Steward sues former CEO over alleged pilfering that contributed to bankruptcy

Now-bankrupt Steward Health Care is suing former executives—including CEO Ralph de la Torre, MD—alleging the group “pilfered” hundreds of millions from the organization, contributing to its demise.

The nearly $1.4 billion legal filing was approved by a bankruptcy court, which will allow the company to attempt to claw back funds de la Torre and other “insiders” allegedly paid themselves in the form of dividends, despite Steward’s struggles. If successful, money obtained through the lawsuit will be used to pay down outstanding debts.

Named in the filing are former board members Michael Callum, MD, Sanjay Shetty, MD and financier James Karam, all of whom allegedly benefited from a $111 million dividend paid out in 2021, despite the healthcare system being insolvent.

According to the lawsuit, de la Torre alone received $81.5 million, using $30 million to purchase himself a “superyacht, which he continues to enjoy to this day.” The former CEO is potentially on the hook for more than $251 million, which includes payouts to multiple companies that Steward alleges are linked to de la Torre. 

In total, all executives named in the case—including all potentially affiliated entities—have been accused of siphoning almost $1.4 billion during a time when Steward was financially unstable. 

“These insiders pilfered Steward’s assets for their own material gain, while leaving the company and its hospitals perpetually undercapitalized and insolvent,” the suit said. “Their misconduct ultimately led to Steward’s collapse and the filing of these chapter 11 cases.”