A Senate committee held an extremely rare vote Thursday to subpoena Steward Health Care Chair and CEO Dr. Ralph de la Torre and launch a formal investigation of the hospital chain's bankruptcy filing.
The Senate Health, Education, Labor and Pensions Committee, citing de la Torre's repeated refusals to come before the committee voluntarily, voted 20-1 to subpoena the executive and 16-4 to launch a formal investigation of Steward that could include sworn testimony and future subpoenas for others in the Steward chain of command.
Related: Lawmakers target private equity in healthcare, citing 'rot'
The committee has never subpoenaed anyone in its 25-year history, though a predecessor committee did in 1981. De la Torre has been summoned to appear on Sept. 12.
Steward declared bankruptcy earlier this year, prompting condemnation from numerous lawmakers who blamed the involvement of private equity in the system's efforts to expand and subsequent deals that saddled the company with debt, as well as an arrangement to lease back sold facilities at high rents.
The company has been struggling to sell off hospitals recently in an attempt to get back on track, even as federal authorities have launched an investigation of the company's practices.
Committee Chair Bernie Sanders (I-Vt.), speaking with photos of de la Torre's and the company's planes and yachts displayed behind him, ran through a litany of financial Steward deals that Sanders described as an "elaborate ponzi scheme." He said while de la Torre bankrupted his hospitals, the CEO netted himself great wealth that let him and the company buy a $40 million yacht and a $15 million fishing boat.
"I'm not quite sure how you pay $15 million for a fishing boat, but while they were shutting down hospitals, that's what he managed to do," Sanders said.
Sanders also singled out the two jets the company bought, one for $62 million and another for $33 million.
"How can you get by in this day and age with one private jet?" Sanders said sarcastically. "It is almost hard to make this stuff up. The greed that we are seeing here is really quite extraordinary."
The near unanimous votes were made possible by support from the committee's ranking Republican, Dr. Bill Cassidy of Louisiana.
"Subpoenas should only be used when absolutely necessary, when all other efforts have failed," Cassidy said. "And the subpoena we're voting on today meets that criteria."
Cassidy did not blame private equity, however. He said early private equity investments that created Steward were beneficial. He said the problem was de la Torre's poor management, including a hospital in West Monroe, Louisiana. He argued de la Torre went wrong starting in 2015 with a string of deals that made the executive a lot of money, particularly a 2016 agreement to sell hospital properties to a real estate investment trust.
"We must learn about these financial deals because it spelled the beginning of the end for Steward," Cassidy said.
"It's important to recognize that Stewart is not a private equity firm — private equity did not cause the situation we're seeing today," he said. "In fact, robust private equity investment kept the hospitals afloat in 2010."
Sen.Ed Markey (D-Mass.) said the problem indeed stemmed from the private equity investments, and said the investigation would put a spotlight on the "role private equity is playing in this hospital sector."
"This is not taking over a widget company. It's not taking over a coffee company," Markey said. "This is where they take over hospitals, and they apply the very same standards to those hospitals that they would apply to a widget company. All I can say to Dr. de la Torre is you cannot treat communities as expendable. You are accountable. Your day of reckoning is going to be to arrive here."
Steward issued a statement after the votes that didn't say specifically how it would respond, but said it would "address the subpoena with the appropriate HELP Committee staff," and acknowledged the committee's desire to unravel the complicated history.
"We understand the desire for increased transparency around our journey and path forward," the statement said, noting that it filed for bankruptcy voluntarily and that the process involves transparency and participation of stakeholders, including the Justice Department's Office of the United States Trustee
"The bankruptcy process is public and to date the record, including briefings, court appearances, mediations and related proceedings, reflect active monitoring and participation from various state regulatory agencies, governmental units, secured creditors, and unsecured creditors," the statement said. "In addition to financial reporting submitted by Steward, the two independent patient care ombudsmen appointed by the United States Trustee pursuant to an order of the Bankruptcy Court have issued reports concluding that all Steward hospitals are safe for patient care."
