Exhibit 10.37.1

                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT


     This  Employment  Agreement  is entered into as of the 18th day of October,
     2001, between  Greenbriar  Corporation,  a Nevada corporation  (hereinafter
     referred to as "Employer"), and JAMES R. GILLEY (hereinafter referred to as
     "Employee").


     In consideration of the mutual promises  hereinafter set forth, the parties
     hereto agree as follows:

     1.  Employment.  Employer  agrees to employ Employee and Employee agrees to
serve Employer, upon the terms and conditions hereinafter set forth.

     2. Term. The employment of Employee hereunder and this Employment Agreement
shall  commence  the date hereof and shall be  terminated  on December 31, 2004,
unless terminated sooner pursuant to Section 7 hereof.

     3. Duties. During the term of this Agreement,  Employee shall be engaged as
an executive employee of Employer and shall report to the Board of Directors and
Executive Committee of Employer. Employee's title shall be Chairman of the Board
of Directors of Employer, with such powers and duties in those capacities as are
set forth in the Bylaws of Employer.  If Employee is elected or  appointed  with
the  Employee's  consent to an office  with any of  Employer's  subsidiaries  or
affiliates  during the term of this  Agreement,  the Employee will serve in such
capacity or capacities without additional compensation.  Employee shall continue
to serve as a member of the Board of Directors  and as a member of the Executive
Committee of Employer.  Employee  shall  perform his duties from the  Employer's
main office in Addison, Texas.

     4. Extent of Services.  During the term of this  Agreement,  Employee shall
devote  substantially  his entire working time,  attention,  and energies to the
business of Employer,  consistent with the time and effort he has devoted to the
business of  Employer  in the past,  and shall not during the term of service be
actively engaged in any other business  activities.  However,  this shall not be
construed as preventing  Employee from investing the Employee's  personal assets
in such form or manner as may require  occasional or incidental  services on the
part  of  Employee  in the  management,  conservation  and  protection  of  such
investments  and  provided  that such  investments  cannot be construed as being
competitive or in conflict with the business of Employer.

     5. Compensation.

     5.1. Base Salary.  Employer will pay Employee during the Employee's term of
service  hereunder,  as  compensation  for the Employee's  services,  the sum of
$12,000  per year  (sometimes  hereinafter  referred  to as the "Base  Salary"),
payable  in  biweekly  or other  installments  in  accordance  with the  general
practices of the Employer.  Employee  shall  receive  fully vested  nonqualified
stock options for 200,000  shares of common stock on December 31 of each year of
the term hereof in lieu of any cash bonus,  with such  options to be issued with
exercise  prices equal to the average  closing price of the common stock for the
ten trading days preceding December 31 and for terms of ten years each.

     5.2  Incentive  Compensation.  Employee  shall  participate  in one or more
partnerships  formed by the  Employer  or others  in which the  Employer  or its
affiliate is a participant  and Employee and others as limited  partners for the
purpose of acquiring,  owning, operating, leasing and selling one or more health
care or other forms of investment  properties.  Such participation shall entitle
Employee  to a  limited  partnership  interest  equal to  between  8% and  25.9%
depending upon the origination of the project without  requiring him to make any
capital  contributions.  The  Company  agrees  that,  during  the  term  of this
Agreement,  all  property  acquisitions  shall be made using such a  partnership
structure with Employee participating therein.

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     5.3. Benefits.

     5.3.1.  The  Employee  shall be  entitled  to the same  benefits  generally
provided to other  executives of Employer of comparable rank and  responsibility
as well as to those generally provided to all officers of Employer in accordance
with the policies of the Employer from time to time.  These are to include,  but
not be limited to,  health  insurance  and vacation  pursuant to the  Employer's
standard policy.

     5.3.2.   The  Employer   shall   compensate   or  provide  the   designated
beneficiaries  of  Employee  with the  benefits  accrued  or  vested  under  any
compensation  and/or other benefit plan of the Employer in which  Employee was a
participant as of the date of his death.

