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At a virtual hearing in federal bankruptcy court Tuesday, Judge Christopher Lopez in Houston said he was focused on ensuring patient safety as the chain reckons with its crushing debts: ”Real people receiving real care in real time . . . are at the forefront of my mind today.”
The hearing was the start of a months-long process to get the hospitals on a sound financial footing. The court must sort through all of Steward’s financial transactions over the past few years and determine which creditors will be paid back, all while the hospitals continue serving thousands of patients.
During the hearing, Steward also disclosed that it is conducting an internal investigation into “any claims or causes of action of the company against insiders of the company,” according to a presentation from its lawyers. “This investigation is ongoing.”
The investigation is being overseen by a three-person committee that includes independent Steward board members Alan Carr and William Transier plus John Castellano, an investment banker from AlixPartners working on the company’s restructuring.
The group, called the transformation committee, also has “full and exclusive authority” to oversee financing, sales, and restructuring transactions, according to the presentation.
The aggressive timeline for sale of the hospitals was a condition of a $75 million loan Steward needs while it reorganizes its debts. The company owes more than $1 billion to “secured” lenders, who received collateral to protect their loans, and more than $7 billion on long-term leases and loans from its main landlord, Medical Properties Trust, according to the company’s presentation at the hearing. Steward also owes an additional $1 billion in unsecured debts to other service providers and contractors.
The latest loan obligates the company to conduct a rapid sale process, Ray Schrock, Steward’s lawyer, told Judge Lopez during the hearing.
Under the loan terms, Steward would have to take bids on all its hospitals except nine in Florida by June 25, with an auction to be held on June 28. Bids would be due on the nine Florida hospitals by July 26, with an auction on July 30. The company has already begun seeking potential buyers for all of its hospitals, Schrock said.
“I’m not going to say we are happy with the timeline,” Schrock said regarding the June deadline for the first group of sales. “It’s not feasible.” The later Florida deadline was “more realistic,” he said.
Steward had already received letters of interest from potential buyers offering to buy some of the hospitals, Schrock said. But he added that hospital sales typically require approval from state, local, and sometimes federal authorities.
Bankruptcy attorney Adam Ruttenberg, a partner at Beacon Law Group in Boston who is not working on the Steward case, said it was unlikely the hospitals could be sold by the end of the June because of the required regulatory approvals.
“It depends on what you mean by sell,” Ruttenberg said. “Are we talking about having a buyer identified? Seven weeks to get bidders and identify who your best bidders are, that’s not unrealistic. Or are we talking about having a sale approved and closed? That strikes me as wishful thinking.”
Boards often appoint special committees, such as the Steward transformation committee, with the power to authorize transactions and investigate insiders in bankruptcy cases, Ruttenberg said.
“It’s standard in any case where there are hints of wrongdoing,” he said.
While no allegations of wrongdoing have publicly been aired as part of the days-old bankruptcy case, the company has faced dozens of lawsuits, including allegations it has not met contractual obligations to various business partners and has failed to pay its bills.
In addition, Steward has been subjected to increasing criticism from public officials. Governor Maura Healey, for instance, has raised the possibility that Steward may have broken the law in its business dealings. “We don’t have enough to know what they’ve done, whether it’s criminal or illegal, but to me it really smells,” she told the Globe in February.
The sales timeline could be altered, particularly if Steward found a different lender. Steward is also seeking to sell its doctor network, Stewardship Health, but a deal with insurance giant UnitedHealth has been slowed by regulatory concerns. “We’re still working through that,” Schrock said.
In the end, the company may retain some of the hospitals, Schrock said. Healey wants Steward to sell all of its facilities in the state.
“We are going to look at reorganizing around a smaller footprint of hospitals,” Schrock said. The Florida hospitals are the “most profitable portion,” he said.
Andrew Troop, a lawyer at Pillsbury Winthrop Shaw Pittman who is representing Massachusetts, urged the judge to approve an order allowing doctors and other Steward employees to continue receiving their pay. “This is not a typical case,” Troop said. “Patients are waiting for the outcome of this hearing.”
Lopez said he planned to approve the order because he wanted doctors treating patients to “have nothing in the back of their minds.”
