Dallas-based Steward Health Care filed a lawsuit July 15 in bankruptcy court against its former chairman and CEO, Ralph de la Torre, MD, alleging insider transactions and mismanagement drained its assets and contributed to its financial collapse.
Tenet Healthcare, parent company of ASC giant United Surgical Partners International, is also named in the lawsuit.
Here are six key points for ASCs to know:
1. Steward, once the largest private for-profit health system in the U.S., filed for Chapter 11 bankruptcy in May 2024. As part of its restructuring, the system is pursuing legal action to recover funds it claims were misappropriated by former executives and business partners.
2. The 68-page lawsuit names Dr. de la Torre along with former Steward executives Michael Callum, executive vice president for physician services, and Sanjay Shetty, MD, former president. Steward alleges widespread self-dealing, fraudulent transfers, and breach of fiduciary duty.
3. Central to the complaint is a $111 million dividend paid in 2021, while Steward was allegedly insolvent. Of that, $81.5 million went to Dr. de la Torre, who allegedly used $30 million to purchase a superyacht. Steward claims these actions significantly depleted its capital and accelerated its downfall.
4. In 2022, Steward purchased five Miami-area hospitals from Tenet for $1.1 billion, a deal now at the heart of the lawsuit. Steward contributed $209 million in cash, with the remainder financed by Medical Properties Trust, its real estate investment partner.
5. The lawsuit claims Steward originally valued the hospitals at $895 million but overpaid due to Dr. de la Torre’s personal ambitions to expand in Miami. It also alleges that the deal was rushed through before Steward could sell five Utah hospitals, which it needed to fund the Tenet acquisition.
6. While Tenet is named in the suit, it is not accused of fraud or misconduct. The court approved Steward’s liquidation plan on July 16, allowing trustees to seek asset recoveries, including from deals where the system may have overpaid while insolvent. Tenet’s inclusion allows the court to assess whether the transaction qualifies as a fraudulent transfer under bankruptcy law.
