TapestryHealth files for Chapter 11 bankruptcy after Medicare payments are suspended

TapestryHealth provides remote monitoring, telehealth and chronic care management for residents of skilled nursing and assisted living homes. The companies filed in the US Bankruptcy Court for the District of Delaware, according to court records summarised by WhatNow and Bondoro. Tapestry Management Services estimated its assets at US$50 million to US$100 million and its liabilities at US$10 million to US$50 million. David Campbell of Hilco Global is chief restructuring officer.

The company blames the Centers for Medicare & Medicaid Services. Its filings say CMS withheld all Medicare payments to one physician entity from January 2026 and suspended payments to more affiliates between August and October; Medicare brings in more than 63% of revenue. In April the US Attorney's Office for the Southern District of New York sent TapestryHealth civil investigative demands under the False Claims Act, and the Connecticut Post reported that the filing came amid a federal investigation into alleged Medicare fraud. The company says it lost nearly all its Medicare income without any finding against it, and it is challenging the suspension in court.

Between August and October the company stopped serving about 50,000 Medicare patients, and its workforce shrank by about 79%, the filings say. It told the court that without the relief it was seeking it could not meet payroll or keep treating patients. Mr Chess, who left management four years ago but still chairs the board, said in a statement on 9 November that the business was still operating and serving its partner facilities and residents.

The court has given interim approval to loans of up to US$19 million from existing lenders LAGO Evergreen Credit and LAGO Innovation Fund III, Bondoro reported. Funding after the first three weeks depends on a court order by 17 November applying the bankruptcy stay to CMS's Medicare suspensions, and on the business being sold within 90 days of filing.