Prospect's California hospitals and their 2025 sale

analysisAt the January 2025 petition date PMH's chief restructuring officer listed seven California hospitals among the 16 owned and operated by Prospect: Los Angeles Community Hospital, Southern California Hospital at Van Nuys, Los Angeles Community Hospital at Norwalk, Southern California Hospital at Hollywood, Southern California Hospital at Culver City, Foothill Regional Medical Center in Tustin and Los Angeles Community Hospital at Bellflower, noting that Foothill is managed by, but not directly owned by, PMH. PMH's website, a company self-description, states that Brotman Medical Center became Southern California Hospital at Culver City, a 420-bed general acute care hospital, which later combined with two sister facilities to form Southern California Hospitals System, and that PMH acquired a hospital in Tustin in May 2014. The corporate ownership statement in the January 11, 2025 petition of Alta Hospitals System, LLC lists PMH as holder of 100% of its equity. ^{1 2 3}

analysisSouthern California Healthcare System, Inc., Alta Los Angeles Hospitals, Inc. and Alta Hospitals System, LLC, as borrowers, had a $90 million revolving credit facility from eCapital Healthcare Corp. under a credit and security agreement entered into on June 5, 2024, secured by substantially all of the assets and equity of the California hospitals other than Foothill Regional Medical Center. Alta Los Angeles Hospitals and Southern California Healthcare System also entered into PACE assessment contracts dated July 19, 2019 with the California Statewide Communities Development Authority; the August 2025 sale order treats the authority's lien on the Medical Properties Trust real estate as a permitted lien that survives the sale and requires the buyer to pay delinquent instalments. ^{1 4}

analysisThe Connecticut Attorney General's draft complaint, citing press reports, states that in 2015 CMS issued an “Immediate Jeopardy” finding against Southern California Hospital at Culver City; that a 2018 California inspection found its pharmacy staff had ignored contamination findings in sterile compounding equipment, leading to about 21,000 doses of “adulterated dangerous drugs” being dispensed over nine months; and that in September 2019 California's attorney general charged PMH executives, including Samuel Lee, the hospital and its supervising pharmacists with gross negligence and sought to revoke or suspend the hospital's pharmacy permit. These allegations are repeated from press reports; the California accusation itself and its outcome are not in the retained records. A 2020 investigative report states that Prospect asserted that “no patient harm occurred” from the “error”, which had been corrected, and that the pharmacy was “fully operational”; that report described the matter as still pending, and no later outcome appears in the retained records. ^{1 2}

analysisOn August 3, 2025 the debtors selected NOR Healthcare Systems Corp., a wholly owned subsidiary of Healthcare Systems of America, as stalking-horse bidder for the California assets and signed an asset purchase agreement. It names NOR, a Nevada corporation, as purchaser and PMH as seller parent and seller representative for Alta Hospitals System, Southern California Healthcare System (Southern California Hospital at Hollywood, Van Nuys and Culver City), Alta Los Angeles Hospitals (Los Angeles Community Hospital, Norwalk and Bellflower) and Coordinated Regional Care Group, LLC; it was signed for PMH by chief restructuring officer Paul Rundell and defines the sellers' knowledge as that of Von Crockett and Alfredo Sabillo. Notices to the purchaser go to 505 North Brand Blvd, Glendale, for the attention of Faisal Gill, and the agreement records a confidentiality agreement of February 18, 2025 between PMH and Healthcare Systems of America. The consideration was the assumption of liabilities plus cash equal to the borrowing base under the eCapital credit line, or the difference after the eCapital debt was repaid or assumed. The debtors' notice stated that NOR had no connections to them other than those arising from its stalking-horse bid. ^{1 2}

analysisThe parties were to file a Hart-Scott-Rodino notification and a material-transaction notice with California's Office of Health Care Affordability. At closing NOR was to receive a new lease of the Medical Properties Trust real estate and enter an interim lease-back and an interim management agreement under which it would manage the hospitals until the licences were transferred; the California hospitals' Medicare advance repayment obligations listed in the sale order totalled $17,493,666.81. On August 29, 2025, after a hearing the day before, the U.S. Bankruptcy Court for the Northern District of Texas approved the sale free and clear of interests to NOR as the highest offer, for the assumed liabilities, cash equal to the eCapital borrowing base (or the eCapital payoff alternative) and an additional $8.5 million in cash, and found that the purchaser acted in good faith without collusion and was not an insider or affiliate of the debtors. ²

analysisAn August 12, 2025 trade-press report, drawing on the company's business registration, stated that NOR had been registered in Nevada three months earlier and named as a director Michael Sarian, who served as senior vice president of Prospect's hospital operations from 2005 to 2012, and listed the six hospitals offered: Bellflower Behavioral Health Hospital, Los Angeles Community Hospital, Norwalk Community Hospital, Southern California Hospital at Culver City, Southern California Hospital at Hollywood and Van Nuys Behavioral Health Hospital. The publication reported that Prospect did not respond to requests for comment about possible sale terms and that HSA, Prospect, MPT and NOR did not respond to requests for comment on the article. A U.S. Federal Trade Commission early-termination notice dated September 29, 2025 (transaction 20251865) names Mike Sarian as the acquiring party and Sang Bum (Samuel) Lee as the acquired party, with Alta Hospitals System, Southern California Healthcare System and Alta Los Angeles Hospitals as the acquired entities; under the FTC's listing format the acquired party is the ultimate parent entity of the companies sold, and the notice does not describe ownership percentages. ^{3 4}

analysisHealthcare Systems of America's website, a company self-description, presents Michael Sarian as its chairman and chief executive, previously President of Hospital Operations at Prime Healthcare Management, and as having been chief executive officer and vice president of finance of organisations including Prospect/Alta Hospital System Inc. Findings of fact in In re Prime Healthcare ERISA Litigation (C.D. Cal., No. 8:20-cv-1529) list members of Prime's 401(k) plan committee including Mike Heather, Prime's chief financial officer, from 2013 to 2020, Heather's successor Steve Aleman and Sarian, Prime's President of Hospital Operations, from 2012 to 2020; after a bench trial in April 2024 the court concluded that the defendants had used a prudent process in managing the plan. A company-data profile describes Heather as PMH's former chief financial officer, who led its 2005 initial public offering and joined Prime in August 2013. In a July 5, 2023 stipulation with California's Attorney General in the bankruptcy of Beverly Community Hospital Association, Sarian signed as chairman and chief executive of American Healthcare Systems Foundation Inc., a North Carolina nonprofit selected as the winning bidder for the Montebello hospital's assets, and Faisal Gill signed as its counsel. ^{1 2 3 4}

analysisA June 2026 trade-press report describes Sarian as founder and majority owner of multiple hospital companies and a legal battle over governance at Healthcare Systems of America, American Healthcare Systems and NOR. It states that HSA and five affiliated Florida hospitals sued Sarian in Miami-Dade County Circuit Court on June 11, 2026, alleging that Sarian diverted at least $14 million from HSA corporate accounts between September 2024 and January 2026 to personal accounts, the Sarian Family Trust and related entities; that other filings allege that Illinois supplemental hospital funding was redirected, including toward a proposed acquisition of PMH's California hospitals; and that Faisal Gill and Aramais Paronyan, MD removed Sarian from leadership roles at HSA and NOR. The publication states that these allegations in pending lawsuits have not been proven and that no court has made findings on the merits. Sarian strongly disputes them, said that moving funds among hospitals was normal cash management and denied taking money improperly, and Sarian's lawyers filed an amended complaint in California on June 23, 2026 alleging that Gill and Paronyan unlawfully sought to seize control of Sarian's businesses. ⁵