Gallup Hospital Faces Multimillion Lawsuit, Community Voices Concern

Rehoboth McKinley Christian Health Care Services, the primary provider for patients not covered by the Indian Health Service in the Gallup area, is now defending itself against a civil lawsuit filed in New Jersey on November 16. Three New Jersey companies accuse the hospital of fraud and misrepresentation, conversion, unjust enrichment and breach of contract, alleging that RMCHCS received grant money intended for continuing medical education events and failed to pass those funds to event organizers.

The lawsuit details multiple instances in which RMCHCS allegedly refused to pay invoices despite repeated demands, and claims the hospital unlawfully retained or misappropriated more than $162,000 in educational grant money. According to court filings, the hospital owed more than $1.4 million at one point, and has since paid that balance down to about $973,000. The suit does not speculate on how the unpaid amounts were used.

The legal action was filed thousands of miles from McKinley County, and local leaders say the cost and distraction of litigation could compound an already serious financial crisis at the hospital. The facility has faced public scrutiny after closing its labor and delivery unit, and physicians and community organizers have warned that mounting losses threaten care. “The hospital’s losing $800,000 to $1 million a month, with a projected loss of $24 million for this year alone. We are concerned that quality and safety are dangerously weak,” said Dr. Connie Liu, a local physician and organizer with Community Health Action Group.

Community advocates emphasize that the hospital is more than a single facility for Gallup. For residents who do not qualify for services through the Indian Health Service, Rehoboth is often the only local option for emergency care, outpatient services and inpatient stays. Any prolonged financial disruption or legal liability could further limit services, create staffing shortages, and force patients to travel long distances for care.

State officials have signaled potential engagement with the matter. The New Mexico Attorney General’s office said it will “step in to protect the most vulnerable if the concerns are substantiated.” The New Mexico Department of Health declined to comment on pending litigation. RMCHCS officials issued a response to the allegations on Tuesday and provided materials that were posted alongside the lawsuit documents on the reporting outlet’s web page.

The lawsuit and the hospital response are now public record, but the litigation is in its early stages and outcomes remain unclear. For McKinley County residents, the immediate concern is maintaining access to safe, reliable health services while the hospital addresses both its fiscal challenges and the allegations raised in the suit. Local leaders and health advocates say they will be watching state involvement closely as the case progresses.