Pa. Supreme Court will take case involving closure of Delaware County Memorial Hospital

The Pennsylvania Supreme Court will hear an appeal involving Prospect Medical Holdings Inc.’s closure of acute care services at Delaware County Memorial Hospital in the fall of 2022.

The decision voids an October agreement between Prospect and the Foundation for Delaware County that would have paused a legal fight over the closure to give Prospect nine months to search for someone to take over the Crozer Health, which still operates Crozer-Chester Medical Center in Upland and Taylor Hospital in Ridley Park.

The high court’s announcement on Wednesday comes as concern grows in communities with Crozer facilities about the fallout from the company’s financial deterioration. Crozer, the largest health-care provider in Delaware County, has struggled to regain its financial footing since the pandemic in part because its former private-equity owner plunged it into debt in 2019 by selling its real estate out from under it.

The Foundation for Delaware County appealed a May decision by Pennsylvania Commonwealth Court that had overturned a lower court’s emergency preliminary injunction to prevent Prospect’s closure of acute-care services at Delaware County Memorial in Drexel Hill.

Despite the preliminary injunction, Drexel Hill hospital’s emergency department and its inpatient units closed in early November 2022 after the state Department of Health ordered the facility to stop accepting patients because it lacked staff.

Now the state Supreme Court said it will consider whether Commonwealth Court erred by “substituting its judgment for that of the trial court” when it overturned the emergency preliminary injunction “on the grounds that there was insufficient evidence of irreparable harm.”

“We’re delighted with the action of the court,” said Rocco P. Imperatrice III, a lawyer for the foundation, which is the legal successor to the nonprofit that previously owned the former Crozer-Keystone Health System.

Were the foundation to prevail at the Supreme Court, it’s not clear if acute care services would return to Delaware County Memorial. However, the foundation has found a company that would be willing to fully staff the emergency department, Imperatrice said. Under state law, the facility would need at least 10 inpatient beds to have an emergency department.

Prospect said in an emailed statement: “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.”

The Foundation for Delaware County warned it is potentially on the hook for $24 million in lease payments to the landlord at the former Springfield Hospital if Prospect defaults on the lease, according to a Dec. 12 letter filed in the Delaware County Court of Common Pleas.

An outside real estate investment firm has owned those Springfield properties since at least 2009.

When Prospect acquired Crozer-Keystone Health System in 2016, the investor did not want to lease the properties directly to Prospect. Instead, Prospect subleased them from the foundation, which means the foundation is ultimately liable for the amounts owed on the lease until it expires in 2029.

Prospect owed $490,572 in back rent, late fees, and other costs, the landlord, Ventas, said in a Nov. 2 letter. In addition, Prospect owed $1.6 million in county, township, and school taxes, the letter said.

Ridley Park, home to Taylor Hospital, is another Delaware County town with unpaid Prospect taxes. Ridley Park had to borrow $300,000 this year to make up for Prospect’s failure to pay taxes and sewage fees, said Borough Manager Richard Tutak Jr.

Now the town of 7,100 could face a nearly 17% increase in property taxes next year to make up for the shortfall, Tutak said.