County sues Hutcheson for audited financial reports
Catoosa County commissioners have decided the time has come, and passed, for Hutcheson Medical Center to provide audited financial reports for the years 2008-2013.
The Board of Commissioners voted 5-0 during its Oct. 21 meeting to have the county’s attorneys prepare a lawsuit for filing in Superior Court.
Such a suit will ask that the hospital provide those audits as well as a detailed strategic plan that outlines the hospital’s ongoing operations as well as how it intends to service and repay its accumulated debts.
The commissioners’ decision was made following an exchange of letters requesting the hospital open its books for public scrutiny.
County attorney Chad Young, of the Ringgold-based firm Patty & Young, sent a letter dated Sept. 24, 2014, to the trustees of the Hospital Authority of Walker, Dade and Catoosa counties as well as the board of directors of Hutcheson Medical Center. The Authority owns the physical properties of the hospital while HMC manages operations of those properties.
As way of background, Young stated that despite multiple public and private comments and statements to the contrary, Catoosa has always been and continues to be a strong supporter of the hospital.
In fact, the attorney notes that during the past three years the county has provided financial support by backing lines of credit and loans that, exclusive of interest and associated charges, total slightly less than $13.3 million.
Young asserts that over the past two years many requests by Catoosa, Hutcheson’s lenders, citizens and other third parties that the hospital boards make available state-mandated audits of its finances.
In reply to those requests, the hospital made promises that audited financial statements would be forthcoming. But nothing came of those promises, according to Young’s letter on behalf of the commissioners.
State law requires each hospital authority to submit an audit of its financial affairs, book and records no later than 90 days after the close of its fiscal year, which in Hutcheson’s case ends the last day of September.
The law also requires that copies of the audited financial report for Hutcheson be filed with the clerk of the superior court. If no such audited reports are prepared, completed and filed as stipulated, “any taxpayer of any participating unit of such authority or the governing authority of such unit may petition the superior court” to order compliance with the law.
Also included in Catoosa’s letter to the trustees were concerns that Hutcheson also may have unpaid IRS tax obligations.
The county set an Oct. 15 deadline for delivery of the requested materials. When none came, the possibility of taking legal action against the hospital’s boards and its individual members was placed on the regularly scheduled commission meeting.
Hospital officials on Wednesday, Oct. 22, said that Dixon Hughes (Goodwin), an Atlantabased certified public accounting firm, currently is reviewing the audited financial reports for the dates in question with one exception.
Results for 2008 were made available in 2009, officials said.
Otherwise, the accountants have said the results for 2009 and 2010 will be released next week.
An audited financial report for 2011 are to be made public the following week and the CPAs are to release the 2012 audited financial report later in November.
Following the presentation of those four years, the auditors will begin reviewing the 2013 and 2014 statements, officials said.
Hutcheson administrators pointed out that the hospital has always made monthly financial reports available to the public, but that while figures are accurate, they are unaudited.
Hospital spokeswoman Stacey Kaufmann said the accounting firm of Cherry Bekaert works with the hospital’s own accounting staff to prepare the financial reports which are then turned over to Dixon Hughes for final review and presentation.
On Thursday afternoon, Oct. 23, the lawsuit was filed at the courthouse in Catoosa County.