Prospect Medical Holdings, Medical Properties Trust owe $23.6M in delinquent taxes to municipalities

CT Insider – Wednesday, January 29, 2025
By Eric Bedner

Prospect Medical Holdings and Medical Properties Trust, which owns the land on which Prospect’s hospitals sit, owe tens of millions of dollars in delinquent taxes to municipalities, some of which have not received payments in two years.

All told, California-based Prospect and Alabama-based MPT owe a total of roughly $23.6 million to Manchester, South Windsor, Vernon and Waterbury.

While Prospect owns the hospitals and medical facilities in each municipality, the for-profit health care company took out a $1.12 billion mortgage on its Connecticut properties in 2018 and then leased them back from MPT.

Prospect filed for bankruptcy earlier this month, but it has not paid its personal property taxes due to the city of Waterbury for each of the past two tax years, Director of Finance Michael LeBlanc said.

As of this week, Prospect owes the city nearly $3 million in principal, delinquent interest and lien fees.

The state has placed liens on Prospect’s three Connecticut hospitals in response to its delinquent tax payments. When the liens were implemented early last year, Prospect owed the state more than $67 million, leading to a $36.4 million lien on Waterbury Hospital, nearly $30 million on Manchester Memorial Hospital and more than $8 million on Rockville General Hospital.

Gov. Ned Lamont has since said Prospect’s debt to the state now exceeds $100 million.

Nina Kruse, a spokeswoman for Prospect, said that as part of the company’s bankruptcy filing, all of Prospect’s outstanding financial obligations are now under the bankruptcy court’s jurisdiction.

“The court will determine the prioritization and timing of payments as part of the overall restructuring process in accordance with applicable law,” she said.

Kruse did not comment on why taxes weren’t paid before the bankruptcy filing.

The federal government has also hit Prospect with liens for failing to make pension payments for employees at its Connecticut hospitals.

MPT has also not paid its real estate taxes due to the city for two years, LeBlanc said.

Principal, delinquent interest and lien fees total roughly $18.15 million in real estate property taxes owed, but MPT has filed a tax appeal challenging the city’s appraised value of the hospital at 64 Robbins St., LeBlanc said.

MPT has also not paid its water and sewer fees due to the city since July and is delinquent a total of roughly $141,700, LeBlanc said.

In Manchester, MPT owes more than $2 million in real estate taxes and Prospect owes more than $670,000 in both personal property and motor vehicle taxes, Director of Revenue Kelly Fleitas said.

Vernon is owed more than $171,000 in back taxes from Prospect and MPT, Town Administrator John Kleinhans said.

Vernon Mayor Dan Champagne said it’s “regrettable that Prospect has put our local hospital in this situation,” adding Rockville Hospital has always prioritized the well-being of residents.

“We are taking action to protect the town from potential financial losses and at the same time doing what we can to keep Rockville Hospital open,” he said.

Prospect also owes nearly $87,000 to South Windsor, where it operates two smaller medical facilities.

MPT does not own those properties and the real estate taxes are up to date as of the end of the fiscal year, Collector of Revenue Jennifer Hilinksi-Shirley said.

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