For-Profit Hospital Chain Never Put Aside Money for Malpractice Insurance to Compensate Injured Patients
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The Bottom Line
A for-profit hospital chain's bankruptcy left hundreds of injured patients without compensation for malpractice claims.
How This Affects You
If you are injured by medical malpractice at a self-insured hospital, you may not receive compensation if the hospital files for bankruptcy.
AI Summary
Prospect Medical, a for-profit hospital chain, failed to set aside money for malpractice insurance, leaving hundreds of injured patients without meaningful redress after its January 2025 bankruptcy filing. The company had promised to self-insure malpractice claims, covering up to $7.5 million per case, but court filings show no funds were reserved for these costs. This oversight has stalled lawsuits, including one by Pamela Dorn against Prospect for the 2022 death of her husband, Bob Dorn, from asphyxia at a Connecticut emergency room. State insurance regulators in Connecticut, Rhode Island, and Pennsylvania expressed concern but noted their limited authority over self-insured companies. Prospect's bankruptcy placed an automatic hold on over 300 lawsuits seeking more than $800 million in damages.
What's Being Done
State insurance regulators expressed concern but noted limited authority over self-insured companies.
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