Bankrupt hospital operator Steward Health has filed hundreds of millions in new claims in Texas bankruptcy court against its former CEO and other executives, including allegations that they orchestrated a sale-leaseback deal that rendered the business an insolvent "zombie."

The revised complaint against ex-CEO Dr. Ralph de la Torre and other executives increased the damages Steward had been seeking to $3.4 billion and added multiple new claims, including that de la Torre rendered the business insolvent by using the proceeds of the 2016 sale-leaseback transaction to pay out a $790 million dividend.

"The result was a zombie hospital chain that limped along for the next eight years, mostly through other equally dubious sale-leaseback transactions providing cash infusions that gave the surface impression of a thriving business, while executives privately conceded it was insolvent all along," the complaint said.

Steward filed for Chapter 11 protection in May 2024 with $9.2 billion in debt, and has since sold or closed its 31 hospitals.

Its liquidation plan established a trust to pursue claims on behalf of the estate, and in July, Steward filed an adversary action against de la Torre and other former executives seeking to claw back more than $1.5 billion in dividend payments and additional transfers they had approved.

The trust alleged that, despite the fact Steward was insolvent at the time, de la Torre, a former surgeon, and other executives approved a $111 million dividend — $81.5 million of which went to de la Torre — overpaid for five Florida hospitals, and allowed investors to pocket most of the proceeds of the sale of the company's Medicare Advantage business.

The new complaint adds claims regarding other transactions, as well, including the $790 million dividend paid after Steward's 2016 sale of its Massachusetts hospitals to Medical Properties Trust in a leaseback deal.

The complaint alleges the dividend payment to Steward's then-owners — private equity firm Cerberus Capital Management — was what definitively drove Steward into insolvency, saying the hospital chain was showing signs of financial distress before the transaction and the deal left the company burdened with significant lease and mortgage costs.

De la Torre personally profited $35 million from the transaction, Steward said, and he was paid a total of $250 million in dividends and salary during his time as CEO.

"Steward is now bankrupt, and five of its hospitals have closed, while de la Torre lives in a palace indirectly paid for by Steward's investors, providers, patients and other creditors," the company said.

The complaint also blasted Cerberus' 2020 sale of Steward to de la Torre, saying the defendants allowed Cerberus to trade "worthless" equity in an insolvent Steward for a $350 million convertible note.

"This wasn't only mismanagement; it was also a systematic extraction of value from a vital healthcare system serving a low-income population," William T. Reid IV, one of the attorneys for the trust, said in a statement released Monday.

Counsel for the defendants in the action did not immediately respond to requests for comment Tuesday.

The trust is represented by William T. Reid IV, Jeremy Wells, Dylan Jones, Taylor Lewis, Julia Gokhberg, Eric D. Madden, J. Benjamin King, Richard Howell, Jeffrey E. Gross and Yonah Jaffe of Reid Collins & Tsai LLP.

De la Torre is represented by Susheel Kirpalani, Zachary Russell, Emma McCabe and Anthony Bongiorno of Quinn Emanuel Urquhart & Sullivan LLP.

The other defendants are represented by James L. Leader Jr. of Vinson & Elkins LLP, Ian D. Roffman of Nutter McClennen & Fish LLP, Joshua A. Sussberg, Richard U.S. Howell and Kent Hayden of Kirkland & Ellis LLP, and William L. Roberts and Desiree Pelletier of Ropes & Gray LLP.

The bankruptcy case is In re: Steward Health Care System LLC et al., case number 4:24-bk-90213, in the U.S. Bankruptcy Court for the Southern District of Texas.

The adversary case is Steward Health Care System LLC et al. v. de la Torre et al., case number 4:25-ap-03593, in the U.S. Bankruptcy Court for the Southern District of Texas.