NEW HAVEN, Conn. — Last month, Yale New Haven Health filed a lawsuit against Prospect Medical Holdings, LLC., asking a judge to help get them out of the acquisition of three hospitals. Now, Prospect Medical has filed a counter lawsuit, asking YNHH to stick to the original agreement.
“These are counterproductive. These two entities will have to come together,” said state Sen. Saud Anwar (D-South Windsor), Senate chair of the Public Health Committee.
Prospect Medical currently owns Manchester, Rockville General, and Waterbury Hospitals. Years ago, YNHH expressed interest in buying the properties for $435 million. The deal has had several ups and downs ever since.
RELATED: Yale New Haven Health says Prospect Medical violated contract to purchase 3 local hospitals
Last month, YNHH filed a lawsuit against Prospect Medical in an attempt to get out of the deal. Yale claims the group violated its contract 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."
Now, Prospect Medical has filed a counter lawsuit. The company claims YNHH breached its agreement by, “’Failing to deliver the agreed-upon purchase price to PMH and by failing to take reasonable best efforts’ to complete the transaction,” said Gary Hopkins, a spokesperson for Prospect Medical Holdings, INC.
Dana Marnane, director of Public Relations and Communications for YNHH responded to the counter suit saying, in part, “The lawsuit filed by Prospect is a clear attempt to shift attention away from the for-profit, California-based company’s mismanagement of their Connecticut facilities and neglect of the communities who entrusted them with their care.”
Lawmakers in Connecticut, especially those on the Public Health Committee, said they are paying close attention to the transaction.
“All eyes are focused on it. The Dept. of Public Health, the governor’s office, the legislative branch, we will be doing everything we can to allow and to foster an environment where these two parties can come together,” said state Sen. Heather Somers, (R-Groton), ranking senator on the Public Health Committee.
Somers said during the last legislative session, lawmakers brought the issue up, but couldn’t come to an agreement on any changes.
“It has brightened our eyes in terms of how we, in Connecticut, deal with and allow private equity to come in and purchase our hospitals,” Sen. Somers said.
Somers said it has shown what can happen when those private equities take over hospitals and pull “all the funding out of the hospitals. Then putting them in a position where they continue to struggle to operate.”
Somers also mentioned some suggestions lawmakers had about changing the way Connecticut's Office of Health Strategy oversees deals like this in the future.
“If our Office of Healthcare Strategy had better control over when equity partners come in and purchase hospitals, we might have been able to prevent some of the things that happened,” Somers said.
Gov. Ned Lamont said Friday that he’s hopeful the deal will still go through, despite the pending suits.
“Two weeks ago, I got the principals together in the room, they hadn’t been in the room before,” Lamont said.
All as the Connecticut State Department of Public Health has been keeping a close eye on the hospitals, making sure patients continue to get the proper care.
There’s also an ongoing investigation lead by Connecticut Attorney General William Tong. His office is looking into the financial practices of Prospect Medical.
“We’re going to make sure that they do better than they have and that we continue to keep the patients safe,” Tong said.
Lamont said there are other things slowing down the deal aside from the lawsuits.
“They’re waiting for the audit of financials right now, which is a condition of the deal. I’m told the audit of the financials are delayed but they ought to have that within a month or so,” Lamont said.
Meanwhile, lawmakers are concerned about what could happen if YNHH doesn’t acquire the three hospitals.
"Yale University and YNHH provide excellent care, and these hospitals will really benefit from their presence in the community,” Anwar said. “Across the board, every single person is really worried and concerned and will do whatever it takes to have these two entities come together and move forward. Because you need health, we need health, we are part of the community, and we are going to do whatever it takes to move forward in the right direction.”
You can read the full statements from both parties, below.
Full Statement from Prospect Medical Holdings:
“The lawsuit states that YNHHS has breached the agreement by ‘by failing to deliver the agreed-upon purchase price to PMH and by failing to take reasonable best effort’” to complete the transaction. Instead, the lawsuit argues, YNHHS ‘has actively worked to prevent the closing of the transaction in hopes of renegotiating the purchase price. The lawsuit further claims that YNHHS has violated the Connecticut Unfair Trade Practices Act as well as its confidentiality agreements with PMH and has failed to act in good faith in its dealings with PMH. As a result, PMH is seeking damages of at least $435 million. Our primary purpose in filing this lawsuit is to hold YNHHS to its binding promise to acquire these critically important safety net hospitals and maintain YNHHS’s stated commitment to ensuring the hospitals’ continuing ability to serve their communities,’ said Von Crockett, co-CEO, Prospect Medical Holdings. ‘This transaction is in the best interest of these communities, and is supported by our physicians, nurses, caregivers, and elected officials.’”
- Gary Hopkins, Blanco + Hopkins & Associates, LLC, Spokesperson for Prospect Medical Holdings, LLC.
Full Statement from Yale New Haven Health:
“Yale New Haven Health stands by our complaint, which outlines Prospect’s numerous violations of our Asset Purchase Agreement through serious mismanagement. The lawsuit filed by Prospect is a clear attempt to shift attention away from the for-profit, California-based company’s mismanagement of their Connecticut facilities and neglect of the communities who entrusted them with their care. We are prepared to defend ourselves against this suit, while pursuing our own litigation to the end.”
- Dana Marnane, Director, Public Relations and Communications, Yale New Haven Health
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Julia LeBlanc is a reporter at FOX61 News. She can be reached at jleblanc@fox61.com. Follow her on Facebook, X and Instagram.
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