According to Oliver, the move to retain Barnes came about because Erlanger objected to Walker County getting legal advice from the McKenna Long firm, which Erlanger has used as its bond attorney for many years.
Oliver maintains there is no conflict, but nonetheless called on the former governor to step in.
“We have a long-standing working relationship with Barnes Law Group,” Oliver said. “Roy Barnes has been involved in these matters in the background for us, but will now step forward as counsel of record for Walker County and the Hospital Authority, since Erlanger has insisted that McKenna Long not work with us.”
Among the financial concerns he has raised, Oliver sought Barnes’ opinion on the legality of the line of credit documents currently on the table in the negotiations.
“The short answer is that neither the Authority nor the Counties may enter into the line of credit documents as drafted without violating Georgia law,” Barnes said in his opinion, returned to Oliver Thursday afternoon, March 24.
Oliver, who also serves as attorney for Walker County, also inquired of Barnes about the intergovernmental agreement (IGA) required for the three counties to officially approve the partnership as well as how Hutcheson’s boards are structured.
Based upon his initial review of the documents, Barnes said that by making direct commitments to Erlanger, which is not a Georgia governmental entity, the intergovernmental agreement “loses its character as (a) contract under the Georgia Constitution.”
Catoosa County attorney Chad Young said that, upon his initial review of Barnes’ opinion, there are some points that he agrees with and others with which he disagrees.
“HMC bond attorney Glenn Thompson is making some minor changes needed to satisfy some of the points that Barnes made in his opinion,” Young said regarding language in the agreement about the way the payments would be made.
Young said he disagrees with Barnes’ opinion on the intergovernmental agreement. “Erlanger is not a party to the IGA. That’s between the three counties and the Hospital Authority Board.”
And while the three counties had initially asserted their desire for significant revamping of Hutcheson’s board structure, Catoosa and Dade County have backed off of demands for any pre-deal shuffling, citing time restraints due to HMC’s financial pressures.
Still, according to Oliver and Walker County commissioner Bebe Heiskell, a majority of the Authority Board have held firm with them that legal protections must be in place before they will sign off on any deal.
Those desired protections have raised the question of having Hutcheson’s non-profit boards populated by appointed or elected county officials, such as the Authority Board members.
Citing a 1985 Georgia Supreme Court case, Oliver maintains that the practice is encouraged.
“The Court did not say that an authority had to have a board with heavy county representation,” he said, “but their ruling encourages it in order to maintain the accountability required under Georgia law.”
Oliver characterizes Hutcheson’s mid-1990s reorganization, whereby the Hospital Authority Board gave control to the non-profit HMC Inc., as “a miserably failed experiment.”
“Handing over their hospital via a 40-year lease, to a non-profit entity, totally in charge and running the whole show, with no accountability, is a flawed model,” he said.
Barnes concurs in his opinion. “Never can the public Hospital Authority become subservient to the non-profit.”
Back and forth
The move to retain Barnes is the result of a series of often heated back-and-forth communication between the various parties involved in the now months-long negotiations.
In a March 22 e-mail reply to an inquiry from a member of the Authority Board who represents Walker County, HMC Inc. attorney Ward Nelson stated that any lack of progress is the cause of Walker County’s continued objections.
Nelson wrote that “Catoosa and Dade commissioners are both very eager to get this deal done and they recognize the danger in any further delay,” and continued by telling the Authority Board member, “I truly hope that you and the Walker County contingency will realize that this is the only deal right now available to save this hospital, and it is a very good deal at that. To lose Erlanger at this stage is to say goodbye to Hutcheson Medical Center and the many hundreds of jobs lost and families devastated.”
The reply was also sent to various other hospital board members, the county commissioners and their legal representatives, and Erlanger president and CEO Jim Brexler.
Heiskell said she is not holding up the process to approve a supposed 20-year contract with Erlanger, but rather has worked hard to facilitate the deal. “The specifics were only made known to the county representatives in recent weeks after Erlanger’s private due diligence of Hutcheson revealed more debt, and now they want the counties to secure their investment.”
The parties in favor of the partnership agreement as it now stands continue to point to HMC’s precarious financial situation as the reason why time is of the essence.
“What is the risk or harm in closing that deal now?” Nelson asked in his e-mail. “(We) believe the best approach is to close with Erlanger now while the hospital doors are still open.”
Nelson cited HMC creditors that might demand payment, in addition to “what Regions may be forced to do” as factors that could force the hospital into bankruptcy if a deal is not struck with Erlanger.
Hutcheson is currently in default on a $35 million bond issue through Regions Bank.
“This is the only deal right now available,” Nelson maintained.
Heiskell says that even though she doesn’t want the community to be without a hospital or to see anyone lose their job, she also doesn’t believe the current proposal is in the best interest of the citizens of Walker County.
“It has always been my opinion that the HMC Inc. board has never had any other goal than to get the deal done no matter what the consequences,” she said. “I do believe other arrangements can be made that will be beneficial to our community.”
Oliver took great exception to Nelson’s e-mail, and saying he could no longer be constrained from public comment, issued a statement on Friday, March 25.
“Up until this week, the negotiations with Erlanger had been confidential,” he said, characterizing Nelson’s e-mail as “inaccurate and misleading.”
“With the details now public, and with other officials making inaccurate comments on it, Commissioner Heiskell, with apologies to Erlanger, felt it incumbent to defend herself and the Walker County taxpayers by setting the record straight.”