Erlanger Health System has struck a deal with Catoosa County for the county to pay about 60 percent of what it originally owed for a loan the Chattanooga, Tenn.-based system made to Hutcheson Medical Center in Fort Ogelthorpe, Ga.
In 2011, Erlanger and Hutcheson entered into a management agreement, and Erlanger made the loan to the financially troubled hospital. Catoosa and Walker County officials guaranteed the loan, promising each county would pay Erlanger $10 million if Hutcheson didn't have the funds to repay the loan. Hutcheson Medical Center filed for Chapter 11 bankruptcy protection in 2014. Without enough cash flow to support itself, the hospital closed Dec. 4. However, after securing a buyer, the facility was able to reopen just three weeks later under a new name.
After the hospital was sold, Erlanger filed a lawsuit claiming Catoosa County officials were cooperating with Erlanger to pay back the money, but Walker County officials were not.
On Tuesday, the Catoosa County Commission voted to accept a settlement agreement, under which the county will pay Erlanger $6.2 million. County Attorney Chad Young told the Times Free Press that Erlanger wants payment by the end of June, which marks the end of the system's fiscal year.
Although Erlanger has reached an agreement with Catoosa County, the system is still involved in a legal dispute with Walker County over the loan. Earlier this year, Erlanger rejected a $1.3 million offer from Walker County.
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