NEW HAVEN, Conn. — Yale New Haven Health, a nonprofit healthcare system based out of New Haven, has filed suit asking the state Superior Court to let it out of its contract with Prospect Medical Holdings to buy Manchester Memorial, Rockville General, and Waterbury hospitals.
YNHH, the largest healthcare system in Connecticut, is suing Prospect, claiming that the group violated its contract with Yale by defaulting on rent and tax liabilities, allowing its facilities to deteriorate, mismanaging assets, driving away physicians and vendors and performing a “pattern of irresponsible financial practices."
In 2022, YNHH said it reached a deal with Prospect Medical Holdings to buy the hospitals for $435 million, but after Prospect suffered a cyberattack in August 2023 and it became public knowledge that Prospect owes tens of millions of dollars to its vendors and the state in taxes, YNHH asked Prospect to reconsider the purchase price. On Friday, YNHH officials said the two sides have not yet reached an agreement, according to the Hartford Courant.
YNHH and Prospect Medical Holdings are both accusing each other of not negotiating in good faith.
In a statement on Friday, Prospect officials described the lawsuit as a “blatant, 11th hour attempt by Yale Health to back out (of the contract),” where Prospect claimed that YNHH didn’t reach out with complaints or concerns until March 27.
Yale officials said they warned Prospect that it had violated the contract in a March 27 letter "identifying each of the breaches of which Yale New Haven Health was aware on that date." Yale claims that rather than attempting to rectify the breaches and satisfy the closing conditions, Prospect has only sought to delay the closing date. "It is now clear that Prospect and the Selling Entities have not satisfied—and cannot satisfy—the [agreement's] closing conditions," the suit contends.
Meanwhile, Prospect claims "patient volumes and finances at our Connecticut hospitals have rebounded significantly,” after a cyber-attack crippled hospital computer systems. But YNNH's suit says, “Over the last 18 months since the (contract) was signed, Prospect and the selling entities have subjected the businesses to a pattern of irresponsible financial practices, severe neglect, and general mismanagement.”
Among those mismanagement allegations, Yale New Haven Health cited nurses and physicians who rallied at the state Capitol in November, saying they were not getting paid. Yale also contends that Prospect has "been unable to maintain adequate supplies and functioning equipment."
The filing also claims the hospitals "have received an extraordinary and unacceptable number of regulatory citations and notices of 'Immediate Jeopardy' and are now the subject of several governmental investigations."
The lawsuit, filed Friday, cites reports in the Hartford Courant and Connecticut Mirror that surgeries at Prospect’s Connecticut hospitals were being postponed because healthcare providers were not given the proper resources, while contracts with traveling nurses and technicians were jeopardized. Both outlets also report that an anesthesiologist sued Prospect over nonpayment of over $3 million and the cyberattack set its hospitals further back financially.
Prospect has until May 30 to make a court appearance in the case.
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Dalton Zbierski is a digital content producer and writer at FOX61 News. He can be reached at dzbierski@FOX61.com.
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