County sues Hutch­e­son for au­dited fi­nan­cial re­ports

The Catoosa County News - - FRONT PAGE - By Mike O’Neal

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.

Chad Young

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