Settlement claim disputed, no end to hospital authority suit against Erlanger

Contrary to reports by some media outlets, the Hospital Authority of Catoosa, Dade and Walker counties has neither reached an out of court settlement with Erlanger Health System nor withdrawn its lawsuit against that Chattanooga-based hospital.

Erlanger originally sued the Authority, and Walker County, for repayment of $20 million in loans, guaranteed equally by the taxpayers of Catoosa and Walker counties, during a twoyear period, 2009-11, during which time Erlanger managed Hutcheson hospital in Fort Oglethorpe.

The Authority answered with a countersuit claiming Erlanger intentionally mismanaged the Northwest Georgia community hospital by steering patients with the ability to pay to Erlanger’s facilities in Tennessee. The countersuit claims the bankrupt Hutcheson, since sold and under new ownership as Cornerstone Medical Center, suffered more than $100 million of damages.

While Catoosa County’s elected officials reached a settlement agreement — as yet unsigned — with Erlanger, the Authority and Walker County opted to continue litigation in federal court.

During the past several weeks, Authority board chairman Dr. Tom Weldon has called several meetings of the eightmember board of trustee to vote on whether or not to sign an agreement, prepared by his son, Tom Weldon, who serves as attorney for the Authority.

Though no quorum was recorded at any of the meetings, Dr. Weldon signed the settlement agreement on behalf of his absent board members.

That is something they have taken exception to.

In a letter sent June 17 to Tom Weldon, attorney for the Hospital Authority in north Georgia, Walker County Special Counsel Stuart James notes concerns for the approval and signing of the agreement with Erlanger.

James pointed out that the May 2 board meeting was called without appropriate notice making any votes taken during that meeting invalid and the meeting itself illegal. The majority of the Authority’s members asked repeatedly to review the final version of the settlement agreement; however, those requests were ignored by the Authority’s own counsel.

As a result of this action and the fact that Erlanger made threats to initiate legal action against individual members of the Authority, five members retained legal counsel to provide advice and guidance to them. The members put the Authority’s attorney Tom Weldon, and Chair Dr. Weldon (Tom’s father) on notice that the May 2 vote was merely to negotiate and was not approval of any specific agreement, and advising them not to enter into a final agreement until their new independent attorney could review the information and provide legal guidance; and, until another board meeting could be called to vote on the final product.

Hospital Authority Chairman Tom Weldon signed the agreement without the full knowledge and consent of Authority members, under-

mining the wishes and requests of the majority of the Authority. Because of this, Walker County declined to honor the demand made of Walker County Sole Commissioner Bebe Heiskell.

“No entity wants this put behind us more than Walker County,” James said. “However, we simply cannot accept an invalid agreement that a majority of the Authority members did not have the opportunity to review with their personal legal counsel.”

James added, “The type of unconscionable threats individual members received and the fact that the Authority’s attorney set up meetings without proper and legal notice give us even more reason to pause and think about what is in the best interests of the citizens of Walker County. Clearly, the Authority’s counsel and Chair have one opinion, and the majority of the Authority has another.”

Facts, as presented by Walker County special counsel Stuart James to Tom Weldon, attorney for the hospital authority, in a letter dated June 16.

Hospital Authority conducts meeting on May 2 (2016) without appropriate notice to members.

Authority members vote to authorize the Authority’s Counsel to negotiate a final settlement and bring the results to the Authority for full review and consideration.

Five members request that the next meeting be set only after they have had at least 48 hours to review information regarding a final settlement.

Five members of Authority raise concern about meeting notice; request meeting to discuss settlement issue and to review final version of the settlement agreement.

Attorney Weldon and Authority Chair Dr. Weldon called several meetings that the majority of the Authority were unable to attend, none of which calls had proper notice.

The five members reiterate the request to review the final version of the settlement agreement. Those requests were ignored. Several Authority members retain Frank Jenkins to represent them individually. Attorney Jenkins is not consulted prior to Dr. Weldon sending the demand.

The Hospital Authority’s attorney and Chair conspired to sign the agreement, dismiss the counter claim, and make a demand on Walker and Catoosa Counties, knowing the majority of the Authority members question the propriety and legality of signing the agreement.

Dr. Weldon signed the agreement in spite of knowing that a majority of the Authority specifically placed the Authority’s attorney and Chair on notice so they could seek advice from personal legal counsel.

The signed agreement is a document that was not reviewed by the Authority and entered into after an illegal and improperly called meeting.

The Erlanger settlement agreement and demand letter were signed and mailed before any Authority member could review the full text, attachments and contents- - with the exception of Dr. Weldon.

The actions of the Authority’s attorney and Chair reflect an intentional and purposeful act to undermine the wishes of the majority of the Authority.

Walker County declines to honor the illegal and improper demand made in the June 10 letter to Commissioner Heiskell.

Walker County is determining the impact of actions made from the signing of the Authority/ Erlanger settlement and what legal actions it should take.

Attorney Weldon, on June 20, said that the Authority board during its May 2 meeting voted to “resolve the issues with Erlanger and authorized the chairman to execute documents necessary to effectuate a settlement agreement — to settle — with Erlanger.”

Weldon said that was the motion that was made and acted on during the board meeting.

“That is what he did,” Weldon said of the chairman’s action concerning settlement.

Noting that three called meetings had no quorum present to vote, Weldon said the chairman had acted on behalf of those present at that earlier meeting.

Bill Cohen, who has represented Catoosa County on the hospital authority board since the late 1990s, said he could definitively state that a quorum was present at the meeting in early May.

“I made the motion that we (the board) agreed in principle with the draft of a settlement that Erlanger had sent,” Cohen said. “And that Tom (attorney Weldon) negotiate a final settlement and that Dr. Weldon was authorized to sign such a final document.”

Cohen said the legal action between the Authority and Erlanger was wearing, going on and on, and that the board needed to make a decision about how to bring the matter to a close.

He said the board finally took the line of least resistance to reach an agreement with Erlanger, but even though a settlement had been signed, he doubted the matter was finished.

“This is kinda like an albatross hung around your neck,” he said. “It goes on and on and on.”