Attorney General Neronha announces new and enhanced conditions and amendments to Centurion decision

Published on Thursday, July 31, 2025

Attorney General Peter F. Neronha today announced a limited series of amendments to the Hospital Conversions Act Decision, originally issued on June 20, 2024, and first amended on November 14, 2024, to conditionally approve a transaction that would allow a change in ownership of a health care system that includes two local safety net hospitals, Roger Williams Medical Center and Our Lady of Fatima Hospital, from Prospect Medical Holdings to The Centurion Foundation.

This Second Amended Decision amends the decision to accommodate a modified bond financing strategy in light of challenges in the bond market, while simultaneously implementing further safeguards to protect the CharterCARE system. These amendments are reflected through four new conditions and nine amended conditions, in addition to a series of amendments reflecting changes previously required pursuant to Prospect’s bankruptcy proceedings.

Importantly, this Second Amended Decision does not change the core findings or conclusions of this Office’s initial review of the Hospital Conversions Act application. Instead, the new Decision is designed to strengthen the Attorney General’s ability to protect the Rhode Island Hospitals.

“While this is a complicated process, our goal is simple: make sure our safety net hospitals are in the best position possible to serve our communities for as long as possible,” said Attorney General Neronha. “Taking into consideration that the Centurion Foundation has faced challenges in securing the bond financing necessary to close on the sale, my Office has amended the cash-on-hand requirement at closing from $80 million to $45 million. Recognizing this reduces the CharterCARE system’s cash position at closing, we are also imposing a series of new conditions that will further safeguard our hospitals, including requiring Centurion to obtain the $35 million cash shortfall within 90 days of the transaction closing, invest $50 million in capital expenditures, and importantly, granting my Office the ability to petition to tip the hospitals into receivership should we need to do so. Additionally, the other newly amended conditions provide the Office with enhanced oversight in order to further ensure that our hospitals are being managed well so that they may continue to serve our communities well.

“All Rhode Islanders deserve quality, accessible, and affordable health care. The survival of these safety-net hospitals is absolutely critical to the future of Rhode Island’s health care system; we cannot afford to lose them. These new and amended conditions provide a better path forward by which these hospitals can survive – and perhaps thrive.”

The Second Amended Decision contains the following new conditions:

Condition 41 (Capital Expenditures): This condition requires, within three years of the closing of the transaction, that Centurion and the New CharterCARE System spend at least $50 million on capital expenditures at the Rhode Island Hospitals.
Condition 42 (Receivership): This condition requires that Centurion and the New CharterCARE System not contest the Attorney General’s standing and/or right to file a petition for the appointment of a receiver of the New CharterCARE System in the event of the New CharterCARE System’s insolvency and/or failure to pay any installment of principal and/or interest under any bond financing or to comply with any applicable bond financing covenant, requirement, or condition within any applicable cure period, or failure to maintain at least forty (40) days cash on hand.
Condition 43 (Enhanced Oversight): This condition provides for the Attorney General to retain a financial and/or operational consultant(s), at the expense of Centurion or the New CharterCARE System, to report and provide analytical support to the Attorney General about the financial and operational state of the New CharterCARE System, in the event that the New CharterCARE System’s days cash on hand falls below forty (40). Further, this condition entitles the Attorney General to a non-voting representative on the New CharterCARE System boards in the event that the New CharterCARE System’s days cash on hand falls below thirty (30).
Condition 44 (Relief from Bankruptcy): This condition requires that, in the event of any bankruptcy or other insolvency proceeding that would include the New CharterCARE System or any of its assets, each of Centurion, the New CharterCARE System and their respective hospitals, clinics, subsidiaries, etc. shall (i) consent to relief from the Bankruptcy Code’s automatic stay or any other applicable stay and (ii) not otherwise object to any request of the Attorney General to have a receiver appointed in Rhode Island and the removal of the New CharterCARE System or any of its assets from any bankruptcy or similar estate upon the appointment of a receiver.

The Second Amended Decision also includes the following changes to existing conditions:

Condition 12 (Initial Hospital Funding): This condition is amended to reduce the cash on hand requirement from $80 million to $45 million. Further, this condition is amended to state that Centurion and the New CharterCARE System will secure up to $35 million in additional funds within the first 90 days following the closing of the transaction such that, in the aggregate, these new funds together with the Initial Hospital Funding of $45 million will total $80 million.
Condition 13 (Hospital Fund): This condition is supplemented with the inclusion of an additional provision requiring that, whenever the balance of the Hospital Fund falls below $50 million, the Attorney General will receive advance notice of any non-capital expenditures planned by the Hospital Fund Governance Committee. Further, the Attorney General may elect to have a non-voting representative on the Hospital Fund Governance Committee.
Condition 17 (Turnaround Consultant): This condition is amended to require that the Attorney General receive notice of candidates and proposed scope of role of the Turnaround Consultant no later than 10 days prior to closing, and retention of the Turnaround Consultant must occur prior to closing.
Condition 22 (Board Composition): This condition is amended to include a requirement that Community Directors appointed to any of the CharterCARE boards are independent of and not employed by or affiliated with the Centurion Foundation or its affiliates.
Condition 25 (Fiduciary Duty Training): This condition is amended to require that the Attorney General approve training materials, content, and the facilitator of the required fiduciary duty training; to increase frequency of the training; and to specifically require an initial intensive training within the first quarter of operations.
Condition 32 (Monitoring and Experts): This condition is amended to require that Centurion and the New CharterCARE System execute payment agreements with the Attorney General for payment of monitors and experts prior to the closing of the transaction, in a form acceptable to the Attorney General.
Condition 34 (Monthly and Quarterly Reporting): This condition is amended to require that Centurion and the New CharterCARE System submit to the Attorney General on a monthly basis all reporting specified in subsection II of Appendix E of RIDOH’s decision, as well as evidence of the New CharterCARE System’s days cash on hand and a 13-week cash flow forecast.
Condition 35 (Annual Reporting): This condition is amended to require proof of capital expenditures as part of the annual reporting requirements.
Condition 36 (Notices): This condition will be supplemented to include additional requirements to provide the Attorney General with written notice in the event that: the New CharterCARE System’s days cash on hand falls below forty (40); the New CharterCARE System’s days cash on hand falls below thirty (30); or the New CharterCARE System fails to timely pay any installment of principal and/or interest under any bond financing transaction or to comply with any applicable bond financing covenant, requirement, or condition within any applicable cure period.

Additionally, pursuant to Prospect Medical Holdings’ bankruptcy proceedings, the Attorney General secured the remaining $50 million from the escrow established in 2021 following private equity investor Leonard Green’s exit as an owner of the CharterCARE System. Pursuant to court order, these funds are fully within the control of the Attorney General and designated for the CharterCARE System as part of this transaction and will be used to support the creation of the Hospital Fund.

Further details about these clarifications and amendments are available on the Attorney General's website.

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