The relationship between the board members controlling Hutcheson Medical Center and the leaders of Walker County, Ga., government may be fracturing.
On April 6, county attorney Don Oliver emailed the hospital’s board members, urging them to hold a united front with Walker County in a couple of legal battles against Erlanger Health System. Oliver told the board members they should stop giving Erlanger’s leaders reasons to believe Hutcheson and the county aren’t willing to work together.
“I want to once again urge each of you (as well as the rest of the Hospital Authority Board and its attorney Tom Weldon) to not take any actions or votes that will negatively impact our ongoing lawsuit with EHS,” Oliver wrote.
Erlanger is entangled in two federal lawsuits – one against Hutcheson, the other against Walker County. Both deal with a management agreement between the two hospitals that ran from April 2011 through the fall of 2013. As part of the agreement, Erlanger loaned Hutcheson $20 million while its employees ran Hutcheson’s day-to-day operations.
As part of the deal, elected officials with Walker County and Catoosa County signed an intergovernmental agreement. The local governments promised to split the $20 million payment to Erlanger down the road, assuming Hutcheson didn’t have enough money to cover the loan.
In 2014, after the management agreement ended, Erlanger filed its lawsuit against Hutcheson, demanding the money. Hutcheson, in turn, filed its own counterlawsuit, saying Erlanger’s leaders poorly managed the hospital in an effort to force it to close. Under that logic, Erlanger would get more North Georgia clients. Both lawsuits are pending.
Meanwhile, in December, Erlanger moved on and filed another lawsuit, this time against Walker County. Erlanger’s lawyers argued that Walker County needs to pay back its half of the debt, as it promised to do in 2011. For his part, Walker County’s lawyer has fought back, saying the county can’t be sued under the sovereign immunity clause of the Georgia Constitution. That lawsuit is pending, as well.
Which brings Hutcheson and Walker County back to April 6, when Oliver sent an email to the Hospital Authority, the governing body of Hutcheson.
In the email, Oliver does not explain what specific action Hutcheson’s leaders could take that would hurt Walker County. He merely mentions that Hutcheson’s leaders are contemplating something. He also alludes to the concept of Hutcheson forcing Walker County to pay the money to Erlanger.
That issue came up in a Walker County filing for its lawsuit with Erlanger. In part, Walker County argued that Erlanger couldn’t sue the local government because Walker County didn’t technically enter into a contract with Erlanger. Instead, Walker County signed a contract with Hutcheson – and Hutcheson signed a second, linked contract with Erlanger.
On April 6, Oliver wrote to the board: “We are very confident that this case will ultimately be dismissed and [Walker County] will owe EHS nothing, UNLESS the Authority Board makes a payment demand on [the county]. Therefore, it will be at least an $8.5 million [the amount Walker County leaders think it would have to pay] mistake if the Board gives in to the pressure to make such a move.”
Oliver added that Walker County leaders are trying to negotiate with Erlanger outside of court.
“However,” he wrote, “that will likely prove totally ineffective so long as EHS keeps getting signals that [the hospital authority] might be willing to throw [Walker County] under the bus.”
Asked about the email Tuesday, Walker County Special Counsel Stuart James said Oliver was asking the hospital board members to hold off any drastic action. The board should wait until at least a couple 0f things play out, he said. First, Hutcheson’s lawsuit against Erlanger should get resolved. Next, a question about what legal rights Erlanger has in this case should get resolved.
Fighting off Erlanger’s demand for money from Walker County, James has argued that the county is protected by sovereign immunity. Pointing to the Georgia Constitution, he said local governments can’t be sued. And even though that clause does not apply to governments that enter into contracts, James said the clause still works in this case.
Because Walker County is in a contract with Hutcheson and not directly with Erlanger, James said, the sovereign immunity clause still protects the county. U.S. District Court Judge Harold Murphy hasn’t gone for that argument, denying James’ motions to dismiss the case on Feb. 19 and again on Friday.
In that April 6 email, though, Oliver said the Georgia Supreme Court will overrule Murphy, eventually.
“Although the law appears to be clear and well established,” Oliver wrote, “Judge Murphy inexplicably refused to dismiss the lawsuit.”
State Rep. Tom Weldon, R-Ringgold, who represents Hutcheson, said the board was supposed to meet April 5, the night before Oliver sent the email. However, that meeting was canceled hours beforehand because not enough people could attend. Weldon said Oliver’s email the next day didn’t make much sense to him.
Asked why Oliver sent it, Weldon said: “I’m not sure what the context is.”
Asked why Oliver wrote that Erlanger “keeps getting signals” that Hutcheson will “throw WC under the bus,” Weldon said: “I’m not sure what he’s talking about. I don’t know why he would think they’re getting signals about that.”
Weldon, asked whether Hutcheson has considered dropping its lawsuit against Erlanger, said: “I wouldn’t be in a position to address anything like that. That’s attorney-client privilege.”
Contact staff writer Tyler Jett at tjett@timesfreepress.com or at 423-757-6476.