Steward owned eight community hospitals in Massachusetts and 23 hospitals in other states, places where residents often had few other nearby options for emergency and other care.
So far, others involved in Steward before its failure have not faced similar consequences. For example, the bankruptcy trustee has sued ex-Steward chief executive Ralph de la Torre, whom a Globe Spotlight Team investigation found enriched himself as his hospitals floundered, and other company insiders for $3.4 billion, in an ongoing case. There have not been any criminal charges filed.
De la Torre drew criticism after the Globe reported that he bought two yachts, worth $40 million and $15 million, while selling the hospital properties to a real estate investment trust in a deal that saddled Steward with crippling rent payments.
“We know that people are not being held accountable publicly,” said David E. Williams, president of Health Business Group, a Boston management consulting firm. “It’s almost the classic thing where they talked about Ralph de la Torre’s yacht, and then you could say, ‘Well, which one?’ ”
Lawyers for de la Torre did not immediately respond to a request for comment.
At least 1,300 entities are listed as creditors in court documents, but it’s unclear how many would be part of the litigation trust receiving the settlement money.
Lopez wrote in his order that the resolution was preferable to creditors having to endure a legal battle that could take years, cost millions of dollars, and result in an outcome that “is uncertain and involves highly complex and disputed legal and factual issues.”
Cerberus did not respond to a request for comment.
The agreement stipulated Cerberus continued to deny “any wrongdoing or unlawful conduct.”
When it cashed out of Steward, Cerberus had tripled its investment, having paid $246 million in 2010 for Caritas Christi Health Care, a chain of six nonprofit Catholic hospitals in Massachusetts that were rebranded as Steward.
The settlement caps a two-year saga that has unfolded since Steward filed for bankruptcy on May 6, 2024, following years of financial woes.
As the chain’s debts mounted, investors, including New York-based Cerberus, reportedly pocketed hundreds of millions of dollars in dividends.
A key development in the collapse of Steward was a controversial sale and leaseback agreement in 2016 for Steward to sell its real estate to Medical Properties Trust, an Alabama-based investment trust.
That deal brought in $1.25 billion, which enabled Cerberus to recoup hundreds of millions of dollars of its investment and also provided a significant dividend to other investors, the Globe has reported; MPT, meanwhile, received an equity stake in Steward.
But the transaction also burdened Steward hospitals, which suddenly found themselves on the hook for multimillion-dollar rent payments.
In 2020, Steward and Cerberus made a deal that transferred a controlling interest in Steward to a hospital management group led by de la Torre in exchange for a binding, legal promise of $350 million. The following year, MPT loaned the new owners the money to buy out Cerberus.
Steward was once the nation’s largest private, for-profit hospital chain, operating a network of 31 hospitals in eight states. It rapidly expanded following Cerberus’ purchase of the nonprofit Caritas Christi system.
In the years leading up to Steward’s collapse, the chain was plagued by staff shortages, unpaid bills, and equipment repossessions — problems a Globe Spotlight Team investigation found contributed to the deaths of at least 15 patients.
In one case, a 39-year-old new mother who had just given birth at St. Elizabeth’s Medical Center died amid severe bleeding, because embolism coils that Steward doctors could have used to stop the bleeding were repossessed by its vendor, the Globe reported.
Steward sold six of its Massachusetts hospitals after filing for bankruptcy and closed the remaining two. A bill pending in the Legislature could clear the way for the state to seize, the eighth one, Norwood Hospital, which is closed, through eminent domain.
Under Steward’s bankruptcy plan, creditors formed a trust to pursue legal claims against parties that may have contributed to Steward’s collapse. The settlement permanently releases Cerberus from claims the litigation trust could pursue in relation to Steward.
Still, court documents redacted the dollar figure from the settlement agreement, and the litigation trust is pushing to keep it sealed. According to court documents, any party seeking an unredacted copy of the settlement will have to receive the trustee’s approval and sign a nondisclosure agreement.
Williams, the health care management consultant, said settling claims without disclosing dollar amount is typical. By choosing to settle the case, the parties avoid the high costs of pursuing a lawsuit, while also shielding Cerberus from accountability.
The agreement ”allows them to put the episode behind them, but I think it will be not very satisfactory for people that are looking for any kind of a resolution,” he said.
Williams called it a “business decision,” in which the creditors needed to assess whether it can outlast the deep-pocketed Cerberus in court, or take the payout. Sealed settlements often offer a higher pay, Williams said.
The litigation trust did not sue Cerberus. Instead of pursuing legal action, it sought an emergency approval, preventing any measures that would delay or appeal the settlement. Court records show the trustee prepared draft complaints in March and May before the parties settled. The complaints also are not in publicly available court records.
Alan Sager, a professor of health policy and management at the Boston University School of Public Health, pointed out that one creditor in the case is MPT, which has claimed it’s owed $6.6 billion from Steward. But he said that he was more concerned about small vendors that are owed money — from businesses that kept elevators running to suppliers of food in hospital cafeterias.
“These were people that Steward may have had over a barrel,” Sager said. “Steward is the legal and financial equivalent of a Superfund site. It’s financially and ethically toxic.”
Still, some observers said they hold out hope that someday those behind the chaos and damage caused by Steward’s financial problems will be held responsible.
“In terms of accountability,” Williams added, about the settlement, “I don’t see it offering very much.”
Jonathan Saltzman of the Globe staff contributed to this report.
Yogev Toby can be reached at yogev.toby@globe.com.