Steward Bankruptcy Needs Labor Department’s Focus, Lawmakers Say

The Department of Labor must ensure Steward Health Care System LLC pays employee health care and retirement benefits during its bankruptcy, a group of lawmakers said in a letter to the agency Monday.

Sens. Edward Markey (D-Mass.) and Bernie Sanders (I-Vt.) were among the group that called on DOL to monitor Steward’s compliance with the federally required 60-day notice for layoffs, uncover Steward’s plan for paying benefits during and after bankruptcy, and communicate that plan to employees. They asked the Labor Department to ensure benefits and health claims are paid to employees and enforce violations of the law.

“Workers and retirees must be protected from further harm resulting from Steward’s gross financial mismanagement,” lawmakers said in the letter. Democratic Sens. Sherrod Brown (Ohio) and John Fetterman (Pa.) and Massachusetts Democratic Reps. Ayanna Pressley, Stephen Lynch, Seth Moulton, and James McGovern also signed the letter.

Steward, which is the largest for-profit health system in the country, declared bankruptcy in May. Lawmakers have repeatedly criticized the health system and called upon other US agencies to step in. Sen. Elizabeth Warren (D-Mass.) urged the US Trustee’s Office to appoint a trustee to take over the bankruptcy from Steward and named Steward while introducing a bill that would crack down on private equity in health care.

A bankruptcy judge in the US Bankruptcy Court for the Southern District of Texas approved Steward’s plan to secure more financing last week, which helped the health system stave off liquidation. The judge also approved mediation between Steward, its landlord Medical Properties Trust Inc. and others on the allotment of proceeds from the sale of Steward’s hospitals.

But concerns linger over the fate of the hospitals. During a hearing last week, Massachusetts regulators pointed out ambiguity in the new financing plan over who will pay to keep a hospital operating if nobody bids on it. MPT said it did not agree to pay hospitals’ expenses in the event there is no bid on them.

Steward could not be reached for immediate comment.

Weil, Gotshal & Manges LLP represents Steward.

The case is Steward Health Care Sys. LLC and Official Comm. of Unsecured Creditors of Steward, Bankr. S.D. Tex., Docket No. 24-90213, filed 5/6/24