Yale New Haven Health Services Corp. announced that a Connecticut appellate court has upheld its information request in the ongoing $435 million property dispute with bankrupt Prospect Medical Holdings Inc. The ruling confirms that third-party hospital real estate holding companies and their parent corporation cannot immediately challenge a decision requiring them to provide records relevant to Yale Hospital’s asset purchase efforts.
The short order, issued Wednesday by the Connecticut Appellate Court, confirmed that the underlying discovery decision by Hartford Superior Court Judge Elizabeth J. Stewart was not a final judgment and therefore could not be appealed at this stage. The court cited the 2019 case Redding Life Care LLC v. Town of Redding in support of its decision.
Judge Stewart previously rejected claims by three Connecticut subsidiaries of Medical Properties Trust Inc.—MPT of Manchester PMH LLC, MPT of Rockville PMH LLC, and MPT of Waterbury PMH LLC—that Yale Hospital’s requests were overly broad or irrelevant. The judge noted that the records held by the entities likely contain material information about the conditions of the three hospitals Yale Hospital intended to acquire from Prospect Medical for $435 million.
While MPT asserted that responding to Yale Hospital’s request would require 1,300 hours of attorney time and cost $425,000, Judge Stewart deemed the figures excessive. She nevertheless ordered Yale Hospital to cover reasonable production costs.
The discovery request is part of the broader $435M property suit between Yale Hospital and Prospect Medical, which involves disputes over asset purchase agreements, unpaid rent, and loan obligations. Yale Hospital has maintained that Prospect Medical repeatedly failed to disclose its true financial condition during negotiations.
“Yale New Haven’s discovery efforts are essential to ensure transparency and protect the interests of all parties in this $435 million transaction,” said a spokesperson for Yale Hospital.
Prospect Medical filed for Chapter 11 bankruptcy in Texas in January, listing more than $1 billion in debts. Despite attempts to move the dispute to federal court and the bankruptcy proceeding, the case remains before the Connecticut Superior Court for state-level proceedings.
Yale New Haven Health Services Corp. is represented by Daniel Slifkin, Michael A. Paskin, Lauren M. Rosenberg, and Helam Gebremariam of Cravath Swaine & Moore LLP, as well as Jeffrey R. Babbin and Kim E. Rinehart of Wiggin and Dana LLP. MPT is represented by Linda L. Morkan, Edward J. Heath, and Benjamin C. Jensen of Robinson & Cole LLP.
