published Tuesday, August 5th, 2014

Judge says Georgia law on Hutcheson foreclosure 'is contradictory and vague'

A federal judge has ordered Hutcheson Medical Center to give notice to Walker, Catoosa and Dade counties by the end of the month of a pending foreclosure action against the hospital by Erlanger Health System, which is trying to recover more than $20 million lent three years ago to the Fort Oglethorpe hospital.

But in a seven-page written ruling released Monday, U.S. District Court Judge Harold Murphy said Georgia law regarding any hospital property transfer "is contradictory and vague.'

Erlanger and Hutcheson are suing one another over debt claims between the two public hospitals. Ahead of any decision on those lawsuits, Murphy granted a request Friday by Hutcheson for a temporary restraining order to block an auction Erlanger had scheduled of Hutcheson today to try to recover Erlanger's unpaid debt. The written version of Murphy's opinion was released by the court Monday.

Murphy directed Hutcheson to publish notice of the foreclosure in the newspaper and give written notice to the three counties that own the hospital by Aug. 31. The notice "shall discuss what safeguards are in place to assure the affected community continued access to affordable care."

Erlanger took over management of Hutcheson in 2011 when it lent $20 million to the Fort Oglethorpe hospital to upgrade its operations and reverse operating losses.

Hutcheson, which has debts of more than $60 million, terminated its management agreement with Erlanger last year but has yet to repay any of the $20 million loan.

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