Workers Urge NJ Attorney General to Sell Prime Healthcare-Owned Hospitals

[Sept. 22, 2016] Healthcare workers called on New Jersey Acting Attorney General Christopher Porrino to protect patient care by ordering the sale of five state hospitals to safeguard their charitable assets and protect the quality and accessibility of healthcare services in their affected communities.

“Prime’s high risk corporate strategy appears to be entering its final chapter and Prime could be blocked from serving Medicare beneficiaries,” said Dave Regan, president of SEIU-United Healthcare Workers West (SEIU-UHW), which sent a letter calling for the sale to Porrino. “The best way to ensure these hospitals remain open for years to come is to put them up for auction now and find a more suitable owner for the communities.”

The non-profit facilities were purchased in the last two years by California-based Prime Healthcare and include St. Michael’s Medical Center in Newark, St. Mary’s Hospital in Passaic and St. Clare’s Hospitals in Dover, Denville and Boonton.

Under conditions placed on the sale, the New Jersey Attorney General has five years from the time of the closings to bring a court action to force the resale of the hospitals if the Attorney General determines that a subsequent event has materially impaired the ability of Prime, or its affiliates, to operate the hospitals.

Such a scenario may be looming for the company. In May 2016, the U.S. Department of Justice joined a whistleblower lawsuit alleging Prime Health had fraudulently billed Medicare. The department said it found merit to the action brought by a Prime Healthcare director who said the company jacked up corporate revenue by wrongly admitting Medicare patients who sought emergency treatment and trying to get rid of patients with no insurance.

If the case goes to trial and Prime Healthcare is found to have violated the law, it could be barred from receiving Medicare funding, which would be a serious financial blow to the company and compromise its ability to provide care at the New Jersey hospitals.

According to the Department of Justice, Prime Healthcare and its CEO Prem Reddy engaged in the following deceptive conduct:

  • Told emergency department doctors to find ways to admit all patients over 65 because they have health insurance through Medicare;
  • Demanded the termination of emergency department doctors if they passed up opportunities to admit patients with Medicare coverage;
  • Told doctors to admit patients with Medicare coverage who would be in the emergency department for more than two hours awaiting test results; and
  • Instructed doctors that uninsured patients could stay in the emergency department no more than eight hours awaiting test results and then be discharged.

SEIU-UHW and Prime Healthcare Services are involved in a labor dispute in California affecting 1,300 employees.

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