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The unpaid tax bill dates back to 2022. Prospect Medical Holdings owes the state more than $127 million in unpaid hospital provider taxes going back more than three years, according to documents obtained by The Connecticut Mirror. Prospect Medical Holdings filed for bankruptcy protection in January, and the sale of its hospitals around the country is being overseen by the U.S. Bankruptcy Court in Northern Texas. State officials have been reluctant to release the total amount in taxes the bankrupt California-based hospital owes. In a filing with the Northern Texas bankruptcy judge earlier this year, Attorney General William Tong’s office cited $67 million in tax liens from December of 2023. But in multiple proof of claims filed with that same court in July, lawyers for the Connecticut Department of Revenue Services said that number has grown to more than $127 million. The documents reveal that Prospect has not met its hospital provider tax obligation, also referred to as a user fee, since 2022. The records show that Prospect owes $64.4 million in provider taxes for Waterbury Hospital, $47.2 million for Manchester Hospital and $16.2 million for Rockville General Hospital. The document only calculates the taxes through the end of 2024 and makes no mention of 2025 taxes or whether they have been paid, meaning the bill could be even higher by now. Spokespeople from Prospect Medical Holdings and MPT did not respond to a request for comment Tuesday. As the tax burden owed by Prospect Medical continues to rise, state officials are still negotiating how much of that debt the state will forgive as part of a deal for UConn Health to acquire Waterbury Hospital, said State Comptroller Sean Scanlon. Scanlon said the state has been negotiating a tax settlement with Prospect Medical Holdings and the hospital’s landlord, Alabama-based Medical Properties Trust, which owns the property and buildings. When Prospect filed for bankruptcy in January, Gov. Ned Lamont insisted that he didn’t think keeping the hospitals necessitated “taxpayer subsidies.” In October 2023, the governor rejected a plea from Yale for $80 million in state funding to help close its $435 million deal with Prospect Medical. That deal eventually fell through, and Yale recently paid Prospect $45 million to end the litigation over the failed deal. Now, the state seems poised to forgive millions of dollars in unpaid taxes to facilitate the UConn deal. “The situation has deteriorated over the last year, two years,” Lamont said in response to a question about how his thinking regarding taxpayer subsidies has evolved. “We really want to keep these hospitals going. I know how important they are to the community.” In addition to acquiring Waterbury Hospital, the state is in talks to buy two other private, independent hospitals that are also struggling: Bristol Hospital and Day Kimball Hospital in Putnam. The state plans to borrow $390 million to fund capital improvement projects at all three hospitals, though it would also support the purchase of Waterbury Hospital, Scanlon said. Funding to acquire Bristol and Day Kimball hospitals would be handled separately, he added. The money would be bonded through the UConn 2000 program. Speaker of the House Matt Ritter, D-Hartford, said that the tax forgiveness would have to be handled separately by the legislature from the hospital bonding deal. “If we want to support UConn Health’s taking over the hospital then we will have to [forgive the tax debt] if it’s part of the deal,” Ritter said. “Otherwise you have to consider the alternatives — that the hospital could potentially close or some other private equity firm could come in and buy it.” The hospital provider tax is intended to help finance the state’s Medicaid program. The revenue generated by the tax is used to receive matching federal funds and to offset other Medicaid costs. If hospitals are not paying the tax the state’s federal match is less. A spokesperson for the Connecticut Hospital Association declined to comment for this story. One of the state’s largest hospital chains is poised to acquire the other two Prospect-owned Connecticut hospitals. Earlier this week a subsidiary of Hartford HealthCare was the successful bidder in bankruptcy court for Manchester Memorial and Rockville General Hospitals, with an offer of $86.1 million for the two facilities. Prospect did not receive any additional bids for the hospitals, court records show. The company originally paid $105 million when it purchased the two facilities in 2016. Dave Altimari and Katy Golvala are reporters for The Connecticut Mirror (https://ctmirror.org/ ). Copyright 2025 © The Connecticut Mirror.
