The state Department of Corrections has spent the last six months fighting the release of a damning 2014 report that says the agency did not monitor its inmate medical care contract and retaliated against a longtime employee who reported the failure.

The document has become pivotal in a whistleblower lawsuit filed by the department’s former Behavioral Health Bureau chief, Bianca McDermott, in 2017. According to an audio recording of a recent hearing, a state district judge said the behavior of Corrections Department officials in response to the case was among the most extreme examples of “willful, intentional and bad faith attempts to conceal evidence” he’d seen in his more than 30-year career.

Judge Raymond Ortiz sanctioned the state agency so severely for concealing and destroying evidence that essentially the only issue left to be decided is how much it will pay McDermott in damages.

“Sanctions are appropriate, in my view, from the bottom up. … I’m striking all the department’s affirmative defenses,” Ortiz said in the hearing on McDermott’s motion requesting the Corrections Department face sanctions for violating court rules on evidence sharing. “I’ve taken away all of the affirmative defenses and made a finding that Ms. McDermott was targeted for retaliation. That is basically the case right there.”

Ortiz harshly criticized the department’s wish to stop the release of a 309-page report by an independent consultant that details an investigation into McDermott’s claims about the lack of audits on the medical care of inmates in New Mexico’s prison system.

Published in June 2014 by the McHard Accounting Consulting firm, the report substantiated McDermott’s claims about delinquent audits and the department’s subsequent retaliation against her.

“Dr. McDermott’s complaints that the audits were required and were not being conducted were in fact valid complaints,” according to the report, obtained through a public records request. “The audits were supposed to be conducted to ensure that inmates were receiving adequate health care.”

The report also noted disciplinary actions against McDermott “bear the hallmarks of retaliation.”

The Corrections Department resisted releasing the report as part of the process of discovery, in which both sides in a court case share evidence, arguing the document was protected by attorney-client privilege or exceptions to the state’s Inspection of Public Records Act regarding personnel files. The department failed to produce the report even after Ortiz ruled in March it should be made available to McDermott’s attorney.

When the judge denied a motion to reconsider his ruling, Corrections Department lawyers filed a petition in May with the state Supreme Court to stop the report’s release. The Supreme Court denied the request. The department finally released the report to McDermott’s lawyer, Samuel C. Wolf, who by then had sought sanctions against the agency in District Court because of discovery process violations.

At the Aug. 5 hearing, Ortiz noted the department had destroyed evidence — including email accounts — while the case was in process.

“Even as another motion to compel was pending,” Ortiz said, “another email account was deleted. … That is extremely troubling to the court.”

The McHard report

The McHard report also made a number of other critical findings regarding the state’s lack of oversight of the prison medical care vendor at the time, Corizon Health, and poor management decisions on the part of top officials during a period that spanned the administrations of former Govs. Bill Richardson and Susana Martinez.

According to the report, the state did not conduct required audits of Corizon between 2007 and 2012, fostering a perception among company employees they were not being watched.

“It is a well studied conclusion that perception of detection is the best and most cost effective way to thwart wrongdoing of all kinds, including fraud and abuse,” the report said. “In this case, the perception of detection was zero, and Corizon personnel absolutely knew they were free to do anything without fear of consequences.

“This constitutes a serious failure by [New Mexico Corrections Department] staff whose job it was to ensure proper inmate health and psychiatric care through the use of the audits and other tools, as well as a failure on the part of those who supervised them,” the report said.

The report noted multiple inmates made allegations of sexual abuse by a Corizon doctor between 2010 and 2012 at state prisons in Santa Rosa and Clayton.

According to court records, Jim Brewster, the Corrections Department’s former general counsel, said in a deposition that the department hired McHard to investigate McDermott’s allegations regarding the medical audits “because I thought it would be the most appropriate way to … make sure that it was fairly investigated.”

Stories published by The New Mexican in 2016 revealed state inmates had filed about 150 lawsuits during the nine years Corizon held the medical care contract, alleging denied, delayed and negligent care.

Corizon later paid $4.5 million to settle lawsuits filed by inmates, the bulk of which went to inmates who claimed they were sexually abused by the doctor.

The company declined to comment for this story.

McDermott — a clinical psychologist with a Ph.D. from Yale who now works for Lovelace Medical Group — also declined to comment.

According to her complaint, she seeks a finding that the Corrections Department violated the Whistleblower Protection Act and reinstatement to her former position, plus double her lost wages with interest dating to her November 2015 termination. McDermott said she was being paid $85,000 per year at the time of her dismissal.

Wolf declined to comment on the estimated dollar amount of McDermott’s damages or legal costs ahead of “renewed settlement discussions” in the case.

Although McDermott’s legal case had proceeded through a change in administrations from Martinez to Gov. Michelle Lujan Grisham, Corrections officials denied the new administration approved the continued battle over the release of the report.

Corrections Department spokesman Eric Harrison said in an email “the strategy and direction regarding this case was made by the prior administration’s leadership.”

While much of the litigation in the case took place during former Gov. Susana Martinez’s administration, the battle over the McHard report was waged while Lujan Grisham was in office.

Lujan Grisham’s spokesman Tripp Stelnicki said the governor only became aware of the controversy in August.

“I briefed her about the McHard report late last week,” Stelnicki said. “Suffice to say she is greatly concerned by the appearance of any attempt to conceal evidence or obfuscate by Corrections, whether under the Martinez administration or not.”

Stelnicki said it was his understanding the fight over release of the report was a “continuation of an ongoing strategy” that until current Secretary Alisha Tafoya-Lucero was appointed in June would have been under the purview of the Jim Brewster, the Corrections Department’s former general counsel.

Brewster retired Aug. 1 and did not respond to requests for comment.