A healthcare giant owes millions to Florida taxpayers. Will the state see the money?
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Hospitals in trouble
A large national healthcare company has filed for bankruptcy. A look at how Steward’s situation is affecting hospitals in South Florida.
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A public Florida healthcare agency is one of more than 100,000 creditors clamoring to get paid by hospital company Steward Health Care System, which filed for bankruptcy protection in May.
Steward owes nearly $14.5 million to Florida’s Agency for Health Care Administration, which regulates hospitals and other healthcare facilities in the state, for unspecified goods or services. The company, the largest physician-owned healthcare network in the country, runs 31 hospitals, including eight in Florida.
Florida is 14th on the top 30 list of Steward creditors with “unsecured claims,” court documents show. Change Healthcare, a subsidiary of United Health Group, is at the top of the list, with more than $70 million.
Steward says it owes Florida the money for “trade debt,” which means the company purchased goods or services from the state agency. Think of it like credit card debt. Because there’s no property or other collateral tied to the debt, it generally doesn’t have the highest priority in bankruptcy court.
And there’s a high chance Florida won’t get paid in full.
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Generally, creditors with secured claims — or loans tied to a property or other company asset — have higher priority during bankruptcy proceedings and will get paid in full, said Scott Norberg, a law professor at Florida International University. Once Steward pays off operating expenses and creditors with secured claims, any leftover money will then be distributed among creditors like Florida with unsecured claims, he said.
In court documents, Steward states that it cares for more than two million patients a year and pulls in more than $6 billion a year. The company has more than $9 billion in total liabilities, CNN reported — a mix of loans, long-term leases, unpaid vendor and supply bills, and unpaid employee wages and benefits.
Steward Health bankruptcy: How will the process work for creditors?
Creditors with unsecured claims are often paid “cents on the dollar,” depending on what is negotiated in court, Norberg said. That means Florida taxpayers likely won’t recoup all the money owed.
Florida’s Agency for Health Care Administration did not immediately comment on the situation or detail the goods or services it provided Steward.
As of May 14, the bankruptcy court has yet to decide on a deadline for creditors to file claims.
Steward filed for Chapter 11 bankruptcy on May 6 and is in the process of reorganizing its debt. As part of the process, it wants to sell all of its hospitals, including Palmetto General Hospital in Hialeah, North Shore Medical Center in North Miami-Dade, Coral Gables Hospital, Hialeah Hospital and Florida Medical Center in Lauderdale Lakes.
Norberg says the court will eventually create a committee of unsecured creditors — commonly made up of a company’s seven largest unsecured creditors — to review Steward’s previous transactions and “how the money of the business is being spent going forward.”
This story was originally published May 15, 2024 at 7:42 AM with the headline "A healthcare giant owes millions to Florida taxpayers. Will the state see the money?."
