Hutcheson Medical Center in Fort Oglethorpe, Ga.Hutcheson Medical Center won’t go on the auction block next week as one of its competitors and former managers had planned.
A federal judge in Rome, Ga., Friday halted a planned foreclosure by Erlanger Health System, which wanted to sell Hutcheson assets on the courthouse steps Tuesday morning to help pay more than $20 million Erlanger lent to Hucheson three years ago when Erlanger took over management of the Fort Oglethorpe hospital. Hutcheson terminated its management agreement with Erlanger last year, but Hutcheson has yet to repay any of the Erlanger loan.
U.S. District Court Judge Harold L. Murphy on Friday granted a temporary restraining order sought by Hutcheson and its senior lender, Regions Bank, to temporarily block the foreclosure action. Murphy said keeping the hospital open is in the public interest and he said overcoming an auction sale could be “insurmountable” for the hospital. The judge also ruled that Regions had a senior claim on Hutcheson’s debts over Erlanger.
“This is a great victory for us and the people of Catoosa, Walker and Dade counties who count on Hutcheson for their hospital care,” Hutcheson President and CEO Farrell Hayes said after Friday’s ruling from the bench. “We serve 85,000 patients annually and employ 850 local citizens and we are very pleased that the mission of this hospital will continue.”
The order will block the foreclosure while separate federal lawsuits by the two public hospitals against each other can proceed. Erlanger lent more than $20.5 million to Hutcheson in 2011 and 2012 to help the struggling hospital pay its employees and bills while Erlanger managed the Fort Oglethorpe facility.