A Senate committee decides to investigate Steward’s bankruptcy and subpoena its CEO

A Senate committee voted Thursday to authorize an investigation into Steward Health Care’s bankruptcy and subpoena the company’s CEO, Dr. Ralph de la Torre.

The subpoena would require de la Torre to testify at a hearing on September 12 before the Senate Committee on Health, Education, Labor and Pensions.

De la Torre had declined an invitation to testify on June 25 from committee chairman Senator Bernie Sanders, the independent senator from Vermont, and Bill Cassidy of Louisiana, the committee’s ranking Republican. De la Torre also declined invitations to testify at a hearing in Boston chaired by Democratic Senator Edward Markey of Massachusetts.

Markey said owning a hospital brings additional responsibilities.

“This is not the acquisition of a widget company. This is not the acquisition of a coffee company. Here they are taking over hospitals and applying the exact same standards they would apply to a widget company,” Markey said.

In May, Steward announced it was selling its 31 hospitals in eight states after filing for bankruptcy. The Dallas-based chain operates eight hospitals in Florida.

Sanders said the Steward firm’s bankruptcy shows how dangerous it is to allow private equity managers to make huge sums of money by taking over hospitals, burdening them with debt and selling off their assets.

“Perhaps more than anyone else in America – and that is undoubtedly a dubious distinction – Ralph de la Torre, CEO of Steward Health Care, embodies the kind of outrageous corporate greed that permeates our entire for-profit health care system,” Sanders said.

Sanders said de la Torre became “obscenely rich” by burdening hospitals with billions of dollars in debt and selling the land on which the hospitals were located to real estate managers who charged unsustainably high rents.

According to Sanders, Steward and his hospitals were subsequently forced to file for bankruptcy with a mountain of debt of nine billion dollars.

Steward Health Care said in a statement that the company would process the subpoena.

“We understand the desire for greater transparency about our path and our path forward,” the company said. “The bankruptcy process is public and the records to date, including briefings, court dates, mediations and related proceedings, reflect active monitoring and participation by various government regulators, government entities, secured and unsecured creditors.”

The company said that one of the agencies involved in overseeing Steward’s bankruptcy proceedings was the Office of the United States Trustee, a division of the U.S. Department of Justice.

The company is also under investigation by the U.S. Department of Justice over allegations of fraud and corruption related to three public hospitals it manages in Malta. Prosecutors were reportedly looking into possible violations of the Foreign Corrupt Practices Act, a law that prohibits Americans from engaging in corrupt practices abroad.

Steward’s problems in Massachusetts have drawn the ire of political figures, including Democratic Gov. Maura Healey. On Tuesday, Healey said the state is reviewing bids for the eight hospitals Steward owns in Massachusetts.

Meanwhile, the company said it had received successful bids from Pafford Health to purchase Wadley Regional Medical Center in Arkansas and from AHS South for Glenwood Regional Medical Center in Louisiana.

However, documents show that Steward canceled the first round of auctions for hospitals in Ohio, Pennsylvania, Arkansas and Louisiana after receiving uncompetitive bids. Steward was expected to announce an alternative approach to relocating those hospitals at a later date.

A second round of bidding is planned for Stewards Hospitals in Florida, with a deadline of August 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 stated that it does not expect any disruption to the day-to-day operations of its hospitals during the bankruptcy proceedings; the company stated that operations will continue as usual throughout the duration of the Chapter 11 proceedings.

In court documents, the company said Steward began a “phased marketing process” to sell its hospital facilities in late January.

Steward has filed for bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas.

Following the bankruptcy filing, de la Torre stated in a press release: “Steward Health Care has done everything in its power to operate successfully in an extremely challenging healthcare environment.”

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