Oklahoma hospital failed to make 'in-kind' payments instead of property taxes, lawsuit says

Saint Francis Hospital Muskogee (Okla.) and the hospital's former operator are facing allegations they failed to make "in-kind" payments that are mandated in the hospital lease agreement in exchange for not paying property taxes, according to MuskogeeNOW.com.

The Muskogee Medical Center Authority, which manages the lease for the hospital, filed the lawsuit against Saint Francis and Capella, claiming the healthcare providers have defaulted on the payments, according to the report.

The payments total $655,022 from 2018 and are designed to help fund county health initiatives, the City of Muskogee, local public libraries and local schools.

Saint Francis has refused to make the payments, citing its tax-exempt status as a nonprofit, but agreed to make the payments in its lease agreement, according to MuskogeeNOW.com.

The report says the healthcare authority wants Saint Francis and Capella to be held liable for future in-kind payments for the duration of the lease. As a nonprofit hospital, Saint Francis says they are not subject to ad valorem taxes. 

Saint Francis Muskogee has more than 140 providers and 320 beds. Capella, doing business as Muskogee, Okla.-based Eastar Health, operated the hospital before Tulsa, Okla.-based Saint Francis Health System purchased Eastar in 2017. Capella is still responsible for the in-kind payments.