     5.4 Severance.  This Agreement represents a modification and restatement of
the  Employment  Agreement  with the Employee  dated  January 1, 1997,  which is
hereby  cancelled.  As a result of such  cancellation,  Employee  is entitled to
severance  computed in the amount of $1,380,000.  Such amount shall be reflected
in the promissory note attached hereto as Exhibit A and  incorporated  herein by
reference.

     6. Expenses.  During the term of employment  provided for herein,  Employer
shall pay or reimburse  Employee,  in accordance with its standard policy,  upon
submission of vouchers by the Employee for all expenses incurred by the Employee
in the interest of Employer's business.

     7. Termination.

     7.1. Termination Events. Subject to the provisions of Paragraph 7.2 of this
Section, this Agreement shall terminate:

     7.1.1. Upon death of Employee.

     7.1.2.  At the option of the Employer if Employee shall become disabled and
remain disabled for a period of six (6) months.  Disability  shall be defined as
Employee's  inability  through illness or other cause to perform his normal work
load as measured by the twelve (12) months  preceding the  commencement  of such
disability. During such disability,  Employee shall be compensated in accordance
with Employer's standard policy regarding disability.

     7.1.3. Upon mutual agreement.

     7.1.4. At any time at the option of Employee.

     7.1.5.  At the Employer's  option for any good cause.  For purposes of this
Section, "good cause" for termination shall mean: (a) the conviction of Employee
of any act involving moral turpitude,  or (b) any material breach by Employee of
any of the terms of, or the failure to perform any covenant  contained  in, this
Agreement.

     7.1.6.  By the Employee for "Good Reason." For purposes of this  Agreement,
"Good Reason" shall mean the occurrence  after a Change in Control of any of the
events or conditions described in Subsections (1) through (9) hereof:

          (1)  a  change  in  the   Employee's   status,   title,   position  or
               responsibilities (including reporting responsibilities) which, in
               the Employee's reasonable judgment,  represents an adverse change
               from his status, title, position or responsibilities as in effect
               immediately prior thereto;  the assignment to the Employee of any
               duties or  responsibilities  which, in the Employee's  reasonable
               judgment,  are inconsistent with his status,  title,  position or
               responsibilities;  or any removal of the Employee from or failure
               to reappoint or reelect him to any of such offices or  positions,
               except  in  connection  with the  termination  of his  employment
               pursuant to Sections 7.1.1,  7.1.2,  7.1.3, 7.1.4 or 7.1.5, other
               than Good Reason;

          (2)  a reduction in the  Employee's  base salary or any failure to pay
               the Employee any compensation or benefits to which he is entitled
               within five days of the date due;

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          (3)  a  failure  to  increase  the  Employee's  base  salary  at least
               annually at a percentage  of base salary no less than the average
               percentage  increases  (other than  increases  resulting from the
               Employee's  promotion)  granted to the Employee  during the three
               full years  ended  prior to a Change in Control  (or such  lesser
               number of full years during which the Executive was employed);

          (4)  the  Employer's  requiring  the Employee to be based at any place
               outside  50 miles  from  Dallas,  Texas,  except  for  reasonably
               required  travel on the Employer's  business which is not greater
               than such travel requirements prior to the Change in Control;

          (5)  the failure by the  Employer to (a)  continue in effect  (without
               reduction in benefit  level,  and/or  reward  opportunities)  any
               material  compensation  or  employee  benefit  plan in which  the
               Employee  was  participating  immediately  prior to the Change in
               Control,  unless  a  substitute  or  replacement  plan  has  been
               implemented which provides  substantially  identical compensation
               and  benefits to the  Employee or (b) provide the  Employee  with
               compensation and benefits,  in the aggregate,  at least equal (in
               terms of benefit  levels  and/or reward  opportunities)  to those
               provided for under each other  compensation  or employee  benefit
               plan, program and practice as in effect at any time within ninety
               (90) days  preceding  the Change in  Control  Date or at any time
               thereafter;