Steward did not assent to everything its lenders requested, Schrock said. Some lenders wanted Steward to issue notices under the US Worker Adjustment and Retraining Notification Act that it could conduct mass layoffs at hospitals within 60 days. But Steward pushed back, Shrock said, because “we don’t think there’s going to be any closures.”
Since Steward’s cash crunch started last year, Medical Property Trust has deferred $166 million in rent and injected $141 million of cash into the hospital operator, Thomas Patterson, a lawyer for the real estate company said.
In Massachusetts, Steward’s hospitals include St. Elizabeth’s Medical Center in Brighton, Carney Hospital in Dorchester, Good Samaritan in Brockton, Holy Family in Methuen and Haverhill, Morton Hospital in Taunton, Nashoba Valley in Ayer, and Saint Anne’s in Fall River. It also runs Norwood Hospital, which has been closed since 2020 due to flooding.
Aaron Pressman can be reached at aaron.pressman@globe.com. Follow him @ampressman. Robert Weisman can be reached at robert.weisman@globe.com.
Local News
Massachusetts will no longer require prospective foster parents to affirm the sexual orientation and gender identity of the children they foster, following legal challenges and criticism from religious groups.
The change comes after the conservative legal group Alliance Defending Freedom (ADF) filed a federal lawsuit in September on behalf of two Massachusetts families, who claimed the requirement conflicted with their religious beliefs, according to a Fox News report. One couple had its foster care license revoked, while the other was threatened with revocation.
That same month, federal regulators with the Administration for Children and Families (ACF) sent a letter to Massachusetts criticizing the mandate as discriminatory and a violation of the First Amendment. The agency said it would open an investigation into the matter.
On Dec. 12, the Massachusetts Department of Children and Families (DCF) updated its regulations, replacing language that required foster parents to affirm a child’s “sexual orientation and gender identity” with a requirement that they support a child’s “individual identity and needs.”
The shift comes amid a broader national debate, as states grapple with whether foster parents should be required to support children’s gender identity even when it conflicts with their personal or religious beliefs.
In a statement to GBH News, DCF Commissioner Staverne Miller said the agency’s top priority is ensuring children in foster care are placed in safe and supportive homes.
“We are also committed to ensuring that no one is prevented from applying or reapplying to be a foster parent because of their religious beliefs,” Miller said.
ADF lauded the change in a statement released Wednesday.
“Massachusetts has told us that this new regulation will no longer exclude Christian and other religious families from foster care because of their commonly held beliefs that boys are boys and girls are girls,” said ADF Senior Counsel Johannes Widmalm-Delphonse.
“Our clients—loving, caring foster families who have welcomed vulnerable children into their homes—as well as many other families affected by this policy, are eager to reapply for their licenses,” Widmalm-Delphonse continued. “This amendment is a step in the right direction and we commend Massachusetts officials for changing course. But this case will not end until we are positive that Massachusetts is committed to respecting religious persons and ideological diversity among foster parents.”
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Massachusetts will no longer require prospective foster parents to affirm gender ideology in order to qualify for fostering children, with the move coming after a federal lawsuit from a religious-liberty group.
Alliance Defending Freedom said Dec. 17 that the Massachusetts Department of Children and Families “will no longer exclude Christian and other religious families from foster care” because of their “commonly held beliefs that boys are boys and girls are girls.”
The legal group announced in September that it had filed a lawsuit in U.S. district court over the state policy, which required prospective parents to agree to affirm a child’s “sexual orientation and gender identity” before being permitted to foster.
Attorney Johannes Widmalm-Delphonse said at the time that the state’s foster system was “in crisis” with more than 1,400 children awaiting placement in foster homes.
Yet the state was “putting its ideological agenda ahead of the needs of these suffering kids,” Widmalm-Delphonse said.
The suit had been filed on behalf of two Massachusetts families who had been licensed to serve as foster parents in the state. They had provided homes for nearly three dozen foster children between them and were “in good standing” at the time of the policy change.
Yet the state policy required them to “promise to use a child’s chosen pronouns, verbally affirm a child’s gender identity contrary to biological sex, and even encourage a child to medically transition, forcing these families to speak against their core religious beliefs,” the lawsuit said.
With its policy change, Massachusetts will instead require foster parents to affirm a child’s “individual identity and needs,” with the LGBT-related language having been removed from the state code.
