Portside

It is not entirely clear why none of the four physicians who saw Yani Rodriguez over the six days in September 2022 she spent dying at the North Shore Medical Center in Miami ever diagnosed her with thrombotic thrombocytopenic purpura, a rare but well-established blood disorder often associated with late pregnancy whose survival rate soared from just 10 percent in the 1950s to almost 90 percent with the advent of modern plasma transfusion techniques. Rodriguez’s blood readings should have been a dead giveaway, according to expert witnesses consulted in her medical malpractice case and a physician the Prospect consulted with the medical records.

But instead, the doctors administered platelet infusions—understood by most med school students, the doc tells the Prospect, to worsen TTP—four times over the three days after Rodriguez, a 35-year-old factory worker, gave birth to a healthy eight-pound baby girl in the hospital. On the fourth day, a hematologist misdiagnosed her with a milder blood disorder and ordered the staff to administer a steroid called danazol that might have inadvertently cured her condition. But the pharmacist told the nurse they needed special permission from the front office to prescribe danazol, whose generic version costs about $100 for a 30-day supply, and because admin was away for Labor Day weekend, that never happened. On the fifth day, the doctors talked about getting her admitted to another hospital but that never happened either, and they conducted a somewhat pointless bone marrow biopsy after which she experienced a stroke. On the sixth day, she died, shortly after being hooked up to a ventilator that didn’t work properly.

“Sometimes medical malpractice happens at the very best hospitals and it’s not the result of a broken system,” said a lawyer familiar with the Rodriguez case who did not want to be named. The death of Yani Rodriguez, she said, was not one of those times. The now-bankrupt Steward Health had purchased NSMC just a year before Rodriguez had been admitted to the maternity ward, and almost immediately established a reputation in the local health care community for not paying its bills. “In years of working on medmal cases I had never encountered a situation where a pharmacist couldn’t fill an order for a lifesaving drug because they had to get authorization from admin,” the lawyer continued. “But at the end of the day, she died because no one involved in her care knew what the hell they were doing, and that was a product of Steward’s business model. When you cut corners in everything, you can’t hire the best physicians. If I’m a top-notch intensivist, I’m not going to work for Steward because I know I’m not going to get paid.”

Steward’s merciless gutting of its hospitals to finance mega-yachts, private jets, and trophy wife horse ranches of its owner Ralph de la Torre occurred alongside dozens of deaths, including most famously that of another new mother who bled to death at its Good Samaritan hospital because a medical device nurses use to block blood flow had been repossessed just weeks earlier. As the hospital system began to collapse under the weight of its shell games toward the end of 2023, Steward officials stopped even denying that their “business model” had killed patients. At a hearing last spring, a Steward hospital CEO was asked by a state official if he felt “personally responsible for any deaths or declining care at your facility.”

“Yes,” he answered, with not a second’s hesitation.

And so on January 9, the day the Rodriguez case was set to go to trial, NSMC’s attorneys offered to settle Rodriguez’s case for $4 million, the maximum award covered by its medical malpractice insurance policy, to be paid in three installments in May, June, and July. Steward’s law firm even contracted a settlement agency to set up an annuity for Rodriguez’s family, and sent multiple emails assuring their lawyers the check was in the mail. But the first check never showed up, and when Steward filed for Chapter 11 bankruptcy protection on May 6, Rodriguez’s widower’s lawyers realized that the hospital’s malpractice insurer, a Panama-domiciled outfit called Tailored Risk Assurance Company Ltd., or TRACO, wasn’t just any old insurance company. Steward founder Ralph de la Torre had incorporated it in Panama City with a Panama-born former Bush administration official named Ruben King-Shaw, who also joined the Steward board.

Toward the end of 2023, Steward officials stopped even denying that their “business model” had killed patients.

