June 11, 2024

Senators Warren, Markey Introduce the Corporate Crimes Against Health Care Act of 2024

“My Corporate Crimes Against Health Care Act would prevent what happened with Steward from ever happening again.”

Text of Bill (PDF) | One Pager (PDF)

Washington, D.C. – Today, U.S. Senators Elizabeth Warren (D-Mass.) and Ed Markey (D-Mass.) introduced the Corporate Crimes Against Health Care Act of 2024 to root out corporate greed and private equity abuse in the health care system.  

Over the last decade, private equity fund assets have more than doubled, totaling $8.2 trillion in 2023. While private equity funds have purchased companies in nearly every sector of the economy, their aggressive deal-making in the health care sector poses grave risks to patient health and raises questions about potential abuse of taxpayer dollars, as private equity companies routinely load up portfolio companies with usurious debt, sell off valuable assets, and extract exorbitant dividends and fees—regardless of how their investments preform. 

Unfortunately, lax corporate accountability and transparency laws have provided cover for private equity’s parasitic practices, allowing executives to plunder hospitals, nursing homes, provider practices, and other health care entities with impunity.

In Massachusetts private equity greed and mismanagement by Ralph de la Torre and top executives drove Steward Health Care (Steward)—which operates eight hospitals in the state—into bankruptcy. The company’s problems began in 2016, when company executives and Steward’s then-private equity owner sold the hospitals’ real estate to Medical Properties Trust (MPT), a real estate investment trust, saddling the hospitals with extortionate rent payments that ultimately landed 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.”

“What Dr. de la Torre, Cerberus Capital Management and Medical Properties Trust did to Steward-owned hospitals in Massachusetts and across the country is unforgiveable. They promised to improve health care, but instead traded lives and livelihoods for profit. Private equity firms and their enablers will continue to steal from America’s health care system to feed their corporate greed unless we stop them. We need guardrails now to guarantee CEO wealth doesn’t come before the public’s health,” said Senator Markey.

It is past time we hold private equity firms and corporate executives accountable for driving companies like Steward into bankruptcy—and empower regulators to prevent similar crises from happening in the future.  

The Corporate Crimes Against Health Care Act will:

  • Create a new criminal penalty 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.
  • Provide state attorneys general and the DOJ with the power to claw back all compensation, including salaries, issued to private equity and portfolio company executives within a 10-year period before or after an acquired health care firm experiences serious, avoidable financial difficulties due to that looting.
  • Authorize an associated civil penalty of up to 5 times the clawback amount.
  • Prohibit payments from federal health programs to entities that sell assets or use assets for a loan collateral made to a REIT, with an exemption for current arrangements; repeal a rule in the Tax Code that allows taxable REIT subsidiaries to exert influence on  the operations of health care entities; and remove the 20 percent pass-through deduction, passed in the 2017 Trump tax cuts, for all REIT investors.
  • Require health care providers receiving federal funding to publicly report mergers, acquisitions, changes in ownership and control, and financial data, including debt and debt-to-earnings ratios.   
  • Mandate an HHS OIG report to Congress on the harms of corporatization in health care.

“Private equity firms have made a killing out of looting vulnerable hospitals and putting patients and healthcare systems at risk. Grounded in the common-sense idea that U.S. healthcare systems should prioritize safeguarding our long-term health over short-term profits, this legislation is a necessary and timely solution to that problem.” - Chris Noble, Policy Director for the Private Equity Stakeholder Project

“As an organization representing frontline nurses and health professionals working in facilities owned and operated by private equity firms and other for profit  providers, we have witnessed how the commodification of health care and the strive for profit taking by these firms has undermined the safety of the patients and communities served by those facilities, and as such, we applaud and support Senator Warren’s legislation that will hold these firms accountable for their misdeeds and corporate malfeasance, to claw back those resources taken from our patients and our communities to ensure those resources go to the care of patients and not their exploitation.” - Katie Murphy, RN, President of the Massachusetts Nurses Association

“Today’s bill represents a major step towards ensuring private equity and corporate executives are no longer able to unjustly enrich themselves through non-cash compensation such as share buybacks or dividend payments that come at the expense of the financial health of hospital chains and quality of care for patients.” - Andrew Park, Senior Policy Analyst at Americans for Financial Reform

“The crisis at Steward health care illustrates the risks of allowing private equity and corporate America to play financial games with our public health care dollars. Hospitals become real-estate investments, clinicians become financial assets, and patients suffer the consequences when a risky investment scheme goes south. We commend Senator Warren for her efforts to prohibit the most extractive financial practices in health care, increase transparency of ownership, and better understand the impact of health care financialization on physicians and other clinicians." - Hayden Rooke-Ley, Senior Fellow for Health Care at the American Economic Liberties Project

