Hutcheson Medical Center in Fort Oglethorpe, Ga.A federal judge has halted Erlanger Health System’s attempts to foreclose on Hutcheson Medical Center, saying the dueling hospitals first must have their day in court.
The judge’s decision comes days after the North Georgia hospital filed for Chapter 11 bankruptcy as it faces $60 million in debts, a move CEO Farrell Hayes said was necessary to protect the hospital as Erlanger presses to recoup more than $20 million it loaned Hutcheson during a now-defunct management agreement.
In an order issued Thursday afternoon, U.S. District Court Judge Harold Murphy wrote that Hutcheson would suffer “significant harm” if foreclosed upon, and that staying the foreclosure would do no harm to Erlanger. Moreover, the question as to whether Erlanger could legally foreclose on Hutcheson still needed to be resolved legally through the appeals process, he said.
“The public has an interest in the property continuing to operate as a hospital,” Murphy wrote.
Erlanger has sued Hutcheson to get the money back, and has argued the attempt to foreclose on Hutcheson is a legal step in the process to hold the Ft. Oglethorpe hospital accountable to the agreement, since the hospital’s property was put up for collateral during the original agreement.
But Hutcheson has argued they owe Erlanger nothing, saying Erlanger did not hold up its end of the management agreement, and officials has filed their own couter-suit. Meanwhile, Hutcheson has held community meetings to drum up support for keeping the North Georgia hospital open.
Read more in Friday’s Times Free Press.