Upland, Pa.-based Crozer Health must pay $1.5 million in estimated claims related to alleged violations of the federal WARN Act, a bankruptcy judge ruled, far short of the $21 million initially sought by plaintiffs, according to the Delco Times in Pennsylvania.
A Texas bankruptcy judge approved Prospect Medical Holdings’ request to reduce a previously reserved fund by 75%, saying the Los Angeles-based company had strong defenses. Prospect is the former owner of Crozer Health, which shuttered in May.
The federal WARN Act requires employers to give 60 days’ written notice before mass layoffs or closures affecting 100 or more employees. The judge noted that Prospect’s intent, even after filing for bankruptcy in January, was to keep Crozer Health’s facilities operating while seeking a new owner.
Prospect began the process of closing Chester Medical Center in Upland and Taylor Hospital in Ridley Park, Pa., in late April, notifying 2,651 employees that layoffs would begin April 25 and conclude by May 2.
On May 2, a former Crozer nurse filed a class-action complaint alleging Prospect failed to meet WARN Act notification requirements, according to the Delco Times. The lawsuit sought 60 days’ worth of unpaid wages, benefits and other compensation for all affected employees.
Prospect defended its actions by citing “unforeseen circumstances” and a desire to avoid jeopardizing patient care by triggering staff departures with early WARN notices, according to the report.
The Pennsylvania Attorney General’s Office expressed frustration over the closures, attributing blame to Prospect’s private equity owner, Leonard Green & Partners.
“We worked tirelessly to avoid this outcome. Unfortunately, the damage inflicted by Leonard Green & Partners … was too much to overcome,” a spokesperson said in a statement shared with Becker’s. “We will continue to work through the bankruptcy process to pursue the commonwealth’s financial claims to the greatest extent possible in order to hold Prospect accountable for actions that caused this closure.”
Neither Crozer Health/Prospect nor Leonard Green & Partners responded to Becker’s request for comment.
