Erlanger filing says Walker County commissioner 'delusional' over debt

Erlanger filing says Walker County commissioner 'delusional' over debt

December 7th, 2017 by Tyler Jett in Local Regional News

Shannon Whitfield

Photo by Robin Rudd /Times Free Press.

Walker County Commissioner Shannon Whitfield's plan to pay back Erlanger Health System is "too little, too late," an attorney for the hospital said this week.

In a filing for the lawsuit between Erlanger and the county, Karen Bragman wrote Tuesday that Whitfield's plan would pay Erlanger less than what the county owes. After negotiations between the two sides broke down in August, Whitfield created a designated tax to pay the hospital $7.5 million through the end of 2020.

The county owes Erlanger $8.7 million, plus interest, because the local government backed the hospital's loan to Hutcheson Medical Center in 2011. Interest on the loan has grown to about $240,000, Bragman said, and continues to increase by $141 every day.

On Oct. 23, Erlanger filed a complaint and asked U.S. District Court Judge Harold Murphy to order Walker County to pay the full amount. On Nov. 20, Walker County special counsel Stuart James asked Murphy to dismiss the complaint, seeing how Whitfield had created a fee to pay back some of the debt over three years.

Bragman wrote Tuesday that Whitfield has a "delusional belief" that the county shouldn't have to pay back the full debt.

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"A judgment debtor cannot be allowed to decide when and on what terms it will pay its judgment creditor," she wrote.

Erlanger has also asked for a hearing to show cause, which would force Walker County to explain why, exactly, it can't pay back the full $8.7 million debt.

On Wednesday, Whitfield told the Times Free Press that Bragman mischaracterized the nature of the county's proposal. He doesn't believe he's dictating terms. He merely passed a special tax to generate some revenue for Erlanger. Residents are supposed to pay this money to the county by Dec. 20. From there, he plans to pay the hospital.

He said Erlanger's leaders stopped negotiating with him after he rejected three proposals in August. The hospital offered deals that ranged from $8.7 million to $9.4 million. The county would have from 2020 to 2023 to make the payments, depending on the deal. The cheaper the deal, the quicker the county had to make the payment.

Whitfield rejected the two more expensive offers, which would have run beyond Dec. 31, 2020 — the last day of Whitfield's term in office. He said he legally could not obligate the county to payments that extended beyond his term. That left the deal of paying $8.7 million by January 2020.

When Whitfield rejected that offer and proposed $7.5 million over three years, Erlanger filed its complaint.

"They have demanded all their money at one time," Whitfield said Wednesday. "We just don't have the finances to do that and continue the county operations of fire, police and 911. They would put the county out of business."

Erlanger filed the complaint two months after Whitfield raised property taxes 52 percent for people living in the incorporated part of the county and 70 percent for people living in the unincorporated part. In addition to the Erlanger debt, Whitfield said he was using some of the money to pay back short-term loans. He took out about $8 million in tax anticipation notes this year to fund basic operations, including paying employees.

Unlike in some other states, counties in Georgia cannot file for bankruptcy protection. But the local government can disband.

"I guess the state will have to take over the county so they can pay Erlanger," Whitfield said.

The lawsuit also comes at a time when Erlanger is competing with CHI Memorial for control of the North Georgia healthcare market. CHI Memorial officials announced in a press conference Friday that the hospital bought Cornerstone Medical Center in Fort Oglethorpe, as well as Hutcheson Medical Center's shuttered ambulatory surgery center off Battlefield Parkway in Ringgold.

CHI Memorial officials are waiting to hear from the Georgia Department of Community Health about whether they have the certificate of need that allows them to run the surgery center. At the same time, Erlanger officials filed an application for a certificate of need, proposing to build a surgery center across the street from the old Hutcheson building that CHI Memorial just bought.

The Department of Community Health has not made a decision on this fight.

"I guess [Erlanger] may need the money to build their new facility on Battlefield Parkway and to file a lawsuit against Memorial," Whitfield said.

Contact staff writer Tyler Jett at 423-757-6476 or tjett@timesfreepress.com. Follow him on Twitter @LetsJett.