US Senate probes Steward Health bankruptcy, subpoenas CEO

[July 26, 2024]  By Dietrich Knauth

NEW YORK (Reuters) - A U.S. Senate committee opened an investigation into the bankruptcy of privately owned hospital network Steward Health on Thursday, voting to compel the company's CEO to testify at a public hearing in September.

Steward, which filed for Chapter 11 protection in May, is attempting to sell its 31 hospitals in bankruptcy.

In issuing a subpoena, Senator Bernie Sanders, chair of the Committee on Health, Education, Labor and Pensions, said on Thursday that Steward's owner and CEO, Dr. Ralph de la Torre, had made "huge sums of money" while the company cut medical services.

"Perhaps more than anyone in America," de la Torre "epitomizes the type of outrageous corporate greed that is permeating throughout our for-profit healthcare system," Sanders said.

De Le Torre had purchased a $40 million yacht, a $15 million fishing boat, and two corporate jets while hospitals under his management shut down, eliminating hundreds of jobs and reducing access to medical care in rural areas, said Sanders, an Independent who caucuses with the Democrats.

De la Torre could not immediately be reached for comment. Steward did not immediately respond to a request for comment.

The committee voted 20-1 to issue a subpoena to de la Torre after he had declined previous invitations to testify about Steward's downfall.

The committee intends to ask about risks to U.S. patients as well as Steward’s ill-fated expansion into Malta, which spurred a U.S. Department of Justice investigation into possible violations of the U.S. Foreign Corrupt Practices Act.

Steward was awarded a contract to operate publicly funded hospitals in the Mediterranean country, but Maltese prosecutors have pursued bribery and corruption charges over the privatization effort.

U.S. Senator Bernie Sanders (I-VT) holds up a vile of insulin while speaking as Senator Bill Cassidy (R-LA) sits next to him during a Senate Health, Education, Labor and Pensions Committee hearing on Capitol Hill in Washington, U.S., May 10, 2023. REUTERS/Leah Millis/File Photo

The committee's top Republican, Bill Cassidy, said the committee had never issued a subpoena to force a witness to testify, and that the step was not taken lightly.

"Patients lives are at risk," Cassidy said. "Americans deserve answers."

In one example of what Cassidy called "shocking" mismanagement, he said a Massachusetts woman died after giving birth because doctors realized mid-surgery that supplies needed to treat her had been repossessed due to Steward's financial troubles.

Sanders also blamed Steward's former private equity owner Cerberus Capital Management for the company's downfall, saying there could not be a clearer example of private equity owners loading a company with debt and leaving it to fall apart after their exit.

Cassidy said Cerberus should not be blamed for the company's missteps, noting that it had exited its investment in 2020.

(Reporting by Dietrich Knauth; Editing by Bill Berkrot)

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