Lovelace Health System Sued: Radiology Firm Claims Contract Breach

Zia Diagnostic Imaging, an Albuquerque-based radiology firm, filed a lawsuit against Lovelace Health System in October. The company alleges that Lovelace breached a long-standing contract by poaching its doctors and failing to manage the impact of a major cyberattack.

The legal dispute centers on a five-year exclusivity agreement signed in 2020. This contract designated Zia as the sole provider of radiology services for Lovelace’s five hospitals in Albuquerque. Zia argues that Lovelace violated this arrangement by hiring its own interventional radiologists in 2022. These doctors use imaging technology to perform minimally invasive surgeries. According to the complaint, they left Zia in October 2023 to work for Lovelace.

The lawsuit claims that once these interventional radiologists joined Lovelace, they began performing diagnostic services that were supposed to be handled exclusively by Zia. This action, the firm argues, broke the exclusivity clause of their contract. Jeffrey Hebert, the managing partner of Zia, stated that three interventional radiologists received offers from Lovelace. He added that the threat of their departure created a contentious environment that led other staff to resign.

A second major allegation involves a cyberattack on Ardent Health, Lovelace’s parent company, which occurred in November 2023. The lawsuit asserts that Lovelace failed to mitigate the effects of this attack, which disrupted patient care for months. Zia claims that system outages prevented them from accessing necessary equipment and data, violating contractual requirements for adequate support.

During the outage, Zia radiologists were forced to hand-write reports and then fax, call, or walk them to clinical locations. The complaint states that Lovelace sent patients to scanners without identification bracelets or room numbers, resulting in mislabeled images. Hebert noted that hundreds or possibly thousands of imaging studies were not provided to Zia providers for days, weeks, or months. By May 2024, some radiologists were still dictating reports for patients whose scans had been taken months earlier.

The fallout from these issues ended the relationship between the two organizations. Zia terminated its agreement with Lovelace effective in the spring of 2024. Following the termination, all six remaining radiologists at Zia took jobs outside of New Mexico. Hebert confirmed that the company no longer offers radiology services, effectively shutting down the firm that had operated since 2007.

Lovelace declined to comment on the specific details of the lawsuit, citing its policy of not discussing pending legal matters. Bryan Davis, an attorney representing Zia, said the firm sought to settle the dispute. Zia asked for several million dollars in damages and proposed mediation, but Lovelace declined to participate. Davis stated that if the court rules in favor of Zia, the company plans to seek between $5 million and $7 million in total damages.