Walker County Commissioner Shannon Whitfield, during his Oct. 26 commissioner's meeting, faced a room full of citizens worried about Erlanger hospital's latest legal action demanding immediate repayment of a $8.7 million loan.
"It's a very real threat," the commissioner said. "I have tried to negotiate with Erlanger."
Whitfield said it is really sad that the seventh largest hospital in America with a billion dollar revenue is bringing this type lawsuit on a neighboring county.
Erlanger, on Oct. 23, petitioned federal Judge Harold Murphy to order Walker County to pay the full amount — plus interest — awarded in a previous judgment. The Chattanooga-based hospital's attorneys asked that the county be ordered pay the full amount from its bank accounts, by borrowing or by raising taxes to settle the debt.
Whitfield said he and Erlanger CEO Kevin Spiegel on numerous occasions have met and attempted — unsuccessfully — to negotiate terms for repaying the $8.7 million judgment against the county that was upheld by the U.S. Court of Appeals in July of this year.
Erlanger had originally sued both Walker and Catoosa counties to recover $20 million loaned jointly to the bankrupt Hutcheson hospital. But in January 2016, Erlanger sued only Walker, saying it had reached an agreement with Catoosa for its share of the loan.
Judge Murphy, in August 2016, issued a summary judgment in Erlanger's favor. Walker County filed an appeal, but in July 2017, the U.S. Court of Appeals upheld Murphy's decision, in part, and ordered Walker to pay.
Whitfield said he met with Spiegel on Aug. 2, and told him "we are finished fighting" and that the county would not file any counterclaims, suits, or appeals.
"We are done fighting this, because we had the federal court speak and tell us, very strongly, that Walker County owes this money," the commissioner said.
Whitfield, on Aug. 24, proposed the county make quarterly installments of $625,000 over the next 36 months to pay off its debt. This was his response to Erlanger's offering three options it would consider: quarterly payments of $1 million over nine quarters and two offers the commissioner said would have required his acting illegally.
The sole commissioner does not have legal authority to commit revenues past his term, Whitfield said, unless it is voted on by the citizens.
Instead, the commissioner has instituted a Public Health Facility and Service District, projected to collect about $2.5 million per year, which would equal out to payments of $625,000 per quarter and repay about $7.5 million over the next three years — Whitfield's term of office..
"We are asking them to forgive $1.2 million of this debt," he said.
In its latest action, Erlanger makes no suggestion of forgiving any amount and instead claims the county has the resources to immediately pay the full amount due — not over a period of months or years.
Whitfield told those attending the meeting last Thursday that Erlanger's request was unrealistic, saying, "We are operating on borrowed money."
The commissioner pointed out that without tax anticipation notes (TANs), the county could not pay its bills or salaries. He credited The Bank of LaFayette and First Volunteer Bank for each having made a $4 million loan, ones that will be repaid when taxes are collected, that have allowed local government to remain solvent during 2017. State law requires that both TANs must be retired before years end.
Pay your taxes early to help the county if you can
Whitfield said he knows not everyone can pay the property tax bills that were mailed in October because many have their taxes escrowed into their mortgage, but asks those who can to go ahead and pay their taxes as soon as possible..
"Because the sooner we can pay the tax anticipation loans off to these banks, the less interest we'll pay and our goal is to try to get that paid off before Christmas," Whitfield said.
The Public Health Facility and Service District fee has generated $1,800 already, money Whitfield said he is willing to offer Erlanger right now.
Erlanger will be the one to raise your taxes
"We want to put this behind us and get this burden off of us," Whitfield said. "I would have to say that I was very taken back and was very disturbed that Erlanger filed this case knowing that we have been so public about what we are doing to pay this."
The commissioner said he did not understand the reasoning behind Erlanger's latest legal maneuver, but protecting the taxpayers is diverting more of the county's scarce funds into its legal defense.
Whitfield said this will add attorney fee costs to the county as well.
"They are asking for a jury trial to be able to try to go prove that we've got the money and we are just holding out," Whitfield said. "They also say that I have the legal ability to raise taxes even more, and folks, I'm not going to do that.
"If the taxes get raised to pay Erlanger, it is going to be on the hands of the CEO of Erlanger. It's not going to be me raising the taxes more to pay Erlanger."
Whitfield said the only way he would raise taxes in the county anymore would be if a federal court order telling him he had no other option, which is what Erlanger's petitioning for mandamus, a judicial order, is all about.
"That would only be pressed and pushed by Erlanger pushing that," Whitfield said.
Reporter Josh O'Bryant and assistant editor Mike O'Neal contributed to this article.