Steward executives paid themselves millions before filing for bankruptcy

In the months before filing for Chapter 11 bankruptcy, as Steward Health Care struggled to pay its bills, the company gave million-dollar payouts to more than a dozen executives, according to court records.

Many executives received hefty salaries and bonuses. But the court documents, and new statements from Steward, also shed light on something else: Executives were reimbursed for making big payments from their personal accounts to help keep the company afloat.

Steward’s chairman and chief executive Ralph de la Torre — a former heart surgeon who launched the company in 2010 — received $5.2 million. This included a salary of about $3.8 million. The other payments include expense reimbursements, as well as $161,000 for “non-business flights.”

The highest-paid executives after de la Torre include regional president Brian Dunn, who received $3.7 million, and Joseph Weinstein, a high-ranking physician, who received $2.8 million. Steward spokesperson Josephine Martin said most of Weinstein's payment was reimbursement for money he spent to help the company.

“He put hundreds of thousands of dollars in vendor payments in a personal credit card to help patients and keep hospitals running,” Martin said in an email.

Other Steward leaders who were paid at least $1 million include Mark Rich, Jeffrey Morales, and Michael Callum.

Many Steward executives also took home six-figure bonuses, in addition to their salaries. These payments came in the year before Steward filed for bankruptcy, on May 6, according to court records.

Steward declined to answer most of WBUR's questions about executive compensation.

Dallas-based Steward operates 31 hospitals nationwide, including seven in Massachusetts. It filed for bankruptcy after stacking up billions of dollars in debt and failing to pay vendors for supplies and services — including medical equipment and staff.

Steward is also under federal investigation by the Department of Justice, the company has confirmed.

Seven-figure paychecks are common for executives at many for-profit and non-profit hospital companies. But Steward’s compensation figures raise questions because Steward has been struggling to pay its bills, said Vikas Saini, president of the Lown Institute, a Needham-based health care think tank.

“If they're scrambling, if creditors aren't getting paid, if suppliers aren't getting paid, if patient care is suffering,” Saini said, “then it really would be important to make sure this was not a corrupt practice in which people are siphoning money off a sinking ship in order to make sure they've feathered their own nest, to hell with anybody else.”

Steward’s statements of financial affairs, filed in U.S. Bankruptcy Court in Houston this week, offer a rare glimpse into a company that has long held its numbers secret. Steward has been locked in a years-long dispute with state officials in Massachusetts for repeatedly failing to submit routine financial information. It is the only hospital operator in the state to keep this information confidential year after year.

Steward’s Massachusetts hospitals and its physician network are scheduled to be sold at auction this month.

Any bidder who makes an offer for a Steward hospital also will have to work out terms with Medical Properties Trust (MPT), the real estate firm that owns Steward's hospital properties. Court documents indicate Steward paid MPT about $239 million in the year before filing for bankruptcy.

Editor’s note: This story was updated to reflect new information Steward filed in bankruptcy court and provided to WBUR after the article’s original publication. In its updated filing, the company revised some details of its executive compensation.