Steward Executives Cashed In Prior To Bankruptcy Filing

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Dive Brief:

• In the months leading up to Steward’s Chapter 11 bankruptcy, executives issued themselves multimillion-dollar payouts, bankruptcy documents reveal.
• Among the top paid include CEO Ralph de la Torre, who received a salary of more than $3.7 million in the year prior to bankruptcy.
• Steward also issued six-figure bonuses to other executives, including the company’s head of human resources and chief legal counsel, while simultaneously halting supplier payments and taking out loan payments to keep the company afloat.

Dive Insight:

Steward’s CEO is one of 14 executives whose total compensation exceeded a million dollars in the year prior to the company entering Chapter 11 restructuring.

Jeffrey Morales, executive vice president for business operations, received a salary of $823,000 and a bonus of $1.25 million, according to Friday’s filing, while Herbert Holtz, general counsel, received $1.48 million in legal fees and expense reimbursements.

Mark Rich, president of Steward Health Care, received a $1.73 million salary and a $500,000 bonus. Patrick Lombardo, executive vice president for human resources, received a salary of $842,000 and a $300,000 bonus.

High salaries are typical for healthcare executives, especially if the health system performs well. Chief executives at HCA Healthcare and Universal Health Services took home above $20 million and $14 million in total compensation, respectively, last year. 

Even struggling systems tend to pay their top executives well. Community Health Systems, which underperforms relative to its peers, paid CEO Tim Hingtgen over $8 million in total compensation in 2023.

However, Steward’s million-dollar paydays follow accusations the health system failed to pay vendors on time leading up to bankruptcy. Prior to entering restructuring, Steward was being sued by dozens of vendors over claims the health system had reneged on contracts and, in some cases, used stall tactics such as issuing false checks to avoid making payments.

At times, critical vendors withheld their services after payments were repeatedly delayed, and in one instance, a patient bled to death after a medical device was repossessed due to Steward’s failure to make timely payments, according to reporting from CBS News.

Steward has also been accused of improperly siphoning funds meant for patient care to spy on political opponents, analysts and whistleblowers.

One of the executives who received over a million in payments, Herbert Holtz, is alleged to have overseen that operation, according to previous reporting from the Boston Globe.

The health system is also currently under investigation by the U.S. Department of Justice for its conduct in Malta, where Steward was contracted to run three hospitals but never enriched the facilities, international documents claim.