          (6)  the  insolvency  or the  filing  (by  any  party,  including  the
               Employer) of a petition for the bankruptcy of the Employer;

          (7)  any  material  breach by the Employer of any  provisions  of this
               Agreement;

          (8)  any purported  termination of the Employee's employment for Cause
               by the  Company  which does not comply  with the terms of Section
               7.1.5.; or

          (9)  the failure of the Employer to obtain an agreement,  satisfactory
               to the Employee,  from any successor or assign of the Employer to
               assume and agree to perform this  Agreement,  as  contemplated in
               Section 9.2.

     Any event or condition  described  in Section  7.1.6  (1)-(9)  which occurs
prior to a Change in Control but which the Employee reasonably  demonstrates (a)
was at the  request of a third party who had  indicated  an  intention  or taken
steps reasonably  calculated to effect a Change in Control (a "Third Party"), or
(b)  otherwise  arose in  connection  with,  or in  anticipation  of a Change in
Control,   shall   constitute   Good  Reason  for  purposes  of  this  Agreement
notwithstanding that it occurred prior to the Change in Control. The Executive's
right to  terminate  his  employment  pursuant  to  Section  7.1.6  shall not be
affected by his incapacity due to physical or mental illness.

     7.1.7.  For any  reason  other  than  those set forth in  Sections  7.1.1.,
7.1.2., 7.1.3., 7.1.4, 7.1.5 or 7.1.6.

         7.2.     Consequences of Termination.


     7.2.1.  Upon  termination by mutual  agreement  under Section 7.1.3, by the
Employee  under  Section  7.1.4.,  or for good cause under  Section  7.1.5,  the
Employee  shall be paid all salary and  incentive  compensation  prorated to the
date of termination.

     7.2.2.  Upon  termination  under Section 7.1.1.,  7.1.2.,  7.1.6. or 7.1.7,
Employee (or his estate) shall be entitled to receive (1) payment in full of the
Promissory  Note  attached as Exhibit A; and (2) for eighteen  (18) months,  the
Employer's current cost sharing shall continue on behalf of the Employee and his
dependents  and  beneficiaries  in  regard  to the life  insurance,  disability,
medical,  dental and  hospitalization  benefits  provided to the Employee at any
time during the 90-day period prior to the termination date.

     The  amounts  provided  for in Section  7.2 shall be paid  within five days
after the  Employee's  Termination  Date.  The Employee shall not be required to
mitigate  the amount of any payment  provided  for in this  Agreement by seeking
other  employment or otherwise and no such payment shall be offset or reduced by
the amount of any  compensation  or  benefits  provided  to the  Employee in any
subsequent  employment.  The severance pay and benefits provided for in Sections
7.2.4 shall be in lieu of any other  severance pay to which the Executive may be
entitled under any Company severance plan, program or arrangement.

<PAGE>

     8. Trade  Secrets  and  Confidential  Information.  During the term of this
Agreement,  Employee  will have access to  customer  lists and  compilations  of
information  and records  specific to and regularly used in the operation of the
business of Employer.  Employee  acknowledges that such information  constitutes
valuable  and  confidential  information  of the  Employer.  Employee  shall not
disclose any of the aforesaid  private company secrets,  directly or indirectly,
nor use them in any way,  either  during  the  term of this  Agreement  or after
termination of employment.  All files,  records,  electronic and magnetic files,
documents,  specifications,  equipment and similar  information  relating to the
business of  Employer,  whether  prepared by Employee or  otherwise  coming into
Employee's possession, shall remain the exclusive property of Employer and shall
not be removed  from the premises of Employer  except as shall be necessary  for
Employee to perform Employee's duties under this Agreement.  Upon termination of
this  Agreement for any reason,  Employee will deliver all such materials in his
possession and all copies thereof to Employer.

     9. General Provisions.

     9.1  Notice.  Any  notice  required  or  permitted  to be given  under this
Agreement  shall be  sufficient  if in  writing  and sent by  certified  mail by
Employer to the residence of Employee,  or by Employee to  Employer's  principal
office.

