Cuba lashed back Friday at what it called a campaign of distortions over the health of an imprisoned American contractor, and hinted at retaliation that could include transferring the 63-year-old man from the military hospital where he is being held to a regular prison.

The Foreign Ministry statement marked an escalation in a dispute that has been simmering for 2 ½ years and that has torpedoed any hope of improved ties between the Cold War enemies. Maryland-native Alan Gross is serving a 15-year term for bringing satellite and other communications equipment into Cuba illegally while on a USAID-funded democracy-building program.

Cuban officials disputed recent comments by Gross's lawyer and wife that his condition is deteriorating, saying his health is in fact "normal" and he is being properly treated.

It said he is well enough, in fact, to serve his sentence in a regular jail, in what appeared to be a thinly veiled warning.