FOLLOW US

Yale New Haven Health Services Corp. has agreed to allocate $411.5 million to potentially satisfy a judgment in its ongoing legal battle over a failed $435 million acquisition of three Connecticut facilities from Prospect Medical Holdings Inc., as stated in a stipulation from the involved parties.

Agreement to Set Aside $411.5 Million

Yale New Haven Health and the California-based Prospect Medical, which is suing for an alleged breach of the asset purchase agreement, agreed that setting aside the $411.5 million would render Prospect Medical's request for a prejudgment remedy moot. This agreement was filed on Friday in Connecticut Superior Court. The funds were set aside partially because the court confirmed it could expedite the proceedings and hold a trial in December.

Disputed Asset Purchase Agreement

Although the asset purchase agreement was for $435 million, the parties stipulated that $411.5 million would suffice to meet Yale New Haven Health's obligations if the court mandates the deal. The stipulation notes, "The base purchase price under the [asset purchase agreement] of $435 million is subject to certain adjustments at closing subject to the terms of the APA. While the parties dispute certain of those adjustments, it is agreed that such adjustments will reduce the total consideration paid at closing by at least $23.5 million."

The stipulation did not detail the adjustments reducing the purchase price by $23.5 million. With the $411.5 million allocated, the prejudgment remedy action brought by Prospect Medical, consolidated with Yale New Haven Health's declaratory judgment suit, is now moot.

Yale Hospital $411M Judgment : Legal Actions and Allegations

Yale New Haven Health initiated legal action over the asset purchase agreement on May 3, claiming that Prospect Medical's "irresponsible financial practices, severe neglect and general mismanagement" breached the terms of their agreement. In response, Prospect Medical filed for a prejudgment remedy in June, asserting no breach on its part and urging the court to enforce the original terms.

Following Prospect Medical's application, the parties agreed to consolidate their cases. The court, during a June 28 status conference, indicated readiness to begin a trial on Yale New Haven Health's declaratory judgment claims on Dec. 9.

Yale Hospital $411M Judgment : Expedited Resolution Efforts

A Yale New Haven Health representative stated Monday that the $411.5 million was set aside to "expedite the resolution" of its claims against Prospect Medical. Counsel for Prospect Medical did not immediately respond to requests for comment.

Yale Hospital $411M Judgment : Legal Representation

Yale New Haven Health is represented by Kim E. Rinehart of Wiggin and Dana LLP and Daniel Slifkin and Michael A. Paskin of Cravath Swaine & Moore LLP. Prospect Medical is represented by Amy P. Blume of Bershtein Volpe & McKeon PC and Robert Friedman and Danielle Vrabie of Sheppard Mullin Richter & Hampton.

The cases are Prospect Medical Holdings Inc. et al. v. Yale New Haven Health Services Corp., case number HHD-CV24-5083574-S, and Yale New Haven Health Services Corp. v. Prospect Medical Holdings Inc. et al., case number HHD-CV24-6184328-S, in the Hartford Judicial District of Connecticut Superior Court.