ST. CROIX — A federal judge in Michigan has entered a $6.36 million default judgment against the Governor Juan F. Luis Hospital and Medical Center and the Virgin Islands Government Hospitals and Health Facilities Corporation over a medical equipment lease, ordering the return of the leased equipment and granting creditors rights to assets covered by an all-asset lien.
The September 22 judgment, issued by U.S. District Judge Brandy R. McMillion, also imposes annual interest of 13 percent on the unpaid monetary award. The ruling was registered Tuesday in the District Court of the Virgin Islands, a step toward potential enforcement of the judgment locally.
The case stems from a lawsuit filed March 31, 2026, in the Eastern District of Michigan by VFI KR SPE I LLC and Varilease Finance, Inc., which accused JFL and the territorial hospital corporation of breaching a two-year lease agreement covering approximately $6 million worth of medical equipment.
According to the complaint, the lease began April 1, 2025, and required monthly payments of $149,400. It also obligated the hospital to provide audited financial statements within 90 days of the end of each fiscal year and unaudited quarterly financial statements within 45 days of the end of each quarter.
The plaintiffs alleged that JFL failed to make its full rental payment in November 2025 and made no payments for December 2025, January 2026, or February 2026. They also claimed that the defendants failed to provide requested financial statements covering 2021 through 2025, constituting additional defaults under the agreement.
In late February, the companies sent a notice informing the hospital and territorial board of the alleged defaults and demanding the return of the leased equipment. According to the lawsuit, neither the outstanding payments nor the requested equipment was provided.
The creditors subsequently sought $6,357,600 in damages, the immediate return of the equipment, and foreclosure of their security interest in the defendants' assets.
The equipment at issue is extensive. A 30-page inventory attached to the federal complaint identifies medical and operational equipment ranging from hospital beds, patient monitors and examination instruments to adult and infant ventilators, operating tables, ultrasound scanners, infant incubators and sterilization systems.
The list also includes laboratory equipment, surgical instruments, patient-care furniture and a nurse-call system.
Court records show that JFL and the territorial hospital corporation were served with the lawsuit in April but failed to respond. The court clerk entered defaults against both defendants on May 6.
The plaintiffs subsequently filed a motion for default judgment. Neither defendant appeared at the September 21 hearing, and Judge McMillion granted the motion, issuing the judgment the following day.
Under the ruling, both defendants are jointly and severally responsible for the $6,357,600 award. The court also granted the plaintiffs $22,250 in attorneys' fees and $2,388.88 in costs, in addition to the 13 percent annual interest accruing on the monetary judgment.
Judge McMillion ordered the defendants to return all equipment identified in the complaint's inventory within 30 calendar days of the September 22 judgment, establishing an October 22 deadline.
The court further ordered foreclosure of the plaintiffs' all-asset lien, referencing a May 7, 2024, financing statement filed with the Office of the Lieutenant Governor of the Virgin Islands. The judgment grants the creditors immediate possession of assets covered by that lien.
The ruling does not allow the creditors to recover the full monetary award without accounting for property obtained through enforcement. Judge McMillion ordered that the $6,357,600 judgment be reduced by the resale value of equipment returned or seized, along with the value of any other assets delivered to the plaintiffs.
Virgin Islands law generally protects property belonging to the territorial hospital corporation from ordinary judicial attachment and execution. However, the governing statute also preserves creditors' rights to enforce mortgages and other security interests granted by the corporation.
The judgment adds to the financial pressures facing JFL, which reported approximately $45.6 million in outstanding obligations during an August Senate budget hearing. That amount included $22.9 million in accounts payable and $22.7 million in employee-related obligations.
In September, the Consortium reported that Worldwide Travel Staffing was seeking court intervention to collect a separate $12.14 million judgment against the territorial hospital corporation arising from unpaid staffing invoices. The company alleged that no payments had been made toward that judgment.
The latest judgment also comes as Governor Albert Bryan Jr. seeks legislative approval for a $250 million bond-financing package that would include $40 million for JFL and $45 million for Schneider Regional Medical Center. The administration submitted the proposed legislation on October 23, saying the financing would help the hospitals address outstanding obligations and maintain essential services.
The proposed borrowing has not yet received legislative approval, and the administration has not specified whether any of JFL's proposed allocation would be used to satisfy the Michigan judgment.
The registration of the judgment in the Virgin Islands places the creditors in a position to pursue further collection proceedings locally. The available court documents do not establish whether JFL has returned the leased equipment or whether any other assets have been seized.
