Connecticut, Hospitals Reach Settlement After 7-Year-Long Tax Battle

Jan 14, 2020

A $1.8 billion settlement between the state of Connecticut and its hospital system has become law. The settlement withdraws legal claims that could have exposed the state to up to $4 billion in liability.

Governor Ned Lamont signed the seven-year agreement into law at Griffin Hospital in Derby alongside executives from the Connecticut Hospital Association.

Lamont told hospital executives he wanted to resolve the longstanding dispute fairly.

“You weren’t treated like partners for a long time in this state. And it was really time to reset that relationship. I’ve tried to do that with the business community, I’ve tried to do that in the capitol, and I knew we had to do it with the hospitals.”

The settlement ends a dispute that dates back to a 2012 tax that was designed to bring in more federal Medicaid reimbursement funds for the state and hospitals. However, hospitals ended up paying more in taxes.

“I do think state government had thrown you guys a curveball. I thought it was time to sit down and resolve this in as fair a way as we could. What we owe the business community in general, and the hospitals specifically, was just a little bit of certainty.”

The move led to legal action and a rocky relationship with former governor Dannel Malloy.