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Canceled Steward contract leads to lawsuit from military healthcare provider

Lawyers for Brighton Marine say Steward Health Care is blocking transfer of ‘thousands’ of military patients

Brighton Marine Inc., a provider of military and veterans healthcare, has sued Steward Health Care, alleging its patients should be allowed to shift away from Steward hospitals, like Saint Elizabeth Medical Center seen here, to another hospital system. Steward has threatened Brighton Marine with legal action if they try, lawyers for the Boston-based company say. (Matt Stone/Boston Herald)

By MATTHEW MEDSGER | mmedsger@bostonherald.com | Boston Herald
May 19, 2024 a

A new lawsuit targeting Steward Healthcare has been filed by a Massachusetts military and veterans healthcare company that wants to seek a new service provider after it says it was stonewalled by the bankrupt hospital operator.

In addition to their recent bankruptcy filing, Steward Health Care System is facing several lawsuits from vendors and their employees seeking relief from the apparently financially troubled Texas-based company.

According to court filings, Boston-based Brighton Marine Inc. joined the list of plaintiffs lined up against Steward late last week, when they alleged that the hospital system is refusing to hold up its end of an agreement over the care provided to “thousands” of local military members, veterans, and their families.

Lawyers for BMI allege that Steward’s much-reported financial difficulties have forced them to terminate — effective May 31 — an “Amended and Restated Management and Services Agreement” contract under which Steward is to provide care for some of the 15,000 Department of Defense beneficiary patients currently using Brighton Marine’s health care services.

Under the terms of that agreement, Brighton Marine is allowed to terminate the contract with Steward and shift those patients to other providers, its lawyers told the U.S. Bankruptcy Court, if it has reason to believe Steward is unable to adequately care for military healthcare beneficiaries.

The agreement allows “BMI to proactively diagnose and address any deterioration in Steward’s financial condition that might jeopardize Steward’s ability to provide healthcare to the military personnel, veterans, and their families enrolled in the BMI Plan.”                                                

Steward’s financial woes, including at least $50 million in back rent owed to its landlords, became apparent to BMI in January, its lawyers told the court.

Over the next several months, representatives of BMI tried to get Steward to share their financial information so that the hospital operator could demonstrate they were providing contractually required levels of care to military patients. Steward failed to share that information, according to court filings.

Not only that, Steward apparently refused to acknowledge the voided contract, and threatened to sue Brighton Marine and prospective healthcare vendors if they attempted to look elsewhere for patient care.

“Steward is actively interfering with BMI’s ability to comply with its contractual obligations to DoD,” BMI’s lawyers wrote. “Because Steward disputes the termination and has declined to cooperate in the ordinary transition of responsibility for administering the BMI Plan to another provider, BMI has been injured and faces the prospect of further imminent harm absent declaratory relief.

Brighton Marine is asking the court to declare the termination of their contract with Steward valid under the terms of that agreement, to force Steward to facilitate the transition of thousands of patients to another provider, and for the healthcare system to cover BMI’s legal fees.

Steward did not respond immediately to inquiries seeking comment on the Brighton complaint.

According to Steward’s bankruptcy attorneys, the company has about $9 billion in debt obligations.

Steward got its start in 2010 by buying six “struggling” Massachusetts hospitals in a $895 million deal approved by then Attorney General Martha Coakley. Caritas Christi Health Care CEO Dr. Ralph de la Torre, now the CEO of Steward, told the Herald in 2010 that the sale would benefit “our patients, employees and pensioners and tremendously benefits the communities.”

Gov. Maura Healey has activated an “emergency operations plan” to deal with the potential for bankruptcy-related service disruptions at Steward’s eight operational facilities in Massachusetts.

Steward operates St. Elizabeth’s Medical Center in Brighton, Carney Hospital in Dorchester, Good Samaritan Medical Center in Brockton, Holyoke Hospitals in Haverhill and Methuen, Morton Hospital in Taunton, Nashoba Valley Medical Center in Ayer, and Saint Anne’s Hospital in Fall River. Norwood Hospital closed in 2020 due to flooding, and the company recently closed New England Sinai Hospital permanently on April 2.