When will Brockton, Taunton, Fall River hospitals be sold?
Three Democratic senators are urging the Department of Justice’s U.S. Trustee Program to appoint an independent fiduciary to run Steward Health Care and monitor the company’s bankruptcy proceedings.
Massachusetts senators Elizabeth Warren and Ed Markey and Ohio Sen. Sherrod Brown, who chairs the Senate Banking Committee, said Monday, June 3, that they wrote to Tara Twomey, the director of the U.S. Trustee Program, asking for the appointment of a Chapter 11 trustee to run Steward in place of its current management “as quickly as possible” and to monitor the hospital chain’s bankruptcy proceedings “to protect patients and local communities.”
Steward owns hospitals in Massachusetts and across the country — including Good Samaritan Medical Center in Brockton, Morton in Taunton and Saint Anne’s in Fall River.
The U.S. Trustees Program oversees bankruptcies for the Justice Department. The Trustees Program would need to ask the U.S. Bankruptcy Court for the Southern District of Texas to appoint a trustee. Steward is headquartered in Dallas, Texas, and bankruptcy court proceedings are taking place there.
“We urge the USTP to move to appoint a trustee to run the company in place of Steward’s current management as quickly as possible,” the senators said in a written statement. “Steward’s current management has demonstrated a long history of deception, mismanagement, delays and outright refusal to comply with state disclosure requirements. Leaving current management in control of both the disclosures and the day-to-day operations of these hospitals is a threat to public health as well as an invitation for management to continue to advance its own financial interests over those of the community served by Steward.”
What if no one buys Steward hospitals?Who will buy Good Sam, Morton and Saint Anne’s?
Steward, one of the largest private, for-profit health systems in the country, filed for Chapter 11 bankruptcy on May 6 after being behind by at least $50 million on rent and payments to vendors. The company plans to sell or auction its facilities by early July.
Steward is the operator of eight hospitals in Massachusetts, including Brockton’s Good Samaritan Medical Center, Saint Anne’s in Fall River and Morton in Taunton.
When can a judge appoint a Chapter 11 trustee?
According to bankruptcy law, a judge can appoint a Chapter 11 trustee “for cause, including fraud, dishonesty, incompetence, or gross mismanagement of the affairs of the debtor by current management, either before or after the commencement of the case.”
The senators wrote that “these circumstances appear to exist in the case of Steward.” If appointed, a Chapter 11 trustee would take over management of the business, oversee sales of the business’ assets and address claims by creditors.
Jaw-dropping revelations6 takeaways from Steward Health Care’s bankruptcy filing
Can a Chapter 11 trustee clawback funds?
A Chapter 11 trustee can also potentially claw back funds by challenging past fraudulent transactions by executives of the company, the senators wrote.
“A trustee is needed to seek such redress, given that (Steward CEO) Dr. (Ralph) de la Torre and his management team may have been beneficiaries of potentially fraudulent transfers or other wrongdoing and thus have a conflict of interest,” the senators wrote.
De la Torre has been publicly criticized for living a lavish lifestyle as the owner of two yachts and two jets.
Who is Ralph de la Torre?The CEO of Steward Health Care with a $40 million yacht
What happened at bankruptcy hearing?
Steward was in bankruptcy court on Monday, June 3 for a hearing before Judge Christopher Lopez, who approved a motion for next steps in the case, breaking up Steward’s assets into two tracks, with the first including all of the company’s hospitals outside of Florida and much of Texas.
“Today we’re just outlining procedures and process, and that is what this motion is really about. We’re not picking a winner today, we’re picking a process that will allow parties’ rights and provide transparency to the process, and that’s what today is really about, and that’s what this motion is requesting,” Lopez said after hearing about half an hour of arguments, almost entirely in support of the timeline Steward proposed. “So today’s just step one in the process. And I understand that, but an important one. You can’t get to step two without step one, and today I will approve the motion.”
What’s the timeline for selling hospitals?
The timeline that Lopez approved Monday sets a deadline for bids on Steward’s Massachusetts hospitals (and hospitals in other states aside from Florida) of June 24 and schedules sale hearings to be held before the judge on July 11. Steward is proposing to sell its physician services network, Stewardship Health, along the same timeline.
A lawyer for the U.S. Department of Justice spoke during Monday’s hearing to highlight for Lopez how the timeline, especially as it applies to the sale of Stewardship Health, could conflict with the U.S. government’s antitrust review of the transaction. A lawyer for Steward said the company has been talking with the DOJ about ironing out any potential issues.
“It is important, though, to note that while the parties are working very quickly, as quickly as they can, regarding the review, that these reviews are time intensive. A lot of it is coming from papers that the debtor and the proposed purchaser, United, need to get to the United States,” Augustus Curtis said. “And it is not likely, frankly, that a review of these antitrust concerns will be completed by the time of the sale hearing.”
Curtis said he wanted to raise the issue Monday because the DOJ “didn’t want to stand up for the sale hearing and indicate that there were problems that we didn’t let the court know about from the very outset of the case.”
Steward owns hospitals in Brockton, Taunton and Fall River
Steward’s eight hospitals in Massachusetts are St. Elizabeth’s in Brighton, Carney Hospital in Dorchester, Good Samaritan Medical Center in Brockton, Holy Family Hospital in Methuen, Haverhill Hospital in Haverhill, Morton Hospital in Taunton, Nashoba Valley Medical Center in Ayer, and St. Anne’s in Fall River.
Norwood Hospital, which was closed and demolished after a catastrophic flood, also belonged to Steward. Reconstruction of that facility appears to have stalled.
Information from the State House News Service and WCVB-TV was used in this report.
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