Steward Health: CEO Charged With Contempt of Congress After Defying Subpoena to Testify

The national media has been buzzing with coverage of Dr. Ralph de la Torre, the embattled former CEO of hospital industry giant Steward Health Care who stepped down in October 2024. In one of the most colossal failures of a hospital chain in American history, the Dallas-based for-profit Steward system declared bankruptcy the previous May.

On September 12, Dr. de la Torre refused to show up at a hearing before a Senate committee investigating Steward’s bankruptcy despite a subpoena compelling his testimony. The Committee on Health, Education, Labor, and Pensions (HELP) next unanimously adopted a resolution intended to hold Dr. De la Torre in contempt of Congress. That was the first time this committee filed such an order since Richard Nixon occupied the White House.

By unanimous consent, the full Senate then approved the measure directing the Justice Department to file civil and criminal charges against Dr. de la Torre for contempt. Senator Bernie Sanders, an independent from Vermont and the committee’s chairman, said the committee had little choice but to seek charges as a result of Dr. de la Torre’s decision to defy the subpoena.

On September 30, Dr. de la Torre filed a federal lawsuit against that committee and nearly all its members, including Senator Sanders. The litigation claims unlawful violations of Dr. de la Torre’s constitutional rights by the legislators.

The complaint claims that by attempting to compel Dr. de la Torre to answer questions about the hospital system’s bankruptcy, the committee members are “collectively undertaking a concerted effort to punish Dr. de la Torre for invoking his Fifth Amendment right not to ‘be compelled . . . to be a witness against himself.’” The complaint also claims that Dr. de la Torre attempts to assert those rights under the Fifth Amendment “in the face of a ferocious campaign, by members of the United States Congress and others, to pillory and crucify him as a loathsome criminal.”

The lawsuit asked the United States District Court for the District of Columbia for a declaratory judgment quashing the subpoena and voiding as invalid and unconstitutional all actions relating to the subpoena’s enforcement, including the Senate’s contempt resolution. The complaint also asked for an emergency injunction barring the Senate from requiring Dr. de la Torre to testify while Steward’s bankruptcy proceedings were in progress.

A renowned heart surgeon trained at Duke University, MIT and Harvard Medical School, Dr. de la Torre filed the litigation the day before stepping down as Steward’s chief executive after serving in that role since 2008. At its peak, Steward was the largest private hospital system in the United States. With 42,000 employees, Steward operated 37 hospitals serving mostly low-income communities in eight states, with most of the facilities concentrated in New England.

But ever since a physicians’ group led by Dr. de la Torre in 2020 bought Steward for $790 million from Cerberus—the private equity firm that created the health system by “rolling up” several Catholic hospitals—he’s overseen Steward’s deconstruction. Some might call it a controlled demolition.

Many of Steward’s financially distressed hospitals have closed, including two in Massachusetts that could not be sold. The failing St. Elizabeth Medical Center in Boston was seized by the State of Massachusetts in an eminent domain proceeding to keep it open as a critical public health resource for the surrounding community, and to eventually find a new owner for the facility. Plus a Steward psychiatric hospital in Phoenix was shut down by the State of Arizona after its air conditioning system failed in 110-degree heat and Steward had no cash available to fix it.

According to the Associated Press, the company has also shut down operations within many hospitals. Steward closed pediatric wards in Louisiana and Massachusetts, neonatal units in Texas and Florida, and maternity services at a Florida hospital.

Senator Sanders said in September that Congress “will hold Dr. de la Torre accountable for his greed and for the damage he has caused to hospitals and patients throughout America.” Massachusetts Democratic Senator Edward Markey said that Steward, led by Dr. de la Torre and its corporate enablers, “looted hospitals across the country for profit, and got rich through their greedy schemes.”

A Wall Street Journal investigation revealed that while Steward’s hospitals were being sued by vendors for nonpayment—and lacked critical supplies and equipment after unpaid vendors stopped supplying the facilities—Dr. de la Torre had amassed a personal fortune of more than $250 million. He owns two luxury yachts worth $40 million and $15 million, and at one point he owned two private jets worth about $33 million each. Public station WGBH in Boston reported that he was repeatedly using the hospital system’s assets as his own personal “piggy bank.”

Senator Sanders said the HELP Committee wants to know how Dr. de la Torre and the companies he owned could have received hundreds of millions of dollars in compensation since 2020 while thousands of patients and healthcare workers suffered and communities were devastated. And he said all those tragedies happened because of Steward’s mismanagement.

The senator also said he wanted Dr. de la Torre to explain why federal regulators reported that at least 2,000 Steward patients were placed in “immediate peril” because of staffing shortages or a lack of medical equipment—and why at least 15 of those patients at Steward’s hospitals had died. One of the reasons why the committee had subpoenaed Dr. de la Torre is that the health system’s financial details had been shrouded in secrecy since at least 2017.