     9.2. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the  benefit of the  Employer,  its  successors  and  assigns,  and the
Employer shall require any successor or assign to expressly  assume and agree to
perform  this  Agreement  in the same  manner  and to the same  extent  that the
Employer  would be required to perform if no such  succession or assignment  had
taken place.  The term  "Employer" as used herein shall include  successors  and
assigns.  The  term  "successors  and  assigns"  as  used  herein  shall  mean a
corporation or other entity  acquiring all or  substantially  all the assets and
business of the Employer  (including this Agreement) whether by operation of law
or otherwise.  Neither this Agreement nor any right or interest  hereunder shall
be  assignable  or  transferable  by the Employee,  his  beneficiaries  or legal
representatives, except by will or by the laws of descent and distribution. This
Agreement  shall inure to the benefit of and be  enforceable  by the  Employee's
legal personal representative.

     9.3.  Waiver of Breach.  The waiver by  Employer or Employee of a breach of
any  provisions of this Agreement by the other shall not operate or be construed
as a waiver of any subsequent breach.

     9.4. Entire Agreement. This instrument contains the entire agreement of the
parties.  It may not be changed  orally,  but only by an  agreement  in writing,
signed  by  the  party  against  whom   enforcement   of  any  waiver,   change,
modification, extension or discharge is sought.

     9.5.  Attorneys'  Fees. In the event that there shall be any  litigation or
court  proceeding  with  respect to this  Agreement  or the  obligations  of the
parties hereunder,  the prevailing party shall be entitled to recover reasonable
attorneys' fees and costs from the other party.

     9.6. Governing Law. This Employment Agreement shall be governed by the laws
of the State of Texas.

     10. Definitions.

     10.1.  Change in  Control.  For  purposes of this  Agreement,  a "Change in
Control" shall mean any one or more of the following events:
     (a)  An  acquisition  (other than directly from the Employer) of any voting
          securities of the Employer (the "Voting  Securities")  by any "Person"
          (the term  person is used for the  purposes  of  Section  13(d) of the
          Securities  Exchange  Act of 1934,  as amended (the  "Exchange  Act"),
          immediately after which such Person has "Beneficial Ownership" (within
          the  meaning  of Rule 13d-3  promulgated  under the  Exchange  Act) of
          twenty-five  percent (25%) or more of the combined voting power of the
          Employer's then outstanding Voting Securities;  provided,  however, in
          determining   whether  a  Change  in  Control  has  occurred,   Voting

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          Securities  which are  acquired  in a  "Non-Control  Acquisition"  (as
          hereinafter  defined) shall not constitute an acquisition  which would
          cause a Change in Control.  A "Non-Control  Acquisition" shall mean an
          acquisition  by (i) an employee  benefit plan (or trust forming a part
          thereof)  maintained  by (A) the  Employer or (B) any  corporation  or
          other  Person of which a majority  of its  voting  power or its voting
          equity securities or equity interest is owned, directly or indirectly,
          by the Employer (for purposes of this definition,  a "Subsidiary" (ii)
          the Employer or its  Subsidiaries,  or (iii) any Person in  connection
          with a "Non-Control Transaction" (as hereinafter defined);

     (b)  The  Individuals  who, as of September  30,  2001,  are members of the
          Board (the "Incumbent Board"),  cease to constitute at least two-third
          of the  members of the  Board.  Provided,  however,  that if after the
          election,   or  nomination  for  election  by  the  Employer's  common
          stockholders,  if any new  director was approved by a vote of at least
          two-thirds  of the  Incumbent  Board,  such new  director  shall,  for
          purposes  of this Plan,  be  considered  as a member of the  Incumbent
          Board;  provided  further,   however,  that  no  individual  shall  be
          considered  a  member  of  the  Incumbent  Board  if  such  individual
          initially assumed office as a result of either an actual or threatened
          "Election  Contest" (as described in Rule 14a-11 promulgated under the
          Exchange Act) or other actual or threatened solicitation of proxies or
          consents  by or on behalf of a Person  other  than the board (a "Proxy
          Contest")  including by reason of any  agreement  intended to avoid or
          settle any Election Contest or Proxy Contest; or

