Erlanger Files New Federal Lawsuit Seeking $20 Million In Aid Given Hutcheson Hospital

Thursday, February 27, 2014

Erlanger Health System has filed a new federal lawsuit in connection with an episode in which  Erlanger sought to revive an ailing Hutcheson Medical Center, Erlanger President Kevin Spiegel said.

That follows a suit filed about a month ago by Erlanger against The Hospital Authority of Walker, Dade and Catoosa counties as well as Walker and Catoosa counties.

The prior lawsuit filed at Federal Court in Rome, Ga., sought $550,000 that Erlanger said was owing on a promissory note.

Mr. Spiegel said the new lawsuit is for $20 million extended to the ailing hospital at Fort Oglethorpe on a line of credit.

It was also filed at Rome before Judge Harold Murphy.

Hutcheson has hired former Georgia governor Roy Barnes to defend it against the Erlanger litigation.

Erlanger officials said, "In May 2011, Erlanger entered into an agreement to provide management services for Hutcheson, and as part of that agreement, issued a line of credit for $20 million to help meet Hutcheson’s operating needs.  In May of 2013, Erlanger loaned Hutcheson an additional $550,000 to help meet its payroll expenses.

"On January 10, 2014 Erlanger sent a demand letter to Hutcheson seeking repayment of both the $20 million and $550,000 loans, stating Erlanger’s intent to initiate its rights as a secured creditor.

"With no resolution to that demand letter, Erlanger filed its first lawsuit in federal court in Rome, Ga., on January 24, 2014, seeking repayment of the $550,000 loan.

"Today, in accordance with the terms of the financing documents, Erlanger filed for the additional $20 million in loans to Hutcheson.   

"As we have publicly stated, Erlanger, without exception, met each of its obligations to Hutcheson and is fully entitled to recover the funds loaned to the North Georgia facility.  We are standing firm and vigorously enforcing our rights to fully recover loans of $20.5 million to Hutcheson."

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