Hutcheson Medical CenterROME, Ga. – Hutcheson Medical Center is safe again. For now.
U.S. District Court Judge Harold L. Murphy blocked Erlanger Health System’s latest attempt to foreclose on the Fort Oglethorpe hospital during a hearing Friday morning. Erlanger officials planned to sell Hutcheson’s property to the highest bidder at a Nov. 4 auction.
But Murphy’s decision Friday merely postpones that potential sale for two months. He said members of the community have not had enough chances to express their opinions about the issue. For that, Murphy blames himself.
During a similar hearing in August, Murphy told lawyers for Hutcheson and Erlanger that the Chattanooga hospital’s officials could not sell Hutcheson until public hearings had been held. Murphy ordered Hutcheson to set up the hearings.
But, Murphy said at the time, Erlanger could hold its own hearings if Hutcheson did not do so in a timely fashion. Erlanger officials felt this was the case and organized a hearing for Oct. 16.
Hutcheson officials, meanwhile, believe Erlanger acted too soon. Hutcheson set up hearings for Nov. 11, Nov. 13 and Nov. 18.
On Friday, Murphy told Erlanger’s attorneys that North Georgia residents should be able to go to Hutcheson’s three hearings before any auction takes place. Murphy postponed the foreclosure until Jan. 6.
Hutcheson employees filled about half the seats inside the federal courtroom Friday. They packed in on the left side — Hutcheson’s side.
The hospital’s attorney, former Georgia Gov. Roy Barnes, told Murphy that closing Hutcheson is not like closing other businesses. The hospital provides about $33 million worth of care every year to patients who cannot afford to pay for their treatment. And, for North Georgia residents, the nine miles dividing Hutcheson and Erlanger is significant.
Murphy acknowledged this when he announced his decision.
“There are times when five and 10 minutes away from a hospital means your lives are saved,” he said.
As Murphy announced his decision to postpone the potential sale, some Hutcheson employees hugged each other. Others wiped away tears.
Dr. Cynthia Nkana, a physician at Hutcheson for the last seven years, understands Murphy’s order doesn’t change the facts of the case. But she hopes the extra two months can lead to an agreement between leaders at Erlanger and Hutcheson.
“It didn’t have to go this far,” she said. “I’m hoping there will be a resolution.”
However, Hutcheson still owes Erlanger about $20.5 million and, overall, Hutcheson is still in debt about $60 million.
Erlanger extended a line of credit to Hutcheson in 2011 when the two hospitals entered into a management agreement. When Erlanger took over Hutcheson, Hutcheson was losing about $1.5 million a month. By 2013, the hospital was earning about $200,000 a month.
Officials on both sides were interested in forming a deeper partnership. Erlanger discussed leasing Hutcheson as part of a 30-year-agreement. But those talks ended in August 2013, and Hutcheson was supposed to pay back that $20.5 million loan by Dec. 1 of last year.
When Hutcheson didn’t do that, Erlanger filed a civil lawsuit in January. Hutcheson countersued, saying that Erlanger didn’t live up to the conditions of its management agreement. In particular, Hutcheson officials say Erlanger never brought the skilled doctors to Fort Oglethorpe that it promised to provide.
Regions Bank is yet a third element in this case. When Erlanger began managing Hutcheson, Hutcheson already owed the bank about $25 million. So, the bank’s attorneys say, Erlanger can’t foreclose on Hutcheson until Hutcheson pays Regions first.
Erlanger’s lawyers say this is not true and would keep money away from the Chattanooga hospital for an unreasonable amount of time.
“There won’t be a hospital at that point,” attorney Edward Marshall said. “It will crumble to the ground and evaporate. It will be eons.”
Contact staff writer Tyler Jett at tjett@timesfreepress.com or at 423-757-6476.
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