Erlanger made the $20 million loan to financially troubled Fort Oglethorpe, Ga.-based Hutcheson Medical Center in 2011. Catoosa and Walker County officials guaranteed 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 hospital was able to reopen just three weeks later.
After the hospital was sold, Erlanger filed suit to recoup its loan. In its lawsuit, Erlanger claimed Catoosa County officials were cooperating with Erlanger to pay back the money, but Walker County officials were not. In June, the Catoosa County Commission accepted a settlement agreement, under which the county will pay Erlanger $6.2 million.
In early August, Erlanger filed a motion for summary judgment, demanding $8.7 million from Walker County. On Tuesday, Judge Murphy ordered Walker County to pay up, stating that contracts signed at the time of the loan indicate Walker County is responsible for the payment.
A lawyer representing Walker County told the Times Free Press the county plans to appeal the ruling.
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