Erlanger Says Hutcheson Debt To It Now At $21.7 Million

Friday, February 28, 2014

Erlanger Health System, in its second federal lawsuit involving Hutcheson Hospital in a month, says the Fort Oglethorpe hospital now owes it $20 million from a line of credit, plus interest of $1.7 million.

The lawsuit filed at Rome, Ga., says Hutcheson has not made a single payment on the debt.

It says interest continues to accrue as well as late charges.

The suit is filed against The Hospital Authority of Walker, Dade and Catoosa counties and Hutcheson Medical Center.

The 14-page lawsuit notes that in April 2011 Erlanger entered into a management agreement with Hutcheson at a time the hospital had suffered significant losses for years and "was in dire financial condition."

It says it was agreed that Erlanger would deposit money into the Hutcheson operating account and charge against a $20 million line of credit. The entire $20 million was handed to Hutcheson.

The suit says Hutcheson officials signed a note promising to pay Erlanger the full amount of the loan on the maturity date - which fell last September when the agreement was ended.

It says in July 2013, Erlanger "obtained significant financial results for Hutcheson, including a July 2013 profit that more than doubled what had been budgeted and which helped achieve its first positive cash flow in more than seven years.

"Yet, despite Erlanger's steady improvements to Hutcheson's bottom line, by letter dated Aug. 20, 2013, Hutcheson and the Hospital Authority purported to terminate the management agreement, effective Sept. 19, 2013."

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