Prospect's Connecticut hospitals: ECHN and Waterbury

analysisAccording to PMH's own website, Prospect acquired Waterbury Hospital (357 beds) in 2016 and Eastern Connecticut Health Network, with Manchester Memorial Hospital (249 beds) and Rockville General Hospital (102 beds), in October 2016; PMH's chief restructuring officer also refers to the October 2016 network acquisition, in which Prospect assumed the network's employee retirement plan. The Rhode Island Attorney General's 2021 decision states that Prospect operated under a certificate-of-need settlement with the Connecticut Department of Public Health relating to the 2016 acquisition of the three hospitals (dockets 15-32017-486 for Waterbury and one for Manchester Memorial and Rockville General), which the department extended by 18 months, to May 2021, because of clinical and quality concerns; the Connecticut orders themselves are not retained. In testimony to the General Assembly's finance committee on March 15, 2019, PMH's Chief Regional Performance Officer, Kimberly A. Lumia, stated that the three hospitals employed 5,111 people, paid $3,163,000 in state sales tax and $6,302,342 in property taxes and provided $45,749,468 in community benefit; these are the company's own figures, and the provider-tax figure in the testimony is printed as “$40,487,00” and cannot be read reliably. ^{1 2 3 4}

analysisIn its annual affiliate report to Connecticut's Office of Health Care Access of March 9, 2017, Prospect ECHN, Inc. listed its acute-care hospitals, Prospect Manchester Hospital, Inc. (The Manchester Memorial Hospital) and Prospect Rockville Hospital, Inc. (The Rockville General Hospital, Vernon), and as affiliates Prospect CT Medical Foundation, Inc., which operates its physician practices, and Prospect ECHN Home Health, Inc. (Visiting Nurse and Health Services of Connecticut); it identified Prospect CT, Inc. as the foundation's Connecticut parent. Prospect ECHN's 2025 petition lists Prospect CT, Inc. as holder of all of its equity. Connecticut's business registry, in records retrieved in October 2026, lists Prospect Waterbury, Inc. (registered April 8, 2016) and Prospect Manchester Hospital, Prospect Rockville Hospital and Prospect ECHN (registered April 12, 2016) as active stock corporations classified as general hospitals, each with PMH's address at 3824 Hughes Ave., Culver City, as its business address. ^{5 6 7 8 9 10 11}

analysisOn October 5, 2022 PMH and certain Connecticut affiliates agreed to sell the three hospitals and related facilities to Yale New Haven Health Services Corporation for $435 million in cash, subject to adjustments. On May 3, 2024 Yale sued in Connecticut Superior Court (No. HHD-CV24-6184328-S) for a declaration that it was not obliged to close because Prospect had breached covenants and could not meet closing conditions; Prospect had applied for a prejudgment remedy against Yale. In July 2024 the parties stipulated, to expedite trial, that the base price would fall by at least $23.5 million and that Yale would keep at least $411.5 million in an account at Northern Trust. That account of Yale's claims is set out in its bankruptcy filings. PMH's chief restructuring officer described Yale's allegations of financial non-viability and material adverse change as a pretext to justify a price reduction, and stated that Yale breached the agreement and failed to close. ^{1 2}

analysisOn January 22, 2025 the Connecticut debtors removed Yale's suit to the U.S. District Court for the District of Connecticut (No. 3:25-cv-105-MPS) and asked for its transfer to the Northern District of Texas; on July 22, 2025 the federal court granted Yale's abstention motion and remanded the case to the Superior Court. In their counterclaims the debtors acknowledged that the City of Waterbury had filed liens against Waterbury Hospital and that there were publicly filed notices of liens on their assets. In August 2025 PMH moved in the bankruptcy court to assume the purchase agreement with Yale, with objections due by September 11, 2025. ^{2 3}

