Walker County appealing judge's decision that it has to pay Erlanger $8.7 million

Walker County appealing judge's decision that it has to pay Erlanger $8.7 million

October 13th, 2016 by Tyler Jett in Local Regional News

Stuart James

Stuart James

Photo by John Rawlston /Times Free Press.

Bebe Heiskell

Bebe Heiskell

Photo by Contributed Photo /Times Free Press.

Walker County, Ga., officials hope new pairs of eyes will be more receptive to their arguments.

After U.S. District Court Judge Harold Murphy ruled in August that the county has to pay Erlanger Health System $8.7 million, attorney Stuart James filed a brief with the 11th Circuit of the U.S. Court of Appeals last week. As he did with Murphy, James argued that a promise five years ago wasn't worth the paper on which it was printed.

In 2011, Erlanger loaned Hutcheson Medical Center $20 million. At the same time, Walker County Commissioner Bebe Heiskell said she would back half of that loan. The whole exchange came through in two deals:

- In a management contract, Hutcheson's board said Erlanger could one day try to get its money back from Walker and Catoosa counties, if Hutcheson couldn't pay.

- In an Intergovernmental Agreement, Heiskell told Hutcheson's board that Walker County could pay Erlanger up to $10 million, if Hutcheson didn't have the funds.

But James has argued multiple times that Erlanger doesn't have the right to get money from Walker County.

Why? First, he has said there was no specific contract between Erlanger and Walker County. And second, he said, the hospital can't sue for the money because Walker County is protected by a clause in the Georgia Constitution about "sovereign immunity."

Murphy rejected those arguments in August when he ordered Walker County to pay Erlanger $8.7 million — the total bill dropped from $10 million after Erlanger got some money from private companies that bought Hutcheson's properties.

Murphy ruled that the two contracts involved in the whole deal work together, linking Erlanger and Walker County. Plus, Murphy wrote, "sovereign immunity" doesn't apply to counties when the commissioners sign a contract.

"Walker County also agreed [in 2011] that its obligation to make the payments required under the Intergovernmental Agreement would be absolute and unconditional," Murphy wrote, "and that such payments would not be abated or reduced for any reason."

In a filing on Oct. 3, James wrote that Murphy didn't properly grasp the law. He said the set-up does not link Erlanger and Walker County, that Erlanger cannot force Walker County to pay. The only way Erlanger can get money from the county, he said, is if Hutcheson's board directly asks the county to pay.

"It could demand payment from the counties," James wrote of the board, "but is not required to do so."

Some members of Hutcheson's board have tried to make this demand, in yet another confusing step in this legal fight.

The board voted in May to write Heiskell a letter, telling her to pay Erlanger. A month after that, other members of the board voted that the letter was worthless. They said the May meeting had been called illegally because it was announced in an email instead of in writing.

Of the board members pushing this argument, all but one were Walker County delegates.

In his filing last week, James also argued that Walker County was still protected from lawsuits by "sovereign immunity," no matter what Murphy ruled. Instead, he said, Erlanger should sue the individual Hutcheson board members to try to get money back. Erlanger can try to sue each one for up to $10 million, he said.

Walker County is paying to represent its board members, in case Erlanger tries to sue them. If Heiskell is defeated in her election next month, it's not clear if those board members would still get free legal representation.

Commissioner candidate Perry Lamb said he wouldn't pay for their lawyers. Shannon Whitfield, another candidate, said he would need to review all information related to the lawsuit before making a decision.

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