Federal Judge Stops Erlanger Foreclosure Of Hutcheson Hospital

Friday, August 1, 2014

In a ruling Friday, a Federal Court Judge in Rome agreed with Hutcheson Medical Center and Regions Bank to grant the request for an injunction, effectively stopping the foreclosure efforts of Erlanger Health System against Hutcheson.

In stopping the foreclosure set for next Tuesday, the judge held that the public interest in keeping the hospital doors open was “insurmountable.” 

Erlanger and Hutcheson have been locked in litigation - with Erlanger claiming it is owed $20 million for its services in helping the ailing hospital and Hutcheson making counter-claims.


“Hutcheson Medical Center serves 85,000 patients annually and employs 850 local citizens,” stated Farrell Hayes, President and CEO of Hutcheson, “and we are very pleased that the mission of this hospital will continue. We are encouraged by the hospital’s performance as we continue to show substantial and rapid improvement in operations.”

He said inpatient volume has increased 30 percent over the past three months and that oncology volume has doubled under the direction of the hospital’s new management team.

Mr. Hayes went on to say, “I think it is important to note that these dramatic gains occurred after the management agreement with Erlanger was terminated.”

Former Governor Roy Barnes and lead legal counsel for Hutcheson said the judge "was very aware of the negative impact that would occur with a foreclosure." He said, “I am very pleased that the judge understands the importance of this hospital and the tremendous damage to the community served by HMC that would occur with a foreclosure.”

Erlanger officials said the judge "temporarily postponed Erlanger’s foreclosure of the Hutcheson property in Fort Oglethorpe granted to Erlanger Health System for its $20 million line of credit three years ago.   This ruling signified an effort by the court to more fully educate patients and residents of the tri-county region about possible foreclosure proceedings on the north Georgia hospital.

"The court not only gave Erlanger a roadmap to enforce its rights under its loan documents, but also ordered the Hutcheson entities and counties to provide additional notice to the residents of Walker, Dade and Catoosa of possible foreclosure on the Fort Oglethorpe campus in the near future.

"Officials with the Erlanger Health System are pleased with the Court’s thoughtful decision regarding foreclosure proceedings on Hutcheson Medical Center.  By filing the foreclosure notice, Erlanger was fully complying with the language in the controlling documents – language added by Hutcheson and the counties – in its efforts to recover debts due to the Chattanooga health system."

“Despite Hutcheson’s failure to meet its obligations, Erlanger – without exception - met its obligations throughout this process,” said Erlanger Chief Administrative Officer Gregg Gentry following today’s hearing.  Mr Gentry said Erlanger’s $20 million loan was secured by the property on Hutcheson’s main campus and further guaranteed by Walker and Catoosa Counties, up to $10 million per county.

“We have stated repeatedly that Erlanger remains committed to meeting its longstanding and continued support of the health care needs of northwest Georgia and we feel the Court understands that,” Mr. Gentry stated.   


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