Connecticut Files Statement of Interest in Prospect Medical Holdings Bankruptcy

02/11/2025

Connecticut Files Statement of Interest in Prospect Medical Holdings Bankruptcy

Hartford, CT – In a statement of interest filed this week in the ongoing bankruptcy proceeding for Prospect Medical Holdings, the State of Connecticut outlined the most detailed claims to date regarding Prospect’s harm to the state, making it

clear that Connecticut expects to have a full seat at the table in ensuring the transition of Prospect’s hospitals in the state to a responsible new owner, and in protecting and asserting Connecticut’s claims for relief based on Prospect’s prior misconduct.

“The Prospect bankruptcy is the “latest chapter in a history of mismanagement and plunder stretching back to 2016, which has harmed Connecticut’s patients, residents, communities, and taxpayers alike. In 2016, Prospect, backed by private equity sponsor Leonard Green Partners, bought three of Connecticut’s nonprofit, community hospitals (Manchester Memorial Hospital in Manchester, CT, Rockville General Hospital in Vernon, CT, and Waterbury Hospital in Waterbury, CT), together with their affiliated healthcare operations, the “Connecticut Hospitals”), promising robust investment and careful quality control. Prospect said that it would improve the hospitals’ facilities and expand their services, that it would scrupulously guard their patients’ sensitive health information, and above all else, that it would faithfully care for the health of Connecticut’s residents. Prospect broke each of these promises.

Instead, Prospect took the Connecticut Hospitals private and then sold the ground out from under them to fund dividends to its shareholders. Those shareholders profited from Prospect throttling Connecticut’s healthcare infrastructure, stiffing vendors and staff, shortchanging Connecticut through material unpaid taxes, and – worst of all – endangering its residents through compromising on vital medical care,” the statement reads.

Prospect’s neglect had dire consequences: patient deaths potentially due to mishandling of their treatment; delayed testing where Prospect had refused to timely pay the vendor; borrowing medications from other facilities to fill patient orders where Prospect failed to fund disbursements; inability to print prescriptions and discharge instructions as a result of failure to pay a vendor who provided printing services; inability to run criminal background checks on applicants; inoperable elevators requiring patients to be carried up and down stairs; backed-up and rescheduled procedures where Prospect refused to repair or replace broken equipment; delays in patient care caused by the refusal to fund necessary software upgrades; delaying and rescheduling surgeries where Prospect refused to pay for anesthesia services; and failing to meet Prospect’s pension plan obligations, resulting in liens asserted by the Pension Benefit Guaranty Corporation and negatively impacting morale of employees who are fundamental to patient care.

On July 31, 2023, a threat actor gained access to Prospect’s IT systems, ultimately deploying a malicious ransomware code that locked Prospect out of its own systems and compromised the private data of 212,369 Connecticut residents.

“Connecticut is committed to ensuring that the Connecticut Hospitals can be transitioned to a responsible, appropriate operator (or operators). That is the only way for the citizens of Connecticut to receive the care they need and deserve. But at the appropriate time, the Debtors and relevant non-debtors must also be accountable for the substantial harm they have caused in Connecticut. Connecticut reserves all rights, regulatory powers, and privileges under state law and the Bankruptcy Code, and waives none, including, without limitation, approval over any sale transaction, subject to conditions Connecticut has or may impose under state law,” Connecticut’s statement of interest concludes.

Click here to view the full statement filed in the U.S. Bankruptcy Court for the Northern District of Texas.

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