What should I do if the FAA requests health records that no longer exist?
I had a very similar situation. Along with the documentation they requested that was available to me, I submitted a letter explaining my lack of the older records. This was apparently acceptable to the physician reviewing my case because I was issued a third-class medical cert. You can borrow from the verbiage I used (identifying information removed):

I am unable to provide any medical records or previous imaging related
to the injury in question. I contacted the hospital that treated me,
[hospital name] in [city, state], and was informed the records have been
destroyed. [State] law [citation of statute] requires retention of records
for “[quote document retention language from the statute].”
The injury and treatment occurred in [month] of [year].
[Hospital name] does not retain records past this requirement, and
the records you are requesting were destroyed more than 10 years ago.
Furthermore, the physician who treated me, [physician name], is no longer
practicing.

Good luck!