Senate committee to vote on holding Steward Health Care CEO in contempt for refusing to testify at hearing
Sep 16, 2024
Leaders of the Senate Committee on Health, Education, Labor and Pensions said the committee would vote on Sept. 19 to bring criminal contempt charges and a civil enforcement action against Steward Health Care’s CEO, Dr. Ralph de la Torre, after he failed to show up and testify at a Senate hearing on Thursday, despite being subpoenaed.
The Senate committee held the hearing to gather information about Steward Health’s financial decisions leading up to the Dallas-based health system’s Chapter 11 bankruptcy filing in May.
Steward said in a written statement that it is inappropriate for Dr. de la Torre, who is also Steward’s majority owner, to testify before the committee while the negotiations for settlements are ongoing, noting that a federal court has banned him from doing so, The Associated Press reported.
The health system — the nation’s largest private, for-profit health system — had more than $9 billion in liabilities at the time of the bankruptcy filing, including $6.6 billion in lease obligations through 2041, and nearly $1 billion in unpaid bills from vendors and suppliers.
It has sold several of its 31 hospitals in the past few months, and others have been closed. Last month, the health system agreed to sell Stewardship Health, its physician group, to Nashville, Tenn.-based Rural Healthcare Group, an affiliate of private equity firm Kinderhook Industries.
Two nurses from Steward hospitals in Massachusetts and two elected officials from Louisiana testified at the Senate hearing.
One of the nurses, Ellen MacInnis, who works at St. Elizabeth’s Medical Center in Boston, spoke of patient deaths resulting from severe understaffing in the emergency department and lack of life-saving equipment because vendors had repossessed the equipment after not being paid. She said nurses have had to buy basic supplies such as infant formula, diapers, and bereavement boxes used to transport the remains of newborn babies who have died to the morgue, according to The AP.
Louisiana state Rep. Michael Echols referred to Steward executives as “health care terrorists,” according to WBUR, Boston’s NPR affiliate.
“They are killing our patients, they are killing our communities, and they need to be held accountable,” he said.
WBUR reported that Sen. Bernie Sanders, I-Vt., who chairs the Senate committee, remarked at the hearing, “How many of Steward’s hospitals could have been prevented from closing down, how many lives could have been saved, how many health care workers would still have their jobs today if de la Torre spent $160 million on high-quality health care at the hospitals he managed instead of a yacht, two private jets, a luxury fishing boat, and a huge contribution to a wealthy prep school?”
“Dr. de la Torre became obscenely wealthy by loading up hospitals from Massachusetts to Arizona with billions of dollars in debt and selling the land underneath these hospitals to real estate executives,” Sanders said, according to The AP.
Sen. Bill Cassidy, R-La., the committee’s ranking member, said, “We need to keep this from happening again, and that means we need answers,” Reuters reported.
“A witness cannot disregard and evade a duly authorized subpoena,” Sen. Cassidy added.
The committee plans to adopt two resolutions next week to hold Dr. de la Torre in contempt, The AP reported. One resolution is for civil enforcement and the other is for certification to the U.S. Attorney for criminal contempt.
If the committee votes to approve the resolutions, the full Senate will then vote on them.
The Department of Justice is also investigating Steward Health Care for allegations of fraud and for possible violations of the Foreign Corrupt Practices Act.
Our Take: Dr. de la Torre said in his statement that lawmakers have “pre-determined his guilt,” Reuters reported. We’ll reserve judgement and bring you up to date on the latest transactions in Steward’s bankruptcy proceedings.
On Wednesday, Steward left the bankruptcy court with an interim settlement agreement in which it transitioned many of its hospitals that are still open to Medical Properties Trust (MPT), Steward’s landlord, or to designated operators, effective immediately, Becker’s Hospital Review reported.
Under the agreement, MPT will forgive roughly $7.5 billion in Steward’s outstanding obligations and allow Steward to use nearly $400 million in net proceeds from the proposed sale of three hospitals to Orlando Health to pay lenders and unsecured creditors.
Steward will continue to operate the hospitals covered under the agreement because it is bound by contracts, but four new management teams will serve as interim operators of 15 of the hospitals. The new managers will fund the hospitals’ operating expenses, Becker’s reported.
Healthcare Systems of America, an affiliate of American Healthcare Systems, will operate eight of the 15 hospitals, including hospitals in Florida, Louisiana, and Texas.
HonorHealth will manage three Steward hospitals and multiple physician practices in Arizona. The deal does not include St. Luke’s Behavioral Health Center in Phoenix, which the state’s health department closed in August because of a faulty HVAC system that left the facility too hot to safely occupy. ABC15 Arizona reported that HonorHealth plans to assume full operational ownership of the facilities (other than St. Luke’s BHC) by Oct. 1.
Insight Health System will interim manage two hospitals in Ohio, which were previously scheduled to close this week because there had been no qualified bidders, and Quorum Health will manage two medical centers in Texas.
According to Becker’s, MPT will open a $5 million escrow account to fund near-term incidental expenses and, along with the interim managers, will fund at least $9.1 million in payroll obligations.
New lease agreements have been signed, and MPT will receive cash rental payments from the 15 hospitals starting in 2025.
A hearing is scheduled for Tuesday to make the interim management permanent, Becker’s reported.
Earlier this month, the bankruptcy judge approved the sale of six Steward hospitals in Massachusetts. The approvals include the sale of Good Samaritan Hospital and St. Elizabeth’s Medical Center to Boston Medical Center; the sale of Morton Hospital and St. Anne’s Hospital to Lifespan; and the sale of two Holy Family Hospital locations to Lawrence General Hospital. Ray Schlock, who is representing Steward, said the targeted closing date for the sales is Sept. 30.
What else you need to know
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What we’re reading
The physician shortage isn’t going anywhere. McKinsey & Company, 9.10.24
Sofinnova’s Jim Healy on ‘more rational market’ as four biotech startups near their IPOs. Endpoints News, 9.12.24 (registration may be required)
How much 10 health systems are paying for EHRs. Becker’s Health IT and CIO Report, 9.11.24 (registration may be required)
