TL/DR –
Steward Health Care, a Massachusetts-based hospital system, is being investigated by the Department of Justice (DOJ) over alleged violations of the Foreign Corrupt Practices Act. The investigations are reportedly connected to controversial deals with Malta’s hospitals and executives Ralph de la Torre and Armin Ernst’s alleged participation in a bribery scheme in the country. The company is already under scrutiny for its financial challenges and has faced previous lawsuits from the DOJ over alleged violations of federal law.
Justice Department Officials Decline to Comment on CBS News Report about Investigation
Justice Department representatives did not comment on a CBS News report regarding an ongoing investigation, and U.S. Attorney for Massachusetts Joshua S. Levy’s spokesperson has not responded.
Steward’s Global Operations Attract Attention
Steward Health Care’s international activities have been under scrutiny, notably in Malta where it made its first international expansion attempt. The company’s executives, founder and CEO Ralph de la Torre and head of international operations Armin Ernst, are implicated in a bribery scheme in connection with a controversial deal to take over Maltese hospitals. Allegations suggest they diverted millions of dollars from the Maltese government to “consultancy fees” instead of improving the hospitals they acquired. Read the full Globe report here.
US involvement in Maltese Inquiry
The US government had a role in parts of the Maltese investigation into the failed public-private partnership. Electronic devices of former Maltese prime minister Joseph Muscat were handed over to a special Homeland Security agent in 2022 to be unlocked.
Outcome of Maltese Investigation
The investigation in Malta concluded in June with a 1,200-page report which recommended charging Ernst and de la Torre with money laundering, criminal association, and corruption of public officials, including Muscat.
Steward’s Long-Running Financial Problems
In the United States, Steward faces scrutiny for financial issues leading to service reductions, supply shortages, and unpaid bills. After its 2010 foundation, Steward filed for bankruptcy in May and is currently up for sale.
Investigation into Steward’s Activities Overseas
FCPA inquiries can take years to resolve due to the complexity of proving foreign bribery allegations. An FCPA probe into Steward may involve actions in multiple countries.
US Securities and Exchange Commission Complaint
A businessman who sold the Maltese hospitals to Steward filed a whistle-blower complaint with the US Securities and Exchange Commission last year, alleging company conduct in Malta violated corruption laws.
Federal Probes into Steward Health Care
Steward has been under federal investigation for months. In December, federal officials alleged Steward’s St. Elizabeth’s Medical Center in Brighton had submitted false Medicare claims. Optum has walked away from a deal after federal review, and in 2022, Steward agreed to pay $4.7 million following another Justice Department investigation.
Allegations of Fraud
Federal lawmakers have criticized the company for allegations of fraud abroad. Senator Ed Markey called Steward’s practices an example of corporate greed endangering the health system.
Company’s Struggles
Recent struggles include difficulty raising cash and finding new operators, a postponed bid deadline for its Massachusetts hospitals, and an exodus of patients. The state mandated its health insurers to also cover treatment at urgent care centers through September due to overwhelming emergency departments.
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