STRATFORD, Conn. — TapestryHealth, a Stratford-based medical services company founded by Stratford Mayor David Chess, has filed for Chapter 11 bankruptcy after federal regulators suspended its Medicare payments during a False Claims Act investigation.

Tapestry Management Services Inc. and affiliated companies operating as TapestryHealth filed voluntary petitions Nov. 6 in U.S. Bankruptcy Court in Delaware, The Connecticut Centinal reported. The company provides remote monitoring, chronic care management and other medical services to residents of skilled nursing and assisted living facilities.

Chess founded TapestryHealth and is its chairman, according to the Centinal, which reported that court documents show he wholly owns several of the companies that filed, including Chess Medical P.C., Chess Medicine PLLC, Tapestry Health PLLC and Tapestry TeleHealth PLLC. Chess, a physician, defeated Republican incumbent Laura Hoydick in November 2025, becoming Stratford's first Democratic mayor in two decades, Connecticut Public reported.

Payments suspended

In its filings, the company blames its collapse mainly on the Centers for Medicare & Medicaid Services, which it says suspended Medicare reimbursements without prior notice, according to a summary of the case by bankruptcy tracker Bondoro. Medicare made up more than 63% of the company's revenue.

CMS put a full hold on Medicare payments to one of the company's physician practices in January, and from August through October suspended payments to more of them, the filings say. Medicare contractors also reversed payments that had already been made. The company says it lost substantially all of its Medicare revenue without any finding against it, and that CMS denied its request for hardship relief.

The suspensions followed civil investigative demands that the U.S. Attorney's Office for the Southern District of New York issued to TapestryHealth and some affiliates in April under the False Claims Act, according to the filings. The demands are part of an investigation. No findings against the company have been reported, and it has not been charged.

Between August and October, the company stopped serving about 50,000 Medicare patients and cut its workforce by about 79%, according to the filings. Its lenders ended a forbearance agreement Oct. 9 and demanded full repayment of its loans.

The company lists $50 million to $100 million in assets and $10 million to $50 million in liabilities. It plans to keep operating while it runs a quick sale process funded by new bankruptcy financing, though the terms of that financing require its Medicare payments to be restored.

Company sues

Alongside the bankruptcy, TapestryHealth sued the United States, Health and Human Services Secretary Robert F. Kennedy Jr., CMS Administrator Mehmet Oz and several Medicare contractors, the Centinal reported. In its complaint, the company calls the billing allegations "unsupported" and "groundless" and argues that the payment freezes are unjustified and put vulnerable nursing home residents at risk.

The Centinal's report did not include a statement from Chess or the mayor's office.