OROVILLE – Oroville Hospital and its parent organization, OroHealth, have submitted voluntary petitions for Chapter 11 bankruptcy protection. The filings occurred on December 8, 2023, in the U.S. Bankruptcy Court for the Eastern District of California, where Judge Christopher M. Klein is overseeing the case. This significant move aims to address the hospital’s ongoing financial difficulties and secure its future as a crucial healthcare provider in the community.
In a statement regarding the Chapter 11 filing, the hospital emphasized, “We believe this filing is an important step toward securing the hospital’s long-term future as a vital healthcare provider and employer in our community.” The hospital plans to pursue a court-supervised transaction with a partner possessing the necessary resources and operational expertise to invest in the facility while upholding its mission.
Mayor Dave Pittman expressed concern over the implications of the bankruptcy on local employment and healthcare access. He stated, “When one of the city’s largest employers finds it necessary to take this path, the City Council and I are deeply concerned for the wellbeing of every employee whose job may be affected as well as the people who depend on the hospital for care.” Pittman highlighted the hospital’s role as Oroville’s primary healthcare provider, emphasizing its critical importance to the local community.
The hospital’s financial troubles have been well documented, particularly following a notice received on October 1, 2023. This notice required immediate payment of nearly $200 million in bonds, which the hospital defaulted on. The bonds, amounting to $195.6 million, were issued on February 1, 2019, to fund the construction of a new five-story, 165,000 square-foot facility, which has yet to open.
Additionally, the hospital faced a significant legal and financial setback in December 2024, when it agreed to pay $10.25 million to the federal government and the State of California to resolve allegations of illegal kickbacks and false billing claims involving Medicare and Medi-Cal. This was compounded by a subsequent lawsuit in March 2025 from Modern-Sundt, the construction company responsible for the new tower, seeking over $16 million in unpaid fees.
The hospital’s management asserts that the Chapter 11 process will allow it to maintain a strong focus on high-quality patient care while maximizing stakeholder interests. The organization plans to continue operating normally throughout the bankruptcy proceedings, assuring the public that patient care will remain unaffected. As part of its restructuring efforts, Oroville Hospital has secured additional financing to support ongoing operations, employee salaries, and vendor payments.
To navigate the complexities of the Chapter 11 process, Oroville Hospital has engaged Cain Brothers, a division of KeyBanc Capital Markets, as its investment banking advisor. The law firm Hooper, Lundy & Bookman, P.C. is providing specialized healthcare regulatory and transactional counsel. The claims agent for the case is Epiq Corporate Restructuring, LLC.
For further details regarding the bankruptcy filing, Oroville Hospital encourages inquiries via email at [email protected] or through their dedicated website at https://dm.epiq11.com/case/orovillehospital/info.
