Physicians, nurses and other clinicians who worked at Steward Health Care’s former Massachusetts hospitals are facing personal liability for malpractice claims after the chain’s in-house insurer, TRACO, was left effectively broke, The Boston Globe reported Oct. 13.
Like many health systems, Dallas-based Steward self-insured against malpractice claims through a captive insurer rather than paying a commercial carrier. TRACO promised to cover clinicians’ legal defense and pay settlements up to specified limits, typically capped at $6 million annually per clinician, according to the Globe. At one point, the insurer covered 1,400 medical practitioners nationwide.
A 2024 Globe Spotlight investigation found Steward executives had for years removed cash from TRACO and left IOUs in its place. By mid-2024, the insurer had $3.5 million in cash while facing more than 500 malpractice claims. Steward moved TRACO from the Cayman Islands to Panama in 2019, in part to take advantage of the country’s lighter regulations, and the insurer is not licensed in Massachusetts. The state’s Division of Insurance told the Globe it lacked legal authority to monitor TRACO’s solvency.
Many clinicians said they kept working through Steward’s decline in part because executives assured them their coverage was secure. In September 2024, Michael Callum, MD, a former Steward executive vice president who served as TRACO’s president from 2019 to 2024, and Rubén José King-Shaw Jr., TRACO’s current CEO and president, told physicians Steward was reserving funds during the bankruptcy to cover new claims and would continue defending old ones, according to the Globe. Neither responded to the Globe’s requests for comment.
Paresh Mane, MD, a thoracic surgeon who worked at Steward’s Holy Family Hospital in Methuen, Mass., and St. Elizabeth’s Medical Center in Boston, described the fallout to the Globe.
“It feels like a massive betrayal,” Dr. Mane said. “We stepped up during a time of need and kept practicing in hospitals that Steward had starved of resources. Now we are left completely exposed.”
When Steward sold its Massachusetts hospitals in fall 2024, physicians hoped the new owners would provide tail coverage for claims tied to their time at Steward. Only one buyer has done so, according to the Globe: Providence, R.I.-based Brown University Health, which acquired Saint Anne’s Hospital in Fall River, Mass., and Morton Hospital in Taunton, Mass.
Boston Medical Center Health System, which bought St. Elizabeth’s and Good Samaritan Medical Center in Brockton, Mass., has said it will provide tail coverage only if TRACO is declared insolvent. No such declaration has been made.
Boston Medical Center Health System, which bought St. Elizabeth’s and Good Samaritan Medical Center in Brockton, Mass., has said it will step in only if TRACO is declared insolvent. No such declaration has been made. In a statement to Becker’s, the system said responsibility for claims tied to physicians’ time at Steward rests with TRACO.
“Steward’s insurer, TRACO, is obligated to cover medical malpractice insurance claims against physicians providing care at St. Elizabeth’s Medical Center and Good Samaritan Medical Center that originated during their time at Steward,” the system said. “These include claims related to their time at Steward Medical Group but initiated after they became BMC Health System employees on Oct. 1, 2024, so called ‘tail claims.’”
“We are concerned about TRACO’s lack of accountability and continue to work with our impacted providers during this difficult time,” the statement continued. “If TRACO is declared insolvent, BMCHS has agreed to support physicians related to tail claim shortfalls.”
Lawrence, Mass.-based Merrimack Health, which acquired Steward’s hospitals in Methuen and Haverhill, also declined to cover past claims.
“The primary responsibility for, and any resolution of those claims, remains with TRACO with any underfunding concerns addressed through the bankruptcy courts,” the system said in a statement to the Globe.
The costs are now landing on individual clinicians. In two recent cases, Massachusetts Superior Court judges ordered former Steward physicians to personally pay six-figure malpractice settlements that the physicians say TRACO negotiated but failed to fund. Plaintiffs’ attorneys are also increasingly naming clinicians as defendants rather than Steward, according to the Globe, while hundreds of other cases have been put on hold indefinitely.
Clinicians seeking their own tail policies told the Globe that quotes have climbed sharply, in part because of Steward’s safety record. In higher-risk specialties such as obstetrics and neurology, quotes have topped $100,000 a year. Zachary Kramer, MD, former chief of emergency medicine at St. Elizabeth’s and associate chief at Morton, found his tail coverage cost had jumped to $80,000 from $26,000 in a year. He left clinical practice in September to move into telehealth.
“I worked my butt off to help my community only to learn that I’m on the hook for it,” Dr. Kramer told the Globe. “It’s an awful feeling, like jumping out of a plane without a parachute.”
In response, more than 300 former Steward physicians, nurses and other clinicians have formed a coalition lobbying Gov. Maura Healey’s administration to backstop their malpractice coverage, tighten oversight of malpractice insurers and launch a criminal investigation into Steward’s former top executives. The group’s list of demands includes a state-backed relief fund to cover unresolved settlements and judgments. The Massachusetts Medical Society has backed the effort, calling the collapse of the clinicians’ malpractice coverage “unconscionable.”
The state’s Executive Office of Health and Human Services told the Globe it is reviewing the coalition’s proposals. A spokesperson told the Globe Steward ignored the agency’s repeated demands to maintain adequate malpractice coverage and that the state has asked the Texas judge overseeing Steward’s bankruptcy to step in, warning that TRACO had “little to no independent capital” to pay claims.
“Doctors and clinicians should not continue to have to pay the price for Steward and Ralph de la Torre’s greed and mismanagement,” the spokesperson said, referring to Steward’s former CEO.
Ralph de la Torre, MD, faces a lawsuit from Steward’s bankruptcy trustee seeking more than $3.4 billion from him and other company insiders over dividends allegedly paid while the company was insolvent. He has disputed the allegations. The Senate also referred Dr. de la Torre for criminal contempt in 2024 after he refused to testify about Steward’s finances, and in August, senators pressed the Justice Department for an update on the case.
In January 2025, Ms. Healey signed a law aimed at closing regulatory gaps Steward exploited, including expanded oversight of private equity-backed providers.
TRACO, for its part, has repeatedly pressed the bankruptcy court to force Steward to pay roughly $250 million to settle its IOUs, according to court filings cited by the Globe. Timothy Walsh, an attorney for TRACO, declined to comment to the Globe on the insurer’s financial condition.
For more on Steward’s collapse, here is Becker’s running timeline.
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