。
She said she was worried he might fail.
Literal
She [topic-は] [he [subject-が] fail [is it not the case that-のではないか] [quotative-と] is-worrying] [quotative-と] said.
Two layers of quotative と stacked together. The innermost proposition 彼が失敗する ('he fails') is wrapped in ~のではないか (the worry pattern, 'might it not be the case that ~?'). That whole worry is then quoted with と as the content of 心配している. And finally the speech act 言った quotes that whole inner reported state with another と.