Steward Health Care is suing former leadership, including CEO Ralph de la Torre, M.D., as well as business associates including Tenet Healthcare over alleged “greed and bad faith misconduct” that contributed to the health system’s bankruptcy.
The lawsuit is part of a bankruptcy-court-approved plan to claw back funds so Steward can repay its debts and was filed Tuesday alongside dozens of other lawsuits against vendors aiming to recover avoidable transfers.
The complaint targeting de la Torre and fellow “insiders” who had held leadership positions and served on Steward boards—Michael Callum, M.D., Sanjay Shetty, M.D., and James Karam—looks to recoup much of a $111 million dividend authorized and paid out in 2021 when Steward was already insolvent.
The complaint notes that de la Torre alone received $81.5 million of the “catastrophic” dividend “and, within just a few months, he purchased himself a $30 million superyacht, which he continues to enjoy to this day.”
Also in the spotlight are two transactions overseen by the defendants that the complaint describes as misvalued and another vehicle to divert away from the company.
First is the $1.1 billion acquisition of five Miami-area hospitals and associated physician practices from Tenet—$209 million of which was funded by Steward. (Affiliates of real estate investment trust Medical Trust Properties, which received much of the facilities’ real estate, also financed the deal.)
The hospitals and their real estate were only valued at $895 million, according to the complaint, with de la Torre rather than an independent financial analysis pushing the higher purchase price. The deal was also closed ahead of a separate hospital sale Steward needed to provide liquidity amid the Tenet purchase.
The second deal involved the $194 million sale of Steward Health Care Network’s value-based care assets to CareMax, which was the exclusive value-based managed service organization for Steward (and in late 2024 filed for its own Chapter 11).
As part of the deal, a “vast majority of the sale proceeds … equivalent to approximately $134 million" was paid to a separate entity owned by the insiders and then distributed to the defendants and another entity owned by de la Torre, according to the complaint. This left less than a third, about $60.5 million, for Steward.
Steward and its legal team are seeking avoidance of the dividend and two deals’ payments and is seeking to recover the funds—including the $1.1 billion from Tenet. (Though, on Thursday, the parties filed a stipulation and agreed order regarding other payment disputes between the two parties that left the complaint’s claims intact.) Steward is also asking the court for an order declaring de la Torre and the others violated their fiduciary duties.
“These insiders pilfered Steward’s assets for their own material gain, while leaving the Company and its hospitals perpetually undercapitalized and insolvent,” the complaint reads. “Their misconduct ultimately led to Steward’s collapse and the filing of these chapter 11 cases.”
Steward filed for Chapter 11 protection in May 2024 with $9 billion in debt, and, in the time since, has worked with the court to sell—or in some cases, close—its 31 hospitals. De la Torre, his decisions at Steward’s helm and his apparent self-payouts were a frequent focal point for critics of for-profit healthcare, disgruntled workers, affected communities and even Congress.
After he chose not to attend a September hearing to which he was subpoenaed, members of the Senate Health, Education, Labor and Pensions Committee gave unanimous consent to hold de la Torre in contempt. Shortly after, the executive resigned from Steward while filing a counter-lawsuit against the legislators.
In statements to press, a spokesperson for de la Torre disputed the complaint’s claims and said the former executive plans to defend himself against them.
In a Wednesday bankruptcy court hearing, Steward said it would be pursuing more than $3 billion in legal claims to repay its bankruptcy expenses, a process it expects to complete by mid-2027 should it be able to recover even a fraction of the claims.