Sources tell CBS News that Steward Health Care is under federal investigation for fraud and corruption

Sources tell CBS News that Steward Health Care is under federal investigation for fraud and corruption

CBS News has learned that federal authorities in Boston have opened a criminal investigation into Steward Health Care, a company that owns dozens of hospitals nationwide, including nine in Massachusetts, according to two people familiar with the matter. Steward, which is based in Dallas, recently Bankruptcy filed.

Federal prosecutors in the U.S. Attorney’s Office in Boston are investigating Steward Health Care on a variety of charges, including fraud and violations of the Foreign Corrupt Practices Act, two people familiar with the matter said. The law prohibits U.S. citizens and companies from engaging in corrupt activities abroad.

In addition to his U.S. properties, Steward was hired by the Maltese government to run three state-owned hospitals. That deal is now at the center of a criminal corruption investigation on the island. Neither Steward nor his executives have been charged in Malta in connection with the matter.

The Justice Department did not immediately respond to CBS News’ request for comment.

A Steward spokesman reached on Thursday was initially unavailable for comment.

Steward filed for bankruptcy in May and is currently exploring the sale of all of its hospitals. Offers for the Massachusetts facilities that remained open during the bankruptcy will be submitted on Monday.

The company was one of the focal points a year-and-a-half-long investigation by CBS News documented how private equity and other investor groups have diverted hundreds of millions of dollars from municipal hospitals with devastating consequences for public health.

Records reviewed by CBS News showed Steward hospitals across the country left a trail of unpaid bills and at times were at risk of running out of potentially life-saving supplies.

The Massachusetts Department of Health launched an investigation after a woman died after giving birth at a Steward hospital in Boston last October. A complaint from health care workers at the facility, obtained by CBS News, suggests that a medical device that could have saved her life had been recalled by the manufacturer weeks earlier because Steward still had about $2.5 million in unpaid bills.

Steward has become synonymous with the dangers of private equity investing in healthcare. The firm began buying up Massachusetts hospitals in 2010, with hundreds of millions of dollars in backing from private equity giant Cerberus.

Cerberus sold its stake in Steward by January 2021 after making $800 million in profits over a decade, according to a Bloomberg report. Financial records show that Steward has also sold more than $1 billion in land and buildings belonging to its hospitals to Medical Properties Trust since 2016, which has done a deal the purchase of hospital properties from private equity investors.

A 2021 filing with the Securities and Exchange Commission shows that Steward’s owners also paid themselves millions in dividends. Around the same time, Steward CEO Ralph de la Torre purchased a 190-foot yacht worth an estimated $40 million.

“They’ve taken money away from hospitals that provide essential care and are lining their own pockets,” Massachusetts Gov. Maura Healey told CBS News in February. “I’m disgusted. That’s selfish. That’s greed.”

The company previously told CBS News that executives always put patients first and said they “deny that any other considerations take precedence over this guiding principle.” The company spokesperson said Steward has “actively and meaningfully invested in its hospital system” since its founding, including in Massachusetts, where it acquired hospitals that were “failing” and “on the verge of closure.”

“Steward Health Care has done everything in its power to operate successfully in an extremely challenging healthcare environment,” de la Torre said in a company statement in May.