Crozer Health’s parent company, Prospect Medical, is suing two federal health care agencies, claiming they violated an automatic stay order after the company’s bankruptcy was filed in January.
The July 11 complaint seeks at least $1.5 million for care that Medicare and Medicaid patients received at five Crozer Health ambulatory surgery and imaging centers, writes John George for Philadelphia Business Journal.
The suit includes as defendants U.S. Health and Human Services Secretary Robert F. Kennedy Jr. and Dr. Mehmet Oz, administrators for the Centers for Medicare and Medicaid Services (CMS).
Prospect alleges it believed it would be able to bill for Medicare reimbursement for a portion of the patient care, based on ongoing settlement discussions with CMS.
But on July 1, the lawsuit stated, CMS terminated Medicare enrollment retroactively to June 21, insinuating that settlement discussion could only continue if Prospect paid more than $8 million owed to CMS prior to the bankruptcy filing, a violation of the bankruptcy code.
“CMS is unfairly penalizing Prospect with regard to this issue because of pre-petition amounts that CMS believes it is due [from Crozer Health],” the lawsuit states. “Clearly, CMS is discriminating against Prospect for filing these Chapter 11 cases.”
Read more about Prospect Medical’s legal battle with federal health agencies in the Philadelphia Business Journal.
Editor’s Note: This post was initially published on DELCO.Today in August 2025.
