Hutcheson board sends Erlanger new offer
CHICKAMAUGA, Ga. — Hutcheson Medical Center reached an agreement with Erlanger Health System. Wait, no it didn’t. Yes it did. Maybe. Depends on who you ask.
During a meeting for the Hospital Authority of Catoosa, Dade and Walker counties, board member Steve Ellis made a motion Thursday night to send Erlanger a new settlement agreement offer. This comes three weeks after the boards of the two hospitals supposedly reached a deal.
As part of that original agreement, Hospital Authority Chairman Dr. Darrell Weldon wrote a letter to Walker County Commissioner Bebe Heiskell, demanding the county pay Erlanger half of a loan from 2011. That could cost the county about $8.7 million.
But as part of a new offer Ellis floated during Thursday’s meeting, the board for Hutcheson would take back that demand. In other words, Walker County might not have to pay the money.
Specifically, the proposed agreement reads: “Neither (Hutcheson nor Erlanger) may assign any claim of any type that Erlanger or the Authority has against the other party or … any third party.”
Erlanger attorney Jeff Woodard, who was in attendance, told the board members their vote was essentially a waste of time. The board for Erlanger, which already agreed to the first deal with Hutcheson, will not entertain a new offer.
“We have a binding settlement agreement,” Woodard said. “Erlanger’s not interested.”
Said Ellis: “I say we send it to them anyway.”
The board then voted to extend this new offer to Erlanger, putting the ball back in the Chattanooga hospital’s hands.
This back-and-forth, willthey-won’t-they between the hospitals dates back to April 2011, when Hutcheson and Erlanger entered into a management agreement. Erlanger employees began to run Hutcheson, and Erlanger loaned Hutcheson $20 million.
At the same time, the elected leaders in Catoosa and Walker counties signed an intergovernmental agreement with Hutcheson’s board, promising to each pay half of that $20 million loan if the board asked.
The potential debt to Erlanger dropped to $8.7 million per county in December, when Hutcheson sold its main campus and nursing home in bankruptcy court. On June 21, Catoosa County’s commissioners agreed to a settlement with Erlanger, paying the Chattanooga hospital $6.2 million.
Walker County Commissioner Bebe Heiskell, meanwhile, has reached no such deal with Erlanger, though the county did offer Erlanger $1.3 million earlier this year. Erlanger rejected that offer.
The hospital and the county have been on bad terms for years. Some Erlanger administrators believe Walker County officials tried to run Erlanger out of Hutcheson, ruining any chance for Hutcheson to succeed under Erlanger’s leadership. Some county officials, meanwhile, believe Erlanger intentionally mismanaged Hutcheson, forcing a competitor to die.
U.S. District Court Judge Harold Murphy did not side with Walker County’s arguments, awarding Erlanger $36 million from Hutcheson’s board.
On May 2, Hutcheson’s board voted to let Weldon “execute” a settlement agreement with Erlanger. He then signed an agreement and made a demand on Walker County.
But Stuart James, an attorney representing Walker County, has argued this May 2 vote did not actually mean that Weldon could sign an agreement — only that he could negotiate. James also argued that the May 2 meeting was not legal because Weldon’s son, Tom Weldon, the attorney for the board, did not call the meeting in writing.
Tom Weldon has argued in response that, in fact, the meeting was legal because it was an emergency meeting. The board’s bylaws about announcing the meeting in writing do not apply in that case.
If the Hospital Authority and Erlanger do not have an actual agreement, Erlanger could then sue individual board members for the debt as opposed to Walker County.
Woodard suggested during the meeting Thursday that Erlanger’s board will maintain that the settlement agreement they already signed still stands. The Hutcheson board members — particularly the ones from Walker County — may argue otherwise. All of this could add up to another day in court.
Contact Staff Writer Tyler Jett at 423-757-6476 or at tjett@ timesfreepress.com. Follow him on Twitter @LetsJett.