Steward was supposed to make $4.5 million in monthly premium payments to TRACO to handle malpractice lawsuits and other legal cases. But as with almost every other one of its bills, Steward had not been making its monthly premium payments to TRACO. Instead the insurer had amassed $413.3 million worth of a line item titled “Investments/Intercompany receivables”—IOUs from Steward representing close to eight years of missed payments, alongside just $5.3 million in liquid assets. (This came as a shock to one Boston physician formerly associated with Steward, who says TRACO charged physicians roughly 30 percent more than other medmal insurers for roughly the same coverage.)

When Steward filed Chapter 11, it specifically sought authorization from the court to begin making monthly premium payments. That’s because TRACO, although a wholly owned subsidiary of Steward, was not a party to the bankruptcy, like several other de la Torre–controlled entities that had extensive financial dealings with Steward.

Two others, CREF and Management Health Services, respectively received about $37 million and $30 million from Steward in the year preceding the bankruptcy; a recent Wall Street Journal story estimated that de la Torre had used such vehicles to siphon at least $250 million out of the desperately insolvent Steward in the four years preceding the bankruptcy. But it’s impossible to know for certain, because none of them have disclosed their own financials, and thus far no one has forced them to.

In the meantime, Steward bankruptcy judge Christopher Lopez seems perfectly content to allow TRACO to enjoy the protections of bankruptcy, without any of the transparency it is theoretically supposed to impose. In a hearing last Tuesday to discuss the Rodriguez case, a bankruptcy attorney pleaded with Lopez to force Steward to start paying its insurance premiums so TRACO could cut his check, or petition the company to liquidate TRACO. Lopez would do neither; the law, he insisted in a voice dripping with faux regret, simply did not give him the authority to force Steward to pay anyone when it owed so many billions to so many thousands of creditors.

No one discussed a critical implication of this insistence, which is that Steward’s doctors are apparently practicing medicine without legitimate malpractice insurance coverage. This is actually against the law in Massachusetts—though so is siphoning a quarter-billion dollars out of an insolvent hospital chain, and thus far no one has tried to indict any Steward insiders for that.

AS WE HAVE DISCUSSED EXTENSIVELY in these pages before, many wealthy malefactors before Steward Health have exploited the bankruptcy courts to avoid liability, even in wrongful death cases. Purdue Pharma’s bankruptcy famously allowed the Sackler family to keep billions of dollars while paying out the family members of dead OxyContin overdose victims between $26,000 and $40,000 a head. Johnson & Johnson, Koch Industries, and other asbestos producers have all descended upon Texas to divest their mesothelioma-generating businesses into insolvent spinoffs that then exploit the bankruptcy code to force the loved ones of construction workers and baby powder consumers to settle their wrongful death cases for pennies (or sometimes less than a penny) on the dollar.

One of the most egregious examples of this trend was last year’s bankruptcy filing of an entity called Tehum Care Services, a spinoff of the large prison health care provider Corizon Health, which recently changed its name to YesCare. More than 500 current and former inmates and their families had sued Corizon for negligence and wrongful death over the years; so after the company was acquired by a shadowy nursing home syndicate in 2021, the new owners decided to split the company into what is commonly known as a GoodCo and a BadCo (or ShitCo). The former, YesCare, held the company’s hundreds of contracts; the latter, Tehum, held its legal liabilities, including both the wrongful death claims and lawsuits filed by vendors Corizon had failed to pay. Then Tehum filed for bankruptcy protection in Houston, and the case was assigned to Judge Christopher Lopez, who is currently presiding over the Steward bankruptcy.

The Tehum case was so audacious that it ultimately threatened to bring down the whole Houston bankruptcy court, which had become so popular with private equity corporate strip miners that it handled nearly half of all major corporate bankruptcies in 2020 and 2021. Lopez, a soft-spoken former Weil, Gotshal partner who often sounds during hearings like he is tormented by the moral quandaries of the profession, appointed Judge David Jones, the architect of the wildly popular complex case panel, to “mediate” the “dispute” between the injured inmates’ lawyers and YesCare. Representing YesCare in that mediation process, meanwhile, was Liz Freeman, Jones’s former clerk who also happened to be the judge’s on-again, off-again live-in girlfriend, an insane conflict of interest and, it turned out, the very tip of a gargantuan iceberg.

