The governing body of Hutcheson Medical Center dropped its lawsuit against Erlanger Health System last week.
The lawsuit, filed by the Hospital Authority of Catoosa, Dade and Walker counties, charged Erlanger's leaders with intentionally ruining Hutcheson when they managed the Fort Oglethorpe hospital from April 2011 to the fall of 2013. A federal judge, however, ruled that Hutcheson's lawyers failed to present enough evidence that the hospital began losing money under Erlanger's guidance.
In fact, U.S. District Court Judge Harold Murphy pointed out in an April 27 ruling, Hutcheson's internal figures show that it actually made more money under Erlanger's leadership than it did in the years before the two hospitals entered into a management agreement.
Murphy's ruling did not end Hutcheson's lawsuit against Erlanger; it just took the teeth out of all of Hutcheson's claims. Hospital authority attorney Tom Weldon officially dropped the suit last Wednesday but did not return a call seeking comment.
In the past few weeks, Weldon has tried to hold a meeting at which the eight members of the hospital authority could vote on whether to accept a settlement agreement with Erlanger. Murphy has ruled that the authority owes Erlanger $36 million for not paying back a $20 million loan on time.
The details of a proposed settlement between the two hospitals have not been publicly released, though a board representing Erlanger voted to accept the deal last month.
Erlanger likely will have a hard time recovering much of the $36 million from Hutcheson, as Hutcheson filed for bankruptcy in 2014 and was purchased this year by ApolloMD, a company in Atlanta.
ApolloMD renamed the hospital Cornerstone Medical Center last month.
Meanwhile, Erlanger is engaged in a lawsuit with Walker County in U.S. District Court, demanding about $8.5 million from the local government. In 2011, Walker County officials signed an intergovernmental agreement, promising Hutcheson that it would cover about half of its loan from Erlanger - if Hutcheson didn't have the funds to make payments.
Catoosa County officials also signed that document. They are negotiating a deal with Erlanger outside of court.
Contact Tyler Jett at tjett@timesfreepress.com or 423-757-6476.