"Workers at hospitals across the country are calling out the failed private equity playbook of gutting patient care to maximize profits, a model that benefits owners and hurts healthcare patients, workers and the communities they serve. Healthcare should be affordable and accessible to all, but private equity investors view it as just another industry to strip for assets and hawk to the highest bidder, while banking stratospheric fees. Patients need investment and oversight to ensure they receive the care they deserve—and workers need employers that provide safe conditions and fair pay, but private equity is focused only on the shortsighted goals of slashing staff and cutting costs, at whatever expense. The expiry date on this broken model is long past due—I applaud Senator Warren for introducing the Corporate Crimes Against Health Care Act.” - Randi Weingarten, President of the American Federation of Teachers

“Unchecked private equity is, simply put, a metastasizing disease threatening health care in this country. The profit-driven health care system in this country is: expensive, inefficient, and inaccessible to those who need it most.  And private equity’s growing foothold is making these problems – tenfold. It’s contributing to our medical debt crisis, worsening health outcomes, and creating unsustainable working conditions for many health workers. It is far past time to put the needs of people over profits. Senator Warren’s bill is an important and significant step in that direction.” - Mona Shah, Senior Director of Policy and Strategy at Community Catalyst

"Our health care system works best when quality care is accessible and affordable.  Unfortunately, private equity has been a scourge on our system by hollowing out hospitals, reducing services for patients, and cutting staffing levels. This legislation marks a crucial step toward accountability for the role private equity plays in our economy." - Bilal Baydoun, Director of Policy and Research for Groundwork Collaborative 

"This bill recognizes the looting of the healthcare system and private equity firms for exactly what it is, a criminal act. Doctors, nurses, and clinicians taking care of patients experience moral injury, patience die, and the public health is put at risk when corporations practice medicine without a license. Take Medicine Back applauds Senator Warren's advocacy and introduction of this critical legislation." - Mitchell Louis Judge Li, MD, a board certified emergency physician and founder of Take Medicine Back

Senator Warren is one of the nation’s leading bankruptcy experts, and has been leading congressional oversight of Steward’s failures. Warren has repeatedly called out the harms of private equity ownership on health care costs and quality of care and has fought to prevent companies from taking advantage of the bankruptcy system: 

  • On June 3, 2024, Senators Warren, Brown (D-Ohio), and Markey wrote to the Director of the U.S. Trustee Program (USTP), calling for USTP to move to appoint a Chapter 11 trustee to run the company in place of Steward’s current management, and to monitor the hospitals’ bankruptcy proceedings to protect patients and local communities.
  • On May 24, 2024, Senator Warren sent a letter to the U.S. Department of Health and Human Services and the U.S. Centers for Medicare & Medicaid Services, urging them to support communities and health care providers affected by the crisis caused by Steward’s financial mismanagement.
  • On On April 19, 2024, Senators Warren and Senator Markey (D-Mass.) sent a letter to six private credit funds that are holders of Steward’s debt, asking them a series of questions about their loans and calling on them to offer loan modifications that could potentially help keep the hospitals afloat.
  • On April 16, 2024, Senators Warren and Markey called out Medical Properties Trust and Macquarie Infrastructure Partners for exploiting Steward Hospitals, and urged them to help keep the hospitals open.
  • On April 8, 2024, Senators Warren, Markey, and the rest of the MA delegation urged the FTC and DOJ to closely scrutinize UnitedHealth Group’s proposed acquisition of Steward Health Care’s physician group, Stewardship Health.
  • On April 3, 2024, Senator Warren delivered remarks at a Senate hearing in Boston titled, “When Health Care Becomes Wealth Care: How Corporate Greed Puts Patient Care and Health Workers at Risk,” which centered on Steward Health Care’s Massachusetts hospitals.
  • On March 26, 2024, Senator Warren released a statement about Steward’s plan to sell its physician group Stewardship Health to UnitedHealth Group’s subsidiary Optum.
  • On March 26, 2024, Senators Warren and Markey sent a letter to Steward CEO and Chairman Dr. Ralph de la Torre, calling on him to testify at a congressional hearing in Boston.
  • On March 8, 2024, Senators Warren and Markey sent a letter to Dr. de la Torre, blasting him for years of financial mismanagement, private equity schemes, and executive profiteering that have led to Steward Health Care’s financial crisis.
  • On February 15, 2024, Senators Warren and Markey, along with all nine members of the Massachusetts congressional delegation, sent a letter to Cerberus seeking answers from the private equity firm for its role in creating the current financial challenges at Steward hospitals.
  • On January 29, 2024, Senator Warren released a statement about Steward’s financial situation and allegations of patient neglect at Steward facilities.
  • On January 23, 2024, Senator Warren led the Massachusetts congressional delegation in a letter to the CEO of Steward Health Care pressing the company to brief them on Steward’s financial position, the status of their Massachusetts facilities, and their plans to ensure the communities they serve are not abandoned.