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Steward Health Care System and Aya Healthcare Staffing Agency – Crisis Rate Lawsuit

Steward Health Care, a private hospital operator based in Dallas, and Aya Healthcare, a San Diego-based staffing firm, are suing each other over the costs of nurses during the COVID-19 pandemic, according to The Wall Street Journal.

Steward’s lawsuit, filed in March in Massachusetts Superior Court, alleges price-gouging by Aya during the public health crisis, and that Aya violated Massachusetts law by trying to unilaterally cancel scheduled nursing assignments, Herbert Holtz, executive vice president and general counsel for Steward, said in an email to employees shared with Becker’s Hospital Review.

Price gouging by nurse staffing agency MSPs is fairly prevalent. There is more than the standard compliance burden the subcontracting agencies are pricing for; for example, recruiter commission and the MSP service fee (Aya is an MSP). MSP service fees can be more than 5% of the total bill rate for a placement.

Aya’s countersuit, filed April 6 in Massachusetts Superior Court, seeks more than $40 million that it claims Steward owes for services of Aya’s more than 2,000 front-line healthcare workers throughout the pandemic, plus treble damages, attorneys’ fees and costs under the Massachusetts Consumer Protection law. 

Hospitals and health systems have relied more heavily on outside staffing, including travel nurses, during the pandemic, particularly when there have been coronavirus surges. Amid demand, rates for healthcare workers went up nationally. For instance, The Wall Street Journal cites an analysis of data from staffing company Health Carousel — conducted by researchers from the University of Chicago and New Haven, Conn.-based Yale University — which found U.S. wages for travel nurses climbed 25 percent in April 2020 toward the beginning of the pandemic. Aya and Steward entered their crisis contract for temporary staffing on March 23, 2020.

Mr. Holtz, with Steward, said after the company filed the March lawsuit, the court granted a nationwide injunction prohibiting Aya from canceling scheduled nursing assignments. According to The Wall Street Journal, that temporary order, which ended April 4, also ordered Steward to post a $10 million perfunctory bond to counterbalance the risk to the staffing firm.

Mr. Holtz said as of April 7, there were 21 Aya nurses still working within the Steward system. Their contracts expire in mid-April, he said.

Aya denied jeopardizing patient safety and pulling nurses midshift or midassignment. The staffing firm said Steward breached its agreement with Aya, did not pay invoices on time and racked up an unpaid contract balance of over $40 million for services provided by temporary staff.

If hospitals stop paying their vendors it will inevitably disrupt the delivery of healthcare services, and negatively impact patient care in the communities those hospitals serve. 

Perhaps hospitals and health systems could afford to pay for their nurse staffing if they were short term or per diem contracts instead of the ever-prevalent travel contracts that maximize the agency profits…

In an interview with The Wall Street Journal, Mr. Holtz denied Steward owes Aya more than $40 million and told the newspaper it has paid Aya more than $39 million under their agreement.

Aya rejected those claims.

Steward operates 35 hospitals in Malta and nine U.S. states, including Massachusetts.


For hospital staffing solutions that don’t rely on Managed Services Providers (MSPs), reach out to RapidHire Placements today.

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