Vitality Health Plan of California, which offers Medicare Advantage plans, filed for Chapter 11 bankruptcy protection Dec. 18.
The company entered bankruptcy after California hospitals canceled their contracts with the insurer earlier this year over its deteriorating financial situation. Vitality is required to maintain a few million dollars in financial reserves, but it had negative working capital as of this summer, according to The Mercury News, which cited documents from the California Department of Managed Health Care.
The company entered bankruptcy with more than $1 million in estimated assets and more than $10 million in estimated liabilities, according to the bankruptcy petition.
The creditor with the largest unsecured claim against the health plan is Regional Medical Center in San Jose, Calif., according to bankruptcy documents.