was understaffed.
“As a result of that, the Department of Health suspended the emergency room services until Prospect hired enough radiology technicians to reopen the emergency room,” Imperatrice said. “Prospect has never done that and it has not rehired any of the individuals that were terminated in accordance with its letter to all employees approximately 60 days before the hospital was closed. It was a calculated move to push the blame for the closure of the emergency room to the Department of Health even though Prospect initiated the action that caused the closure of the emergency room.”
Bad neighbors
Imperatrice noted that from the outset, Prospect made clear that it was going to be an issue for the people of Delaware County.
Shortly after the sale had closed, Prospect bucked at paying $20 million still due and dragged the process out in Common Pleas Court for approximately a year.
In January 2022 — the same month Prospect announced closing the obstetrics department at DCMH — it announced that COVID-19 shortages had forced the “temporary closure” of Springfield Hospital’s emergency department as well. That emergency room remains closed today.
Imperatrice noted that the Springfield Hospital buildings are actually leased to Prospect, which is responsible for payment of rent and taxes. Prospect is in default of the November and December rents, he said, as well as real estate and municipal taxes totaling $2.1 million.
In April 2022, Prospect told several municipalities that they would lose ambulance “chase cars” unless they came up with $336,000 within 10 days and nearly shut down behavioral health services in the county before a deal was reached with County Council to keep them open in August of last year.
It was also learned in April 2022 that Crozer Health received $72 million in relief funds during the COVID pandemic, but it was unclear how or where that money was spent.
In March 2023, Prospect announced it would be eliminating 215 positions during another restructuring, about 4% of its workforce.
Just this week, Ridley Park announced it is looking to raise taxes 17% because Crozer Health’s Taylor Hospital has failed to pay hundreds of thousands of dollars in taxes and sewer fees this year. Taylor, assessed at $60 million, owes more than $1.77 million in delinquent Ridley School District taxes for 2022 and more than $181,000 in county tax.
The U.S. Senate Committee on the Budget also issued a letter to Prospect and related parties Dec. 6 concerning its management and financial status. That letter made several requests, including an explanation of $457 million in dividend payments to investors in 2018 while recording a net loss of $244 million in the same year and accruing more than $1 billion in debt by 2019.
While state Attorney General Michelle Henry filed a stipulation in Delaware County Court of Common Pleas to suspend litigation on the DCMH matter for 270 days in October so Prospect could find a buyer for the Crozer system, Imperatrice said he does not for a minute believe that’s what will happen.
“Prospect stated the reason for the pause was so they could engage in efforts to sell the system unfettered, which is nonsense, because our litigation with regard to the emergency room at Delaware County Memorial Hospital is a drop in the bucket as to the transaction — potential transaction — to sell the hospital system or transfer the hospital system,” he said. “My belief is the reason that Prospect wanted this 270-day stay is so they could drain every single penny out of the system, and then shutter the doors, and allow all the suppliers and other creditors to sue Prospect Crozer LLC, which is the operating company and has very little, if any, assets.”
Imperatrice said Prospect is a privately held company and can act as such. If you put “shoe maker” into the place of “hospital,” he said, that shoe maker would have every right to simply close up shop if they wanted to.
“That’s why for-profits do not belong in health care,” he said. “It’s beyond belief what they’re doing, and they have the right to do it because their bottom line is all that they’re interested in. When a for-profit company is in business, they’re in business to make money. And these are companies that are owned by them and they can do with them whatever they want. There’s no social consciousness, in my opinion. That goes hand in hand with a for-profit operating a community hospital: the two concepts are in complete opposition.”
