New Mexico hospital faces possible closure over $68M malpractice verdict

Rehoboth McKinley Medical Center in Gallup, N.M., was recently hit with a $68 million malpractice verdict and a district court judge has ordered the hospital to put up a bond of more than $100 million before it can file an appeal, Source NM reported May 31.

Rehoboth McKinley, which recently took $5 million from the city of Gallup and McKinley County to make payroll, has struggled to stay afloat after years of financial difficulties and alleged mismanagement, according to the report. As of February, it had a negative net worth of $25.7 million.

The $68 million malpractice verdict — which includes $59 million in punitive damages — was awarded to a man who underwent a botched hernia surgery that left him with lifelong complications. 

An appeal of the verdict could take more than three years, so the court has ordered the hospital to come up with more than $100 million for the expected length of the appeal, according to Source NM. The hospital will need to put up a bond worth $68 million for the judgment, about $6 million in pre-judgment interest and tens of millions in post-judgment interest that will accrue over the next three years. 

The court's bond requirements, coupled with Rehoboth McKinley's precarious financial position, could have far reaching implications for the hospital, including potentially seeking bankruptcy protection, laying off workers or ceasing operations altogether, Larry Montaño, an attorney representing the hospital, told the court.

During a May 29 meeting with the Gallup City Council, Rehoboth McKinley Interim CEO Bill Patten said he is hopeful that the hospital has landed on a strategy to come up with the money to satisfy the court order and survive this challenging period.

"I don't believe that either the plaintiff or the plaintiff’s attorneys want to be responsible for closing us," Mr. Patten said, according to the report. "In essence, if the judgment as initially handed out … is not changed, that's what would happen."

Becker's has reached out to the hospital and will update this story as more information becomes available.

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