The amended language comes after President Donald Trump signed an executive order last month that aims to improve the nation’s foster care system by modernizing the current child welfare system, developing partnerships with private sector organizations, and prioritizing the participation of those with sincerely held religious beliefs.
Families previously excluded by the state rule are “eager to reapply for their licenses,” Widmalm-Delphonse said on Dec. 17.
The lawyer commended Massachusetts for taking a “step in the right direction,” though he said the legal group will continue its efforts until it is “positive that Massachusetts is committed to respecting religious persons and ideological diversity among foster parents.”
Other authorities have made efforts in recent years to exclude parents from state child care programs on the basis of gender ideology.
In July a federal appeals court ruled in a 2-1 decision that Oregon likely violated a Christian mother’s First Amendment rights by demanding that she embrace gender ideology and homosexuality in order to adopt children.
In April, meanwhile, Kansas Gov. Laura Kelly vetoed legislation that would have prohibited the government from requiring parents to affirm support for gender ideology and homosexuality if they want to qualify to adopt or foster children.
In contrast, Arkansas in April enacted a law to prevent adoptive agencies and foster care providers from discriminating against potential parents on account of their religious beliefs.
The Arkansas law specifically prohibits the government from discriminating against parents over their refusal to accept “any government policy regarding sexual orientation or gender identity that conflicts with the person’s sincerely held religious beliefs.”
A costly sportsbook screwup left DraftKings on the hook for nearly $1 million after Massachusetts regulators ordered the payouts tied to a botched MLB parlay scheme.
The Massachusetts Gaming Commission voted 5-0 on Thursday to reject DraftKings’ bid to void $934,137 in payouts stemming from a series of correlated parlays placed during MLB’s 2025 American League Championship Series, according to Bookies.com.
A Massachusetts customer wagered $12,950 total across 27 multi-leg parlays on Toronto Blue Jays player Nathan Lukes, exploiting an internal DraftKings configuration error that allowed the bettor to stack multiple versions of the same bet into one wager.
DraftKings told regulators the bets should never have been accepted and argued the patron acted unethically by taking advantage of an obvious error.
Commissioners flatly rejected that argument.
The wagers were tied to DraftKings’ “Player to Record X+ Hits in Series” market during the seven-game ALCS between Toronto and Seattle.
Because of a misclassification inside DraftKings’ trading tools, Lukes was incorrectly labeled a “non-participant” rather than an active player.
That designation disabled safeguards designed to block bettors from parlaying correlated outcomes from the same market.
As a result, the bettor was able to combine multiple Lukes hit thresholds — including 5+, 6+, 7+ and 8+ hits — into single parlays, functionally creating an inflated wager on Lukes recording eight or more hits at dramatically enhanced odds.
The bettor also added unrelated, high-probability legs, including NFL moneyline bets, to further juice payouts.
Lukes ultimately appeared in all seven games and finished the series with nine hits, clearing every threshold.
Of the 27 parlays placed, 24 hit cleanly. Only three lost due to unrelated college football legs involving Clemson, Florida State and Miami.
During a heated exchange at Thursday’s commission meeting, DraftKings executive Paul Harrington accused the patron of fraud and unethical conduct.
Commissioners bristled. One of them, Eileen O’Brien, blasted DraftKings for casting aspersions on the bettor without evidence and said the situation did not meet the standard of an “obvious error.”
“An obvious error is a legal and factual impossibility,” O’Brien said. “This is an advantage that the patron took.”
She added that DraftKings’ internal failures — not the bettor’s conduct — created the situation.
“We need to seriously consider giving voice to the consumer and getting their half the story,” O’Brien said. “The compulsion to pay will in fact encourage compliance.”
Other commissioners echoed that view, emphasizing that it is the operator’s responsibility to ensure the integrity of its markets.
The commission noted that DraftKings acknowledged the root cause was internal — a configuration failure within its own trading tools — and not the result of a third-party odds provider or external data feed.
Upon discovering the error, DraftKings pulled the affected markets, left the wagers unsettled pending regulatory guidance and implemented corrective fixes.
The company said no other Massachusetts customers were impacted, though the same issue appeared in two other jurisdictions.
The Post has sought comment from DraftKings.
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