analysisThe Connecticut Attorney General states, in a draft complaint whose claims have not been adjudicated, that PMH stopped paying the state's hospital tax in spring 2022 and that on December 18, 2023 the state filed tax liens on PMH for $67 million of unpaid taxes; that PMH reportedly owes the Pension Benefit Guaranty Corporation at least $4 million in missed pension contributions, for which liens were filed; and that PMH failed to pay Medical Properties Trust at least $56 million of accrued rent and interest. A December 2025 news report states that the Department of Revenue Services claims $257 million in unpaid provider taxes from Prospect. The draft complaint also reports that in June 2022 North American Partners in Anesthesia (Connecticut), P.C., Waterbury Hospital's sole anesthesia provider, sued PMH's subsidiary for more than $3.2 million of unpaid services from October 2020 to October 2021, and that the Connecticut Hospital Association sued PMH for breach of contract over an unpaid balance of about $1.7 million; the outcomes of these suits are not in the retained records. Agiliti Health, Inc. sued Prospect Waterbury, Inc. in the Central District of California in January 2024 (No. 2:2024cv00457) for breach of contract over unpaid invoices, and after Prospect Waterbury did not respond the clerk entered its default on February 27, 2024. ^{1 2 3}

analysisOn July 9, 2025 the Attorney General's office filed proof of claim no. 2592 in the Chapter 11 case for unliquidated amounts, attaching a draft complaint by the State of Connecticut and Attorney General William Tong against PMH and Prospect Medical Systems, LLC in Hartford Superior Court. The draft pleads negligent misrepresentation to regulators in connection with the 2016 acquisition of the three hospitals, unjust enrichment, negligent performance of a special duty and violations of the state's Safeguards Law and Unfair Trade Practices Act, and seeks restitution, disgorgement and civil penalties. It describes Prospect Medical Systems as a Delaware limited liability company with its principal office in Orange, California, whose sole principal is PMH; PHP Holdings' July 2025 bankruptcy filings instead describe it as held through Prospect Intermediate Holdings, LLC under PHP Holdings. The draft also alleges that on July 31, 2023 an unauthorised actor entered Prospect Medical's systems through a Citrix NetScaler vulnerability and on August 3 deployed Rhysida ransomware, compromising data of 212,369 Connecticut residents, and that the hospitals diverted ambulances. A December 2025 news report, citing the complaint, adds the allegation that Prospect obtained at least $7.4 million in federal and $1.8 million in state COVID relief funds for Rockville General although no COVID patient was treated there as an inpatient, and that most of its 102 licensed beds were shut by 2022. These are claims in a draft complaint attached to a proof of claim; no adjudication appears in the retained records, and the same December 2025 report quotes the Attorney General's spokesperson as saying the office was pursuing the claims, would add defendants if appropriate and was keeping its investigation open. ^{1 2}

analysisThe debtors' monthly operating report for July 2025, signed by chief restructuring officer Paul Rundell, shows net intercompany cash outflows that month of $15,337,609 from the Connecticut companies and $14,556,562 from PMH and corporate entities, and inflows of $20,582,033 to the Rhode Island companies, $5,936,013 to California, $1,900,000 to Pennsylvania and $1,476,126 to the physician companies; consolidated bank cash fell from $74,537,820 to $64,258,605. A December 2025 news report calculated from the debtors' filings that from the January 2025 filing to the end of July 2025 a total of $58.7 million was drawn from the Connecticut operations as intercompany activity, and that the Connecticut system's days of cash on hand fell to zero. ^{1 2}

analysisThe confirmed Chapter 11 plan defines the Connecticut ECHN assets, including Rockville General and Manchester Memorial, as sold under an asset purchase agreement between PMH, Prospect CT, Prospect ECHN, the two hospital companies and Prospect CT Medical Foundation as sellers and ECHN Holdings, Inc. as purchaser; a December 31, 2025 transition services agreement identifies the buyer as Manchester Memorial Hospital, Inc., a Connecticut nonprofit formerly known as ECHN Holdings, Inc., and dates the purchase agreement September 12, 2025. On November 6, 2025 the debtors selected UCHCFC Waterbury Health Corp. as stalking-horse bidder for Waterbury Hospital and signed a purchase agreement with it; no other qualified bids were received by November 14. The final price was $13,000,000 in cash: $4,000,000 plus landlord deposits for the operating assets and $9,000,000 for the real estate sold by its Medical Properties Trust owner, under a master agreement among Prospect Waterbury, PMH, MPT of Waterbury PMH, LLC and MPT Operating Partnership, L.P. Liabilities under the Waterbury Hospital Cash Balance Plan and other plans for which the Pension Benefit Guaranty Corporation is statutory trustee were excluded and did not pass to the buyer. ^{3 4}