A Senate committee voted Thursday to authorize an investigation into the bankruptcy of Steward Health Care and to subpoena the company’s CEO, Dr. Ralph de la Torre.
The subpoena would compel de la Torre to testify before the Senate Health, Education, Labor, and Pensions Committee at a hearing on Sept. 12.
De la Torre had declined a June 25 invitation to testify by committee Chair Sen. Bernie Sanders, the Vermont independent, and Bill Cassidy of Louisiana, the committee’s top Republican. De la Torre also refused invitations to testify at a Boston field hearing chaired by Democratic Sen. Edward Markey of Massachusetts.
Markey has said owning a hospital carries extra responsibilities.
“This is not taking over a widget company. This is not taking over a coffee company. This is where they take over hospitals and they apply the very same standards to those hospitals which they would apply to a widget company,” Markey said.
In May, Steward said it planned to sell its 31 hospitals in eight states after announcing it had filed for bankruptcy protection. The Dallas-based chain operates eight hospitals in Florida.
Sanders said the Steward bankruptcy shows the dangers of allowing private equity executives to make huge amounts of money by taking over hospitals, loading them up with debt and stripping their assets.
“Perhaps more than anyone else in America, a dubious distinction no doubt, Ralph de la Torre, CEO of Steward Health Care, epitomizes the type of outrageous corporate greed that is permeating throughout our for-profit health care system,” Sanders said.
Sanders said de la Torre became “obscenely wealthy” by loading up hospitals with billions of dollars in debt and selling the land underneath the hospitals to real estate executives who charged unsustainably high rents.
As a result, Sanders said Steward and its hospitals were forced to declare bankruptcy with $9 billion in debt.
In a statement, Steward Health Care said it plans to address the subpoena.
“We understand the desire for increased transparency around our journey and path forward,” the company said. “The bankruptcy process is public and to date the record, including briefings, court appearances, mediations and related proceedings, reflect active monitoring and participation from various state regulatory agencies, governmental units, secured creditors, and unsecured creditors.”
The company said that those involved in overseeing Steward’s bankruptcy cases include the Office of the United States Trustee, an arm of the U.S. Department of Justice.
The company is also under a DOJ investigation over fraud and corruption allegations related to three public hospitals it manages in Malta. Reportedly, prosecutors were looking at possible violations of the Foreign Corrupt Practices Act, a law that prohibits Americans from engaging in corrupt practices overseas.
Steward’s troubles in Massachusetts have drawn the ire of political figures including Democratic Gov. Maura Healey. On Tuesday, Healey said the state is evaluating bids for the eight hospitals owned by Steward in Massachusetts.
Meantime, the company said successful bids were received from Pafford Health to purchase Wadley Regional Medical Center in Arkansas and AHS South for Glenwood Regional Medical Center in Louisiana.
However, documents show that Steward canceled first-round auctions for hospitals in Ohio, Pennsylvania, Arkansas and Louisiana after receiving uncompetitive bids. Steward was expected to announce an alternative approach for moving these hospitals at a later date.
Steward’s Florida hospitals are scheduled for second round of bids, with a deadline of Aug. 12.
In Florida, Steward operates Coral Gables Hospital, Hialeah Hospital, North Shore Medical Center and Palmetto General Hospital in Miami-Dade County; Florida Medical Center in Broward; Melbourne Regional Medical Center and Rockledge Regional Medical Center in Brevard; and Sebastian River Medical Center in Indian River.
The company has said it does not expect any interruptions during the bankruptcy process in its hospitals’ day-to-day operations, which the company said will continue in the ordinary course throughout the Chapter 11 process.
In court filings, the company has said that beginning in late January, Steward initiated what it described as a “phased marketing process” for the sale of its hospital facilities.
Steward filed for protection in the U.S. Bankruptcy Court for the Southern District of Texas.
After filing for bankruptcy, de la Torre said in a news release that “Steward Health Care has done everything in its power to operate successfully in a highly challenging health care environment.”
