As deal with Erlanger hangs in the balance, Hutcheson board skips meeting

FORT OGLETHORPE - The board that once controlled Hutcheson Medical Center was supposed to discuss settling a lawsuit with Erlanger Health Systems on Saturday.

Except, most of the board didn't show up.

Of the eight members of the Hospital Authority of Catoosa, Dade and Walker counties, only Dr. Darrell Weldon and Bill Cohen came to the special called meeting. At least five members must be present to take any action. So after sitting for about two minutes, Weldon and Cohen went home - to wait for another meeting.

"We can't conduct business," said Weldon, "so I guess we'll adjourn. Entertain a motion to adjourn?"

"Without a quorum, we can't make a motion," said Cohen. So the meeting ended without ever having begun.

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Tom Weldon, who is Dr. Darrell Weldon's son and the board's attorney, said he will try to schedule another meeting.

Officially, board members skipped the Saturday meeting for a procedural reason - they were notified by email instead of in writing, a technical violation of the bylaws. But on a deeper level, multiple sources close to the board say, there is a fight behind the scenes about whether to settle with Erlanger.

The board voted May 2 to enter into negotiations, but that doesn't guarantee that they will sign off on the actual agreement.

With millions on the line, Walker County leaders are opposed to a deal between Hutcheson and Erlanger. For months, Walker County officials have tried to sway Hutcheson board members against the settlement.

The issue dates back to April 2011, when Erlanger and Hutcheson entered into a management agreement and Erlanger loaned Hutcheson $20 million. Elected leaders in Catoosa and Walker counties promised to each pay Erlanger $10 million if Hutcheson didn't have the money.

In February 2014, Erlanger sued Hutcheson's board for the $20 million. That June, Hutcheson countersued, claiming Erlanger's leaders purposely ruined Hutcheson.

Both lawsuits are pending in U.S. District Court. In the meantime, a private company bought Hutcheson for $4.2 million and rebranded it as Cornerstone Medical Center.

On April 27, a federal judge ruled against the Hutcheson board members, granting Erlanger's motion for partial summary judgment and awarding it $36 million: The original $20 million, plus money for interest and late fees. The judge also ruled key points in Hutcheson's lawsuit against Erlanger were without merit.

Realistically, Erlanger cannot get $36 million from Hutcheson, a hospital that no longer exists. But Hutcheson's board - which now meets only to oversee the end of these lawsuits - has been negotiating a settlement

The terms of that potential agreement are private, but Walker County officials have opposed the deal. The county is in its own lawsuit with Erlanger over the money the county guaranteed in 2011. Two weeks ago, Walker County officials offered to pay Erlanger $1.3 million. The hospital rejected the deal, its spokeswoman referring to the offer as "15 cents on the dollar."

This all led to Saturday's board meeting. Or, rather, the meeting that didn't happen.

Tom Weldon emailed board members Thursday, calling a meeting for Saturday afternoon. But board member John Culpepper said another member, Steve Cooper, informed Weldon that they couldn't legally meet. Per the board's bylaws, Weldon needed to inform the members of the meeting in writing three days in advance.

Cooper did not return a call seeking comment Saturday. But Weldon, who has represented the board since the beginning of last year, said he always calls meetings through emails. Nobody has complained before.

But with Cooper's protest, Weldon said other board members told him they would not be showing up either.

"It wouldn't be legal, said Culpepper, who represents Walker County on the board. "You want to have a meeting [called the right way], just to be on the safe side."

Cooper was appointed to the board by Catoosa County officials. But he also has been represented in a lawsuit by Stuart James, who is Walker County's attorney in its case against Erlanger.

Asked whether he informed Cooper that the board's bylaws would prevent Saturday's meeting, James said, "I could not tell you anything I told Steve Cooper. I actively represent him. That's attorney-client privilege. But I haven't pointed anything out to any other board member outside of my representation of Walker County."

County officials have told the board for months to resist a deal with Erlanger.

"[Walker County] is also seeking mediation and/or meaningful negotiations with [Erlanger] to settle this matter," attorney Oliver wrote in an April 6 email. "However, that will likely prove totally ineffective so long as [Erlanger] keeps getting signals that the [Hospital Authority] might be willing to throw [Walker County] under the bus."

James said in a May news release that Erlanger has threatened to sue every Hutcheson board member for a combined $36 million if the board doesn't settle.

"We are not going to be intimidated by what 'might' happen," he said. "We are going to move forward thoughtfully and purposefully as this matter is heard by the Court."

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

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