Las Cruces, Doña Ana County sue hospital

LAS CRUCES — Officials from the city and Doña Ana County jointly announced a lawsuit against Memorial Medical Center on Monday, alleging violations of its lease and an asset purchase agreement pertaining to public property used by the hospital.

Memorial Medical Center, located at the site of a former county medical center, is owned by private equity firm Apollo Global Management and operated by Tennessee-based Lifepoint Health. All three entities are named as defendants in the lawsuit, filed over the weekend in New Mexico’s 3rd Judicial District.

The action follows a notice of breach the two governmental units issued to the hospital in 2024, presenting a list of seven demands for documentation and a plan of action addressing alleged failures to meet its obligations to provide care for indigent and low-income patients and to make capital improvements based on a percentage of its net revenue.

The leaders who spoke on Monday acknowledged progress and saluted medical staff, but, as Mayor Eric Enriquez put it, “The leadership and management have failed to fulfill the obligations that were agreed upon.”

City Manager Ikani Taumoepeau, who sits on the hospital’s board of trustees, said, “The city continues to receive dozens of complaints from residents … regarding barriers to accessing care. These troubling reports underscore serious concerns that are not consistent with the quality of service and compassion our community expects and deserves.”

The 2024 demand letter followed an NBC News report documenting MMC patients, including cancer patients, who reported low income or a lack of insurance and were denied care or asked to pay up front.

The hospital’s CEO at the time, John Harris, denied the allegations in the report but abruptly retired shortly thereafter. Harris was succeeded by Dennis Knox.

Despite intermittent upbeat reports that discussions between the government entities and the hospital were showing progress over 17 months, the lawsuit states that patient complaints of denied care have continued.

Additionally, the plaintiffs say the hospital provided “limited information” about capital spending from 2021-23, obscuring whether it was complying with a lease requirement that 4-5% of its net patient revenue, minus bad debt, is used for capital investments that benefit patients, such as equipment or facilities.

“MMC has undoubtedly been required to provide such information through either income statements or other financial records to both the IRS and MMC’s shareholders,” the lawsuit argues.

Deputy County Attorney Cari Neill said the governments had offered to pay for a third-party audit determining whether Memorial had met that obligation, but said the company refused.

The lawsuit seeks a judgment that Apollo and Lifepoint are in breach of their contracts, a judicial order for the hospital to comply with the agreements and applicable damages.

Yoli Diaz, a local patient advocate and persistent critic of Memorial Medical Center who has worked to keep its record in the public eye, told the Journal she did not believe Memorial and its ownership were credible partners for the city or county.

“They need to part ways,” she told the Journal Monday. “There is absolutely no way that Lifepoint is able to do the right thing, because their first priority is to their investors. They can never really take the route of being there for the people.”

City Attorney Brad Douglas said the damages could reach as far as taking back public property, while adding, “Obviously, that’s not our preferred outcome.”

The litigation could potentially drag on for years, but the city and county said they would maintain efforts to work with MMC and Lifepoint.

“This could be over tomorrow,” Douglas said, “if Lifepoint and MMC come to the table with a resolution that’s acceptable to the county and the city, that satisfies our concerns and ensures that our residents get the care that they deserve.”

Lifepoint Health and Apollo Global Management did not respond to queries from the Journal. 

Memorial Medical Center released a statement Monday evening maintaining it “has been working in good faith to address the questions and concerns” from the two governments and added it was “surprised and disappointed” by the press conference and lawsuit.

“We strongly believe that we are not in breach of our agreements, and we have been committed to forging a collaborative path aimed at the common goal of ensuring our community has access to the care they need,” said the hospital’s statement. “We have attempted to discuss the City and County’s latest requests for weeks — even as recently as last week — and continue to be rebuffed.”

Algernon D’Ammassa is the Journal’s southern New Mexico correspondent. He can be reached at adammassa@abqjournal.com.