For years, Jones had been secretly conspiring with Freeman and her law firm Jackson Walker to bring big-money corporate bankruptcy filings to Houston, in a series of maneuvers that also involved Jones’s best friend, former law partner and fellow bankruptcy judge Marvin Isgur; Isgur’s former clerk turned Jackson Walker partner Matt Cavenaugh; and the Chicago mega-firm Kirkland & Ellis, which generally used Jackson Walker as its “local counsel” in big bankruptcy cases it brought to the court. So far, only Jones, who recently retained über-attorney David Boies to represent him in a federal criminal investigation into the scheme, has been forced to sacrifice his career over the scandal. Isgur maintains that he never knew that his best friend of more than 30 years lived with another of his close friends, and earlier this month another Houston bankruptcy judge threw out a subpoena to obtain the taxpayer-funded cellphone records that would likely prove otherwise. No one has been more protective of his mentors than Lopez, who last week shut down a creditor’s lawyer in an oil producer bankruptcy hearing for having the temerity to ask Cavenaugh what he knew about the judge’s affair with his old law colleague. “We’ll see this through,” Lopez promised after the scandal broke last fall.

Notably, Steward’s brief explaining why it should not have to pay its malpractice insurance premiums was largely premised on two Isgur decisions, one in the bankruptcy of the iHeartMedia radio conglomerate and the other in the parent company of the retailer Jos. A. Bank. In the former case, the decision threw out the claim of a worker who’d suffered a grievous head injury while setting up a radio station concert; in the latter, a former Jos. A. Bank store manager had sued for wrongful termination after getting fired for what he alleged was race discrimination. Both cases involved the companies’ refusal to pay substantial deductibles and were thus not terribly analogous to the Steward case, especially given the central role of malpractice insurance in the practice of medicine and the fact that many Steward doctors have apparently been dutifully paying premiums for coverage that may not exist. But both companies were represented in the court by Cavenaugh, Jackson Walker, and Kirkland & Ellis, and that is likely all that mattered when it came down to it. Isgur is also playing a prominent role in the Steward bankruptcy, having been appointed by Lopez to serve as a mediator between Steward and its landlord Medical Properties Trust, which has been accused by real estate investment trust experts of enabling private equity–backed operators like Steward to siphon cash out of safety-net hospitals.

Meanwhile, the Tehum bankruptcy remains on the docket despite calls from Sen. Elizabeth Warren (D-MA) and an official motion filed by the United States trustee to dismiss the bankruptcy. “It’s crazy that Lopez has allowed that case to just languish on the docket for 18 months,” an attorney told the Prospect. A financial statement filed for NSMC in Steward's bankruptcy lists the $4 million Rodriguez settlement alongside more than $462 million in other unsecured claims, including $9.1 million it owes the Centers for Medicare & Medicaid Services, $766,000 it owes in unpaid employee bonuses, $53.4 million it supposedly owes Steward, $87.6 million it owes Steward’s St. Elizabeth’s hospital in Boston, and unspecified amounts it owes more than 40 other plaintiffs in liability lawsuits; a bankruptcy lawyer working on the case says the hospital system has more than 500 outstanding malpractice and wrongful death claims, all of which are likely to be worth “pennies” if the case proceeds as Steward’s lawyers are driving it.

“I feel like a minnow in an ocean of unsecured claims,” an attorney in a different state representing another widower whose wife died in a Steward hospital told the Prospect. “I can tell already that this is going to be just like Purdue. I’ll be working my ass off for ten years and end up making about five dollars.”

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Maureen Tkacik is investigations editor at the Prospect and a senior fellow at the American Economic Liberties Project.