That’s because Steward had ignored requirements to provide regulators with comprehensive financial statements, although they had levied fines against the system and sought a court order attempting to compel discovery of the statements. But even in Massachusetts where many of the Steward hospitals operated, the fines for that noncompliance were insignificant, at only about $1,000 per week.

As a result, Steward stalled for at least nine years, and regulators didn’t realize the full extent of the system’s insolvency until the United States Bankruptcy Court for the Southern District of Texas required it to file financial statements to obtain protection from creditors under Chapter 11. Combined with the aggregate value of the creditor filings, those statements finally disclosed that Steward was facing a staggering amount of debt: over $9 billion in total liabilities.

Now that the bankruptcy court had publicly released Steward’s financial data, a December 2024 analysis by scholars at Harvard University’s T.H. Chan School of Public Health identified the main reasons for Steward’s bankruptcy.

In essence, private equity owners’ extreme pursuit of profit maximization, followed by risky financial strategies like sale-leaseback agreements and a failure to invest in patient care were the main factors that resulted in Steward Health Care’s bankruptcy filing.

After Cerberus bought the Catholic hospitals that it later rebranded as Steward, like most private equity firms Cerberus sought high returns on its investment quickly—which led to the premium-priced sale to Dr. de la Torre’s physician group. Dr. John McDonough, a professor of the practice of public health at Harvard’s Chan School, calls private equity “the sharp end of capitalism:”

It’s otherwise often described as ‘capitalism on steroids.’ It’s for-profit business in its most aggressive form. [Private equity firms] seek returns on their investment as high as possible as quickly as possible, then rush to sell off that investment and go on to their next conquest.

After developing a presence in other industries, PE firms like Cerberus targeted the healthcare sector starting in the mid-2000s, attracted by the industry’s $5 trillion valuation and stable cash flow. PE firms now own 5,779 physician practices—a 608 percent increase since 2012. They also own 460 U.S. hospitals, representing eight percent of private hospitals and 22 percent of for-profit hospitals.

Dr. Meredith Rosenthal, a Harvard health economics professor, points out that private equity firms like Cerberus pitch deals by claiming that they can raise capital and invest it in improving the business in ways that nonprofits can’t. “But the challenge is that because healthcare is so important, the public expects these corporations to prioritize public interest over profits,” she says. “And that’s not what they’re built to do.”

Dr. McDonough adds that “medical care has always had a for-profit element. Physicians were mostly small businesspeople. But there’s a difference between a sole proprietor or small business and a mega-corporation that believes its only purpose in the world is return on equity to shareholders. Hold that belief up against a medical provider’s belief that patients come first, and right away there’s conflict. It’s this core contradiction that I think American society has never sufficiently grappled with.”

Harvard’s analysis then cites evidence showing that when private equity takes over, healthcare quality declines while charges soar. At PE-owned hospitals, Medicare patients suffered a 25 percent increase in hospital-acquired complications and a doubling of their rate of postoperative infections compared to similar patients at non-PE-owned hospitals. Meanwhile, the PE-owned hospitals boosted charges by up to 16 percent more and earned 27 percent more income. They usually accomplished these results by issuing more service charges each day, while admitting fewer Medicare patients in favor of more patients holding private health insurance providing higher reimbursements.

After Cerberus sold Steward to Dr. de la Torre’s group in 2016, the system started to engage in risky financial deals.

Steward quickly signed a sale-leaseback agreement with Medical Properties Trust (MPT), in which the system sold off its hospital land and buildings to MPT, then leased them back. This deal provided Steward with $1.25 billion—including millions of dollars in bonuses for Dr. de la Torre and his associates that suddenly made them wealthy—but saddled the company with massive rent obligations that eventually proved unsustainable. From this point on, Steward’s hospitals would struggle with aggressive cost-cutting as its managers tried to find the cash to pay these huge rental charges.

Steward prioritized profits and cost-cutting to keep up with their rent payments to MPT, leading to compromised patient care and safety. This management team “wanted it both ways:” the company aggressively cut costs and neglected bills at the same time it focused on maximizing profits for its investors and executives.

Exacerbated by the rent obligations to MPT, Steward’s financial instability persisted. By January 2024, Steward was $50 million behind on rent payments, leading to the bankruptcy filing in May 2024.

The financial statements released in 2024 finally documented all the ways that Steward had consistently paid hundreds of millions to its investors and leadership each year since 2020—including huge sums to CEO de la Torre—even while patient care suffered and patients died. Despite all the outrage over Dr. de la Torre’s actions, this aspect probably did more to draw his contempt of Congress charges than anything else.

“The passage of this resolution by the full Senate will make clear that even though Dr. de la Torre may be worth hundreds of millions of dollars, even though he may be able to buy fancy yachts and private jets and luxurious accommodations throughout the world, even though he may be able to afford some of the most expensive lawyers in America—no, Dr. de la Torre is not above the law,” Sanders said during a speech on the floor of the Senate. “If you defy a Congressional subpoena, you will be held accountable no matter who you are or how well connected you may be.”