Medical Properties Trust (MPT) has dropped its defamation case against a financial research firm that alleged fraud in its dealings with Steward Health Care System, which filed for bankruptcy in May.
MPT is a major U.S. real estate firm that owned part of Steward, and also rented hospitals to the failed healthcare giant.
MPT launched a defamation suit in March 2023, claiming that Viceroy Research LLC had deliberately misled the markets about its finances in order to drive down its share price, including making “false accusations" about its dealings with Steward.
In the suit, MPT said Viceroy founder Fraser Perring had publicized his firm’s “false ‘research’” on social media, “using the hashtags ‘#fraud’ and ‘#ponzi scheme’” and “accusing MPT of ‘involvement in #Corruption” and ‘scamming investors.’”
Since MPT filed its defamation suit, Steward has imploded and is now subject to a grand jury investigation, and was discussed in Senate hearings. Senators Elizabeth Warren and Edward J. Markey have made similar allegations as Viceroy did about MPT’s financial relationship with Steward.
In an open letter to MPT’s CEO Edward Aldag in April, which echoed some of Viceroy’s claims, the senators wrote that the way the company infused Steward with money to prop it up had “all the appearances of a Ponzi scheme.”
MPT has now decided not to challenge Viceroy’s assertions in court.
In a December 18 statement, MPT announced that it had agreed with Viceroy “to mutually settle and dismiss the defamation lawsuit,” adding that the “parties have agreed to keep the terms of the settlement confidential.”
Richard Elias, a Viceroy lawyer, told OCCRP that the defamation case had been resolved “to the satisfaction of all parties.”
Viceroy researches publicly-traded companies as part of its strategy of “short selling,” in which traders seek profits by betting that a firm’s stock price will fall. MPT accused Viceroy of harming its stock price by “spreading malicious falsehoods."
OCCRP and the Boston Globe reported in October that MPT played a key role in the financial demise of Steward, which once oversaw the largest private healthcare system in the U.S., running hospitals throughout the country.
Reporters discovered that MPT was secretly subsidizing Steward, allowing the healthcare giant to pay rents it could not afford. In doing so, MPT boosted its own value as a publicly traded company, while masking the dire financial situation at Steward.
At a Senate committee hearing in September, Senator Bernie Sanders outlined the trappings of Steward CEO Ralph de la Torre’s excessive wealth, which included a $15 million luxury fishing boat and extensive use of private jets to fly around the world.
Meanwhile, as Steward’s end game played out, staff described dire scenes at two Steward hospitals in Massachusetts, where medical supplies were missing and vendors had blacklisted Steward facilities over non-payments.
