Steward Health Care Sues Ex-CEO for Greed and Misconduct

Legal Battle Over Financial Mismanagement

Steward Health Care, now in bankruptcy, has launched a legal battle against its founder and former CEO, Ralph de la Torre, along with three other former executives. The lawsuit accuses them of mismanaging the company's finances while enriching themselves at its expense. The allegations include greed, bad faith misconduct, and financial exploitation.

The lawsuit names Michael Callum, James Karam, and Sanjay Shetty, who are all accused of running the company in a way that prioritized personal gain over the organization’s stability. According to the filing in the bankruptcy case, these individuals allegedly orchestrated a series of transactions designed to extract value for insiders.

A History of Controversial Decisions

De la Torre has been under scrutiny for his actions during Steward’s financial struggles. He is accused of taking millions for himself and purchasing a megayacht while the hospital chain faced severe financial difficulties. A spokesperson for de la Torre denied the allegations, stating that he will vigorously defend himself against the claims.

Karam, Shetty, and Callum were not immediately reachable for comment. However, their involvement in the alleged misconduct raises serious questions about the leadership of Steward during its decline.

Financial Troubles and Bankruptcy

Founded in Boston, Steward Health Care filed for bankruptcy in May 2024. As part of its restructuring efforts, the company closed two hospitals in Massachusetts and began selling off its remaining facilities. This move came after years of financial instability and mounting debt.

In September 2024, de la Torre failed to appear before a bipartisan Senate committee to address questions about the company's financial dealings, further fueling public and political concern.

Alleged Dividend Scheme

One of the most damaging accusations in the lawsuit involves a $111 million dividend taken by de la Torre and the other executives between April 2020 and November 2022. The complaint claims that this transaction was part of a scheme to benefit insiders, even as Steward was already insolvent.

According to the filing, de la Torre personally received $81.5 million of the dividend and used a portion of it to purchase a $30 million superyacht. The lawsuit argues that this action was catastrophic for the company’s finances and highlights a pattern of self-serving decisions.

Questionable Hospital Acquisition

In June 2021, Steward acquired five South Florida hospitals from Tenet Healthcare Corp. for $1.1 billion, despite the assets being valued at only $895 million. The lawsuit claims that de la Torre pushed through the deal before completing the sale of five Steward hospitals in Utah, which the company needed to fund the Tenet transaction.

The complaint suggests that the higher price was driven by de la Torre’s personal ambition to build a hospital empire in Miami rather than sound financial reasoning.

Asset Sale and Hidden Profits

In 2022, Steward alleges that de la Torre orchestrated a sale of healthcare assets related to its Medicare Advantage business to CareMax Inc. Instead of benefiting the company, the proceeds were largely directed to an entity owned by the executives.

According to the lawsuit, $134 million of the proceeds were paid to investors, including Callum, Karam, Shetty, and an entity linked to de la Torre. Steward only received about 31% of the proceeds, or roughly $60.5 million. The lawsuit also claims that the assets were sold for less than their fair value at a time when Steward was already insolvent.

Additional Entities Named in the Lawsuit

Steward claims that the former executives did not act alone. Several entities are also being sued for facilitating or benefiting from the alleged misconduct. These include Steward Health Care International S.L., Steward Health Care Investors LLC, Sparta Holding Co. LLC, Mullet II Ltd., Mullet II LLC, 5326 Old Buena Vista Road LLC, RDLT-SHCI Investor LLC, and Tenet Healthcare Corp.

The ongoing legal battle underscores the deep financial and ethical issues that led to Steward’s downfall. As the case unfolds, it may provide further insight into the decisions that contributed to the collapse of one of the nation’s largest private hospital chains.