Allegations of Misconduct Lead to Steward Health's Bankruptcy Filing

Steward Health Care, a hospital network facing financial troubles, has submitted recent legal documents pointing blame at the organization’s original CEO for their fiscal difficulties. The documents accuse the ex-chief executive and three of his associates of misappropriating a substantial sum and leading the company into insolvency.

The legal filing asserts that the company’s founder, along with Michael Callum, James Karam, and Sanjay Shetty, orchestrated the diversion of more than $245 million.

These former leaders are accused of engaging in self-serving activities at the corporation's expense, disadvantaging creditors, patients, and the communities relying on Steward’s services. The accusations suggest they siphoned off company assets for their own benefit, leaving Steward and its hospitals financially strapped.

Once the largest for-profit hospital network in the United States, Steward expanded under the guidance of de la Torre. Collaborating with real estate investment entity Medical Properties Trust, de la Torre increased the company’s reach by acquiring new properties, selling them, and enacting high-cost leasing agreements.

A thorough investigation over nearly two years revealed these strategies allowed private equity investors and de la Torre to cash out substantial sums from real estate transactions, adversely affecting financial resources necessary for patient care.

The investigation unearthed numerous instances where Steward’s hospitals owed significant debts, jeopardizing access to crucial medical supplies. One alarming example involved a Massachusetts hospital, where a critical device went missing, endangering a patient during childbirth.

Following the bankruptcy declaration last August, Steward divested six hospitals located in Massachusetts, leaving about 1,200 employees without work, state authorities reported. Massachusetts Governor Maura Healey, in a 2024 interview, sharply criticized the actions of Steward’s leadership.

"It reflects sheer selfishness and greed," Healey remarked.

In the wake of a patient’s passing, a Steward representative asserted that the company prioritizes patient well-being over any other considerations.

A previous statement suggested that Steward has robustly invested in the healthcare infrastructure, particularly in Massachusetts, saving some hospitals from closing.

De la Torre defended the company's overall efforts to thrive against healthcare industry challenges.

The recent lawsuit outlines three significant transactions that allegedly profited de la Torre and others while depleting Steward's resources.

The court document indicates that in early 2021, despite financial constraints, de la Torre secured a $111 million payout. This filing notes he also collected $81.5 million, with additional funds funneled to other key executives and a division of Stewards owned mainly by him.

Steward accuses de la Torre of overindulging in a $1.1 billion acquisition of five Miami hospitals, purportedly lacking thorough financial justification.

Additionally, Steward's Medicare Advantage-related assets were sold to CareMax in 2022, with much of the proceeds allegedly channeled into a holding company controlled by de la Torre and partners.

The complaint underscores significant breaches of responsibility and ethical duties by de la Torre, Callum, and Karam, describing their actions as grossly negligent.

Amidst these challenges, reports have surfaced about de la Torre’s lavish expenditures, including purchasing a yacht, a ranch, and two luxury jets, prompting scrutiny.

Steward Health is currently overseen by a court-appointed administrator, making attempts to recover diverted funds.

De la Torre, instrumental in the company’s 2010 inception, faces ongoing probes into potential fraudulent activity. Notably, despite being subpoenaed, he declined to testify before a Senate Committee exploring the company’s financial troubles.

Responding to these allegations, de la Torre’s spokesperson denies the accusations and states they plan a robust defense.