Zia Diagnostic Imaging seeks millions from Lovelace over lost contract

Zia Diagnostic Imaging has filed a lawsuit against Lovelace Health System, seeking between $5 million and $7 million in damages for alleged contract violations.

The dispute centers on a five-year agreement signed in 2020 that named Zia as the exclusive radiology provider for five Lovelace hospitals in Albuquerque. Zia was formed in 2007 and first entered into an exclusive partnership with Lovelace in 2008. The current contract, which took effect in March 2020, governed the relationship until Zia terminated the agreement in spring 2024.

The legal conflict began in 2022 when Lovelace extended job offers to three of Zia’s interventional radiologists. These doctors, who perform minimally invasive surgeries using imaging, departed Zia in October 2023. Upon joining Lovelace, they began performing non-interventional diagnostic services. Zia argues this move violated the exclusivity clause of their contract, which reserved those duties for Zia staff.

The departure of the interventional team triggered a wider exodus. The lawsuit states that several other Zia radiologists resigned in hopes of securing positions with Lovelace. Jeffrey Hebert, Zia’s managing partner, noted in a statement that four additional radiologists left the state to find employment elsewhere. Hebert described the departures as a direct result of the contentious environment created by the initial threats to leave. Six radiologists remained at the firm until its contract with Lovelace ended. All six subsequently took jobs outside of New Mexico, leaving Zia without a workforce to provide radiology services.

The complaint also cites a cyberattack on Lovelace’s parent company, Ardent Health, in November 2023. Zia claims the attack caused prolonged outages that prevented the hospital from providing adequate equipment and services, as required by their contract. During the disruption, Zia radiologists were forced to hand-write reports and deliver them via fax, phone, or in person. The lawsuit alleges that patients were sent to scanners without identification bracelets or room numbers, leading to mislabeled images.

Zia asserts that hundreds or potentially thousands of imaging studies were not provided to its providers for days, weeks, or months. By May 2024, radiologists were still dictating reports for studies taken months earlier. The lawsuit describes these conditions as untenable and lasting far beyond a reasonable timeframe for Lovelace to cure the effects of the cyberattack.

A spokesperson for Lovelace declined to comment on the pending legal matter, citing company policy. Bryan Davis, the attorney representing Zia, stated that the firm attempted to reach a settlement by asking for several million dollars in damages. Lovelace declined to mediate the dispute. The case is now pending in Bernalillo County district court, where Zia will press its claim for the full amount of damages if it prevails.