In re Jackson Hospital & Clinic, Inc., et al.

In re Jackson Hospital & Clinic, Inc., et al., Case No. 25-30256 (Bankr. M.D. Ala.), Memorandum Opinion and Order Regarding Sanctions Against Cassie D. Preston and Gordon Rees Skully Mansukhani, LLP (Document 1182), entered November 20, 2025. Federal bankruptcy court. Copy of primary document: `~/workspace/goals/ai-sanctions-case-monitoring/files/sources/D-111-jackson-hospital-v-preston.pdf`.

Attorney Cassie D. Preston filed a motion to reconsider, a supplemental brief, and a joint response containing fabricated quotations, mis-citations, and misstatements of existing case law generated through generative AI. When the court asked directly whether AI was used, she answered "No, sir"; she later admitted she knew AI had been used by someone other than a firm associate, and she filed two more pleadings recycling the false authorities after being put on notice of the defects. The Firm (Gordon Rees Skully Mansukhani, LLP) voluntarily paid $55,721.20 in fees sought by the DIP lender and the debtors.

Bankruptcy Rule 9011, 11 U.S.C. 105(a), the court's inherent authority, and Alabama Rules of Professional Conduct 1.1, 3.1, and 3.3(a)(1). Sanctions on Preston: formal public reprimand; she must provide the opinion to her clients, opposing counsel, and the presiding judge in every pending state or federal case within 30 days and certify compliance; the opinion is directed for publication; her pro hac vice admission to the court is revoked; she must list her licensing jurisdictions within 24 hours; and the clerk must serve the opinion on the general counsel of the Alabama and Georgia State Bars. The Firm was not sanctioned but must distribute the opinion and its updated AI and cite-checking policies to every attorney with acknowledgment of receipt.

R5, Denied or Doubled Down (answered "No, sir" at the 8/26/25 hearing when asked whether generative AI was used; retracted on 10/23/25 in the Preston Response; filed the Supplemental Brief and Progressive Response after notice from the Court, the DIP Lender and the Debtors; withdrew the Motion to Reconsider and Supplemental Brief at the 8/26/25 hearing after a recess; accepted responsibility in writing on 10/23/25 and at the 10/28/25 hearing; public reprimand and pro hac vice revocation imposed). [REPEAT ×2, prior Georgia AI-hallucination filing documented in the order, settled by the Firm (no entry)] TEXT-LAYER-PARTIAL: the opinion's exhibits (PDF pp. 33–130) are header-only scans; this grade rests on the 32-page opinion text (adjudication Q7(b): the flag suffices; no OCR required).

R2, Owned It Late (first appeared 9/23/25 after the 8/28/25 Show Cause Order; conceded Rule 9011 responsibility in the 10/23/25 Firm Response; paid $55,721.20 in fees by the 10/23/25 Status Report, which the Debtors' counsel held pending the hearing; audited about 2,700 Preston documents; adopted a Cite Checking Policy 9/19/25; held training in mid-October 2025; the order credits the response and imposes no sanction but orders an acknowledgment and certification step).

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(a) Never lie to the court about AI use; the false denial converted a sanctions matter into a candor violation. (b) Stop filing once errors are flagged: reusing a fabricated quotation in a new brief after notice is what established bad faith. (c) Check whether every attorney has acknowledged the firm's AI policy; the firm could not show Preston had acknowledged its AI policies.