Steward Health Care says it's under federal investigation

Steward Health Care, the bankrupt company that operates seven Massachusetts hospitals, confirmed Thursday that it is under federal investigation.

“Steward Health Care can confirm it is aware of and cooperating with an investigation by the U.S. Department of Justice,” spokesperson Deborah Chiaravalloti said in an emailed statement. “As a matter of policy, Steward will have no further comment on this investigation as it remains ongoing.”

CBS News first reported that Steward is being investigated for alleged fraud and corruption. CBS, citing unnamed sources, said federal prosecutors in Boston are looking into various allegations, including violations of the Foreign Corrupt Practices Act. This law prohibits people from the U.S. from paying bribes and engaging in other corrupt practices overseas.

Caroline Ferguson, a spokesperson for the U.S. Attorney’s Office in Massachusetts, said the office does not confirm or deny investigations.

Steward is a privately-owned for-profit company that was founded in Massachusetts with private equity funding 14 years ago. Now the company is based in Dallas and operates 31 hospitals nationwide. It expanded overseas, including to Malta where its deal to run three public hospitals also came under investigation by authorities.

Steward is billions of dollars in debt and filed for Chapter 11 bankruptcy protection in May. It is seeking to sell its assets in a series of auctions this summer. Steward’s physician network and its Massachusetts hospitals are scheduled to be sold at auction on July 18.

It’s unclear whether all the Steward hospitals will attract buyers. Any deals would be subject to approval by a federal bankruptcy judge, as well as state regulators.

Steward has been the target of ire from many public officials, including U.S. Sen. Ed Markey. The Massachusetts Democrat released a statement Thursday accusing Steward leaders, including chief executive Ralph de la Torre, of treating the health care system “as their piggy bank.”

“Steward must be investigated,” Markey said, “and I hope the company and the corporate executives who facilitated Steward's actions face consequences that reflect the lives, livelihoods, safety, and security that they stole from communities.”

Steward is the third-biggest hospital operator in Massachusetts. Its locations include Carney Hospital and St. Elizabeth’s Medical Center in Boston, Good Samaritan Medical Center in Brockton, Holy Family Hospital in Methuen and Haverhill, Nashoba Valley Medical Center in Ayer, Morton Hospital in Taunton and Saint Anne’s Hospital in Fall River.

Another site, Norwood Hospital, has been closed since it was damaged by flooding in 2020.

Hundreds of thousands of patients rely on Steward hospitals, though the numbers have been falling since the company’s financial problems became public.

WBUR's Dan Guzman contributed to this report.