     (c)  Approval by stockholders of the Employer of:

          (1)  a merger, consolidation or reorganization involving the Employer,
               unless  such  a  merger,  consolidation  or  reorganization  is a
               "Non-Control Transaction." A "Non-Control Transaction" shall mean
               a merger, consolidation or reorganization of the Employer where:

               (i)  the  stockholders of the Employer,  immediately  before such
                    merger,  consolidation  or  reorganization,  own directly or
                    indirectly immediately following such merger,  consolidation
                    or  reorganization,  seventy  percent  (70%) of the combined
                    voting power of the  outstanding  Voting  Securities  of the
                    corporation  resulting from such merger or  consolidation or
                    reorganization    (the    "Surviving     Corporation")    in
                    substantially  the same proportion as their ownership of the
                    Voting   Securities    immediately   before   such   merger,
                    consolidation or reorganization,

               (ii) the  individuals  who were  members of the  Incumbent  Board
                    immediately   prior  to  the   execution  of  the  agreement
                    providing for such merger,  consolidation or  reorganization
                    constitute at least two-third of the members of the board of
                    directors of the  Surviving  Corporation,  or a  corporation
                    beneficially directly or indirectly owning a majority of the
                    Voting Securities of the Surviving Corporation, and

               (iii)no Person other than (a) the Employer,  (b) any  Subsidiary,
                    (c) any employee  benefit plan (or any trust  forming a part
                    thereof) maintained by the Employer,  the Surviving Company,
                    the Surviving  Corporation,  or any  Subsidiary,  or (d) any
                    Person who, immediately prior to such merger,  consolidation
                    or  reorganization  had  Beneficial  Ownership  of fifty-one
                    percent  (51%)  or  more  of  the  then  outstanding  Voting
                    Securities,  has Beneficial Ownership of fifty-percent (51%)
                    or  more  of the  combined  voting  power  of the  Surviving
                    Corporation's then outstanding Voting Securities.

          (2)  A plan of complete liquidation or dissolution of the Company, or

          (3)  An  agreement  for  the  sale  or  other  disposition  of  all or
               substantially  all of the  assets of the  Employer  to any Person
               (other than a transfer to a Subsidiary);

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     (d)  Notwithstanding the foregoing, a Change in Control shall not be deemed
          to occur solely  because any Person (the  "Subject  Person")  acquired
          Beneficial  Ownership  of more than the  permitted  amount of the then
          outstanding Voting Securities as a result of the acquisition of Voting
          Securities  by the  Employer  which,  by reducing the number of shares
          Beneficially  Owned by Subject  Persons,  provided that if a Change in
          Control  would occur (but for the  operation  of this  sentence)  as a
          result of the  acquisition of Voting  Securities by the Employer,  and
          after such share  acquisition  by the  Employer,  the  Subject  Person
          becomes the Beneficial Owner of any additional Voting Securities which
          increases the  percentage of the then  outstanding  Voting  Securities
          Beneficially  Owned by the  Subject  Person,  then a Change in Control
          shall occur.

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     IN WITNESS  WHEREOF,  Employer has caused this  Employment  Agreement to be
executed  in  its  corporate  name  by its  corporate  officers  thereunto  duly
authorized, and Employee has executed this Employment Agreement.

                                          EMPLOYEE:


                                          /s/ James R. Gilley
                                          -------------------
                                          JAMES R. GILLEY

                                          EMPLOYER:

                                          GREENBRIAR CORPORATION



                                          By: /s/ Gene S. Bertcher
                                              --------------------
                                              Name:  Gene S. Bertcher
                                              Title:  Executive Vice President &
                                              Chief Financial Offficer