Steward Health Care’s bankruptcy has prompted two U.S. Senators to introduce a bill called the Corporate Crimes Against Health Care Act of 2024.

Senators Elizabeth Warren (D-Mass.) and Ed Markey (D-Mass.) say the bill would root out what they say is corporate greed and private equity abuse in the healthcare system. 

“Steward Health Care is a clear-cut case of private equity exploiting health care,” said Sen. Warren during a news conference held Tuesday outside one of Steward’s hospitals in Boston.

Steward operates 31 hospitals in eight states, including Trumbull Regional Medical Center in Warren, Hillside Rehabilitation Hospital in Howland, and Sharon Regional Medical Center in Sharon.

“If private equity executives drive a hospital like Steward into bankruptcy, putting patients & communities at risk, there should be consequences,” said Steward.

Over the last decade, private equity fund assets have more than doubled, totaling $8.2 trillion in 2023, Warner said in a news release.

Warner claims what she characterized as "private equity greed and mismanagement" by top executives drove Steward Health Care into bankruptcy.

According to Warren Steward’s problems began in 2016 when company executives and Steward’s then-private equity owner sold the hospitals’ real estate to a real estate investment trust, saddling the hospitals with what the Senator describes as “extortionate rent payments” ultimately landing Steward in bankruptcy.

“My Corporate Crimes Against Health Care Act would prevent what happened with Steward from ever happening again,” said Senator Warren. “When private equity gets hold of health care systems, it is literally a matter of life and death, so if you drive a hospital like Steward into bankruptcy, putting patients and communities at risk, you should face real consequences.”

Warner says her bill will make it a crime punishable of up to 6 years in prison for executives who “loot health care entities like nursing homes and hospitals, if that looting results in a patient’s death.”

In addition, state attorneys general and the Department of Justice would be given the power to recoup all compensation, including salaries, issued to private equity and portfolio company executives within 10 years before or after an acquired healthcare firm experiences serious, avoidable financial difficulties due to “that looting.”

Reports published this week said Steward Health had secured $225 million in funding to keep its doors open throughout the bankruptcy proceeding.

Steward filed Chapter 11 bankruptcy in May, claiming assets and liabilities between $1 billion and $10 billion.

Steward agreed to auction off hospitals later this month, with a judge ruling on the final sale.

The attorneys for Steward Health asked for an extension for the sale of the hospitals, asking for them to be done in two rounds, the first round scheduled for a July 11 sale date and round two, with the final sale approval on August 22.