Steward Well being Care, an embattled hospital chain that has been the main target of federal scrutiny, has filed new courtroom papers blaming the corporate’s monetary woes on its founding chief govt. The corporate alleges that the ex-CEO and three former colleagues misappropriated a whole bunch of tens of millions of {dollars} and drove the chain out of business.
Steward accuses its founder Ralph de la Torre and three others — Michael Callum, James Karam, and Sanjay Shetty — of defrauding the corporate of greater than $245 million.
“Through their greed and bad faith misconduct, [these former insiders] operated Steward with the aim of enriching themselves at the expense of the Company, its creditors, and the patients and communities that Steward served,” the brand new submitting alleges. “These insiders pilfered Steward’s assets for their own material gain, while leaving the Company and its hospitals perpetually undercapitalized and insolvent.”
“I’m disgusted. It’s selfish. It’s greed,” she stated.
In an earlier assertion, the spokesperson stated Steward “has actively and meaningfully invested” in its hospital system since its formation, together with in Massachusetts, the place it took over hospitals that have been “failing” and “about to close.”
De la Torre additionally defended the corporate’s actions.
“Steward Health Care has done everything in its power to operate successfully in a highly challenging health care environment,” de la Torre stated in an organization assertion in 2024.
This week’s grievance lists three main transactions that de la Torre and executives allegedly profited from whereas leaving Steward hospitals struggling for funds to function.
Dr. Ralph de la Torre
Michael Nagle/Bloomberg by way of Getty Pictures
In January 2021, de la Torre allegedly took a $111 million dividend payout whereas the corporate was struggling financially. The previous CEO additionally pocketed $81.5 million in keeping with the grievance. The courtroom submitting additionally lists the previous executives who benefited: Callum, who as vice chairman for doctor companies at Steward obtained $10.3 million. Shetty, then-president of Steward Well being Care System obtained $1.8 million and Karam, who stays a member of Steward’s board, obtained $728,456.
The grievance additionally claims Steward Well being Care Worldwide, the worldwide arm of Steward that’s majority-owned by de la Torre, obtained $4.3 million of the dividend payout.
Later that yr, Steward claims de la Torre overpaid by $200 million for 5 Miami-based hospitals acquired from Tenet Healthcare Company. The grievance alleges the previous CEO pushed for the $1.1 billion deal primarily based on his “personal desire to build a hospital empire in the Miami area, rather than on any independent financial analysis.”
In response to the grievance, de la Torre then offered property associated to Steward’s Medicare Benefit enterprise to an organization referred to as CareMax in 2022.
Steward, by way of its physicians group, allegedly obtained $60.5 million in money, whereas the majority of the proceeds — virtually $134 million in inventory of CareMax — finally went to a holding firm that was majority-owned by de la Torre, Callum, Shetty and Karam. The grievance alleges de la Torre and named board members “sold valuable” property and “diverted the proceeds to themselves” whereas the corporate went bancrupt.
“De la Torre, Callum, and Karam were grossly negligent and breached their duties of care, loyalty, and good faith,” in keeping with the submitting.
CareMax filed for chapter in February.
Steward Well being Care is now being run by a court-appointed administrator and is making an attempt to claw again funds from its former leaders to repay its collectors.
In an announcement, a spokesperson for de la Torre says the previous CEO “disputes the allegations of wrongdoing and will vigorously defend himself against them.”
Michael Kaplan
contributed to this report.
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