Oroville Hospital Files for Chapter 11 Bankruptcy Protection

Oroville Hospital and its parent organization, OroHealth, have filed for Chapter 11 bankruptcy protection, a move aimed at restructuring their finances and securing a viable partnership for future operations. The petitions were submitted on December 8, 2023, in the U.S. Bankruptcy Court for the Eastern District of California, with Judge Christopher M. Klein overseeing the case.

In a statement following the filing, the hospital emphasized that this decision is crucial for its long-term sustainability as a healthcare provider. The aim of the Chapter 11 process is to facilitate a court-supervised transaction with a partner experienced in the healthcare sector who can invest in the hospital and uphold its mission for the community’s benefit.

Community Concerns and Financial Struggles

The bankruptcy filing has raised concerns among local leaders, including Mayor Dave Pittman, who expressed deep anxiety over the implications for employees and patients. 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.”

Oroville Hospital serves as the primary healthcare provider for the city, making its continued operation vital for community health and safety. Pittman reassured residents that the city is prepared to support efforts that lead to positive outcomes for both the hospital and its employees.

The hospital’s financial difficulties have been longstanding. On November 14, 2023, it announced intentions to seek a partnership or sale to a larger healthcare organization to address its financial woes. Despite these efforts, no partner or buyer has been secured thus far.

Compounding these challenges, on October 1, 2023, the hospital received a notice of acceleration from United Missouri Bank regarding the immediate repayment of nearly $200 million in bonds. This bond, issued on February 1, 2019, was intended to finance the construction of a new five-story, 165,000 square-foot facility, which has not yet opened.

Legal and Financial Repercussions

In December 2024, the hospital faced further financial strain when it agreed to pay $10.25 million to resolve allegations of illegal kickbacks and false billing claims to Medicare and Medi-Cal. This legal settlement was followed by a lawsuit in March 2025 from Modern-Sundt, the construction firm behind the new facility, which claimed over $16 million in unpaid fees.

Despite these setbacks, the hospital stated that the Chapter 11 process will allow it to maintain a focus on high-quality patient care. “We will remain open and continue to operate during the Chapter 11 process. Patient care remains our top priority and will be unaffected,” the statement noted. The hospital has secured additional financing to support its operations, ensuring that it can continue serving patients and supporting its employees throughout the bankruptcy proceedings.

To navigate the Chapter 11 process, Oroville Hospital has engaged the services of Cain Brothers, a division of KeyBanc Capital Markets, as its investment banking advisor. Additionally, the law firm Hooper, Lundy & Bookman, P.C. has been retained for healthcare regulatory and transactional counsel. The claims agent for the Chapter 11 case is Epiq Corporate Restructuring, LLC.

For further details regarding the bankruptcy filing, the hospital has directed inquiries to [email protected] and provided a dedicated webpage for updates.