Prospect Medical Holdings received DOJ subpoena

PHOTO | SHAHRZAD RASEKH/CT MIRROR Waterbury Hospital is among the care providers owned by Prospect Medical Holdings.

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The list of legal issues for Prospect Medical Holdings continues to grow.

As the California-based company that owns Waterbury, Manchester Memorial and Rockville General hospitals fights a legal battle to sell them to Yale New Haven Health System (YNHH), it also faces an inquiry from the U.S. Department of Justice.

In a legal document filed June 27 in its lawsuit with YNHH, Prospect states that it was served a “CID” — a civil investigative demand, or subpoena — by the Justice Department on Nov. 3, 2023. No details about the subpoena were included in the document.

In May, YNHH asked the Connecticut Superior Court to be let out of its $435 million contract with Prospect, after failing to renegotiate a lower price following a cyberattack that financially devastated operations at the three hospitals, as well as revelations that Prospect owed tens of millions of dollars to vendors, physicians, and local and state taxes.

Prospect countersued in June, claiming YNHH breached its contract and failed to make “reasonable best efforts” to complete the deal.

On June 14, Hartford Superior Court Judge Barbara N. Bellis granted a joint motion from the two sides to consolidate the lawsuits and place them on the complex litigation docket.

The Connecticut Hospital Association is also suing Prospect and the three hospitals it owns in the state claiming they failed to pay more than $1.75 million in membership dues and for special services fees.
Prospect’s deal to sell its Connecticut hospitals is complicated by the fact that the properties are owned by Medical Properties Trust (MPT, the largest hospital landlord in the country.

MPT said it had expected to receive $355 million from the sale of the three hospitals to YNHH, but that is now on hold because of the lawsuits.