A lawyer for Walker County, Ga., says Erlanger Health System representatives refuse to negotiate.
In a Thursday news release, Stuart James said he offered the hospital $1.3 million to end the lawsuits between the two sides. He said Erlanger declined the offer, with the company's lawyers telling him they are not interested in mediation.
James, whom Walker County hired to handle its lawsuit with Erlanger, said the hospital's lawyers also turned down a settlement offer in late March or early April.
"We are disheartened that Erlanger has rejected offers to settle or for mediation not once, but twice," James wrote in the release. "At the direction of [Walker County Commissioner Bebe] Heiskell, I've worked diligently to resolve this claim without litigation."
He added: "Our goal is an outcome that will best serve everyone involved in this matter. We believe it's time to put this dark chapter behind all of us and we're prepared to do so through the offer of a settlement. Unfortunately, this goal is not shared by Erlanger."
Pat Charles, a spokeswoman for Erlanger, said the offer from Walker County was not strong enough to seriously consider.
"We are committed to pursuing what is rightfully owed to Erlanger on behalf of our community," she said in a statement. "If Walker County is serious about an outcome that best serves everyone, it should start by offering Erlanger more than 15 cents on the dollar."
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The dispute between the county and the hospital dates back to April 2011, when Erlanger entered into a management agreement with Hutcheson Medical Center. Erlanger loaned the struggling Fort Oglethorpe hospital $20 million. At the same time, Walker and Catoosa counties' elected officials signed an intergovernmental agreement with the leaders of Hutcheson.
As part of the agreement, the counties each guaranteed half of the $20 million loan for the Hospital Authority, the board that controls Hutcheson. Should Hutcheson not be able to pay Erlanger back, the agreement said, the counties would make the payments.
The management agreement between Erlanger and Hutcheson ended in the fall of 2013. In 2014, Erlanger filed a federal lawsuit against Hutcheson, demanding the $20 million. Instead, Hutcheson filed for bankruptcy in November 2014. One year later, Hutcheson closed.
ApolloMD then bought Hutcheson for $4.2 million, transforming it into Cornerstone Medical Center. Meanwhile, with no money coming from Hutcheson, Erlanger pushed the counties for payment.
The debt from the counties to Erlanger appears to have shrunk from $10 million to $8.5 million. Why? Because the counties received "credit" for the sale of Hutcheson's properties in bankruptcy court. But while Erlanger and Catoosa County leaders are negotiating a deal, the hospital filed a lawsuit in U.S. District Court against Walker County in December.
Catoosa County attorney Chad Young said in an email that he believes the hospital has approached the two local governments differently because the leaders of Walker County have picked fights with the hospital while Catoosa County has tried to keep a cordial relationship.
"Walker's strategy is certainly its prerogative," he said, "but Catoosa has adopted a different approach, choosing instead to focus its efforts on attempting to seek a resolution that minimizes (to the greatest extent possible) Catoosa's financial exposure and also minimizes legal expenses that would be incurred in protracted litigation. We are still in the process of these negotiations with Erlanger, but I believe we are close to reaching a resolution both sides can agree upon."
Walker County, meanwhile, filed a counter lawsuit against Erlanger. James has argued that Erlanger can't actually sue Walker County for money because the county did not enter into a contract with Erlanger - not directly, at least. Instead, Walker County entered into a contract with Hutcheson. And Hutcheson entered into a contract with Erlanger.
And if anyone owes money, James argued, it's Erlanger. He said Erlanger ruined Hutcheson while managing the Fort Oglethorpe hospital from 2011-13. The management was so bad, James wrote in the counter lawsuit, Hutcheson had to shut down in December 2015.
A judge rejected similar claims from Hutcheson's own attorneys, pointing out that the hospital actually lost money at a slower clip during Erlanger's management of Hutcheson than in the previous years.
Contact staff writer Tyler Jett at 423-757-6476 or at tjett@timesfreepress.com. Follow him on Twitter @LetsJett.