St. Croix Hospital Mortgaged Its Own Gear to Pay Bills, Now Faces $6.36M Judgment

The V.I. Government Hospitals and Health Facilities Corporation revealed Friday that the Juan F. Luis Hospital and Medical Center financed its 2024 operations through an unusual arrangement: selling medical equipment it already owned and then leasing the same equipment back.

When JFL faced severe financial strain in 2024, mounting vendor bills and payroll obligations left few options. The hospital struck a roughly $6 million deal with Varilease Finance, Inc. under which it sold existing equipment and continued using it through a lease. The arrangement called for 48 payments of $149,400 each, totalling $7.17 million over the full term.

The hospital kept current with payments through October 2025. A cybersecurity incident and ongoing financial pressure then disrupted the schedule. From December 2025 to October 2026, JFL made only ten payments totalling $230,000.

When Varilease Finance sued in Michigan federal court, neither JFL nor its governing corporation filed a defence. The court entered a default judgment of $6.36 million in September. In a statement Friday, the hospital and corporation said the decision not to appear was deliberate, made on legal advice about questions over service of process and the court's jurisdiction. They did not name the attorneys who gave that advice or explain why those concerns were not raised before the default took effect.

Court records show both defendants received service on April 10, 2026. Defaults were entered on May 6 after they failed to respond. Judge Brandy R. McMillion issued the judgment on September 22 following a hearing neither party attended.

The creditors have now registered the Michigan judgment locally and sought to seize JFL's bank accounts and assets. On Thursday, Chief Judge Robert Molloy of the District Court of the Virgin Islands ordered the creditors to justify their legal authority to proceed. He cited a territorial statute that generally shields hospital corporation assets from judicial seizure and raised his own questions about whether the Michigan court had proper jurisdiction, though he made no ruling on that point.

The judgment covers equipment listed in a 30-page inventory: ventilators, operating tables, ultrasound scanners, infant incubators, hospital beds, patient monitors and sterilization systems. No equipment or assets had been seized as of Friday.

JFL Chief Executive Officer Darlene Baptiste said the hospital recognises the need for stronger oversight of agreements involving essential resources. Chris Finch, chairman of the St. Croix District Governing Board, acknowledged the concerns and pledged that the hospital's interests would be represented in legal proceedings.

The hospital and corporation pointed to broader challenges facing public healthcare facilities, including patient populations heavily dependent on Medicare and Medicaid reimbursements that do not cover the full cost of care. Governor Albert Bryan Jr. has proposed a $250 million bond package that includes $40 million for the St. Croix hospital, though the financing remains subject to legislative approval.