Walker County Still Claiming Erlanger Debt Is Invalid

Monday, June 27, 2016

Though Catoosa County Commissioners voted last Tuesday to pay Erlanger Health System $6.25 million to satisfy claims involving Erlanger's management of the former Hutcheson Medical Center in Fort Oglethorpe, Walker County is still holding off on payment.

Chattanooga attorney Stuart James said he sent a letter on behalf of the citizens of Walker County to Tom Weldon, attorney representing the Hospital Authority of Catoosa, Dade and Walker Counties.

He said he was responding to the demand letter in which the Hospital Authority said it had no funds to satisfy the Erlanger debt and it was up to Catoosa and Walker counties to do so.


In his letter to attorney Weldon, attorney James "notes the reference to payment rights that were acquired under the Intergovernmental Agreement." He said in the demand letter attorney Weldon wrote, 'The Hospital Authority has assigned its right to receive payment under the Intergovernmental Agreement to Erlanger.  Walker and Catoosa County are therefore directed to issue payment pursuant to paragraphs four and or five of the Intergovernmental  Agreement directly to Erlanger as its express assignee.' ”

Attorney James said, "Under Georgia’s Constitution,  an Intergovernmental Agreement can only involve Georgia governmental entities.  Based upon the law, the assignment made in the Erlanger settlement agreement signed by Dr. Weldon voids the Intergovernmental Agreement as Erlanger cannot have any rights under the Intergovernmental Agreement, whether by valid assignment or by express or implied consent because Erlanger is not a Georgia governmental entity. 

"In the legal opinion of Walker County Special Counsel, Erlanger’s lawsuit against the County is unconstitutional; therefore, making it invalid.

"The architects of Georgia’s Constitution wisely put in place the Intergovernmental Agreement to conduct transactions business between governmental entities with ease. Legally, Erlanger simply cannot be a part of any Intergovernmental Agreement unless the State of Georgia takes legislative action to allow them to do so.”

The Catoosa funds to pay Erlanger will be taken from the county's fund balance (rainy day fund), officials said.

Catoosa County and Walker County had agreed to guarantee $10 million each of $20 million that Erlanger put into Hutcheson, which ultimately wound up in bankruptcy and was closed.

Terms of the bankruptcy settlement brought some credits that trimmed the amount owed by each county to $8.5 million.

Walker County sued Erlanger, but that counter-claim was dismissed by Judge Harold Murphy of Rome, Ga. He upheld the debt owed Erlanger by Walker County.

Under terms of the Catoosa County agreement, it would get a rebate if Erlanger settles with Walker County for less than $6.25 million.


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