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Court Order Enforces Certain Terms of the Attorney General's HCA Decision and the Asset Purchase Agreement Should Prime Pursue Transfer

Attorney General Peter F. Kilmartin today announced that Superior Court Justice Michael Silverstein has issued a consent order enforcing terms within both the Asset Purchase Agreement (APA) among Landmark Medical Center (Landmark), the Rehabilitation Hospital of Rhode Island (the Rehab) and Prime Healthcare Services Landmark, LLC (Prime -Landmark), et al. and the Attorney General's Hospital Conversions Act (HCA) decision.

The consent order follows a petition of the Attorney General filed earlier this month. That petition was motivated by the Change in Effective Control Application (CEC Application) filed with the Rhode Island Department of Health (DOH) wherein Prime Healthcare Services, Inc. (Prime) proposes to donate Landmark and the Rehab to Prime Healthcare Foundation, Inc. (the Foundation).

"I am pleased with the Court's order enforcing the conditions of our HCA decision, which were put in place to ensure that the parties continued to provide quality healthcare services to the people of Northern Rhode Island. This order will ensure that the promises Prime made when they first purchased Landmark will be kept," said Attorney General Kilmartin.

Pursuant to the consent order, if the CEC Application is approved by DOH, and Landmark and the Rehab are transferred to the Foundation, certain five-year commitments set forth in the original Asset Purchase Agreement (APA) and the HCA decision will also transfer to the Foundation.

Prime and the Foundation will adhere to the provision in the APA requiring that Landmark remain an acute care hospital with an open and accessible emergency room and an independent medical staff until December 31, 2018, five years from the initial conversion. Prime also continues to guarantee the full amount of the financial obligations in the APA with the following capital commitments to transfer to the Foundation should the donation occur: the investment of $30 million in capital expenditures to improve Landmark; investment of no less than $4.5 million toward physician recruitment; and the investment of no less than $15 million towards routine equipment replacement.

With regard to the Attorney General's HCA decision, the five year conditions that will transfer to the Foundation include providing the Attorney General with proposed amendments to corporate documents, utilizing assets transferred by the APA for the benefit of Landmark and reporting to the Attorney General concerning action taken against Prime by the Department of Justice and Office of Inspector General or any other governmental entities. In connection with the Attorney General's obligation to monitor, assess and evaluate Prime's compliance with all of the conditions of approval, Prime will continue to provide the Attorney General with the information necessary to complete the 2015 and 2016 compliance reports that are required by the HCA.

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