Ten months after the unexpected closure of the Yadkin Valley Community Hospital, the ongoing legal battle between Yadkin County and former hospital operations group CAH, also referred to as HMC, has finally come to a conclusion with a settlement agreement.
Yadkin County Attorney Ed Powell met with the commissioners in a closed session emergency meeting last Thursday to present the agreement. The full report was presented on Monday at the regular meeting of the board of commissioners.
As part of the agreement, CAH has paid $250,000 to the county. County Manager Lisa Hughes said $26,000 of that money will go to pay the property taxes on the building. The remaining funds will go towards the legal fees the county has incurred during the case.
CAH also has paid $14,983.17 to the town of Yadkinville for personal property tax payment.
In the previous bankruptcy case of CAH, the amount of $451,493.32 remains payable to the county.
In February of 2015, the county began the process to find a new company to operate health care services in the county-owned hospital building. After negotiations came to a standstill, operator CAH closed the hospital on May 22 of 2015 despite a temporary restraining order obtained by the county in an attempt to keep the hospital open through the end of CAH’s lease term.
Judge Terrence Boyle found CAH in contempt of court for defying that restraining order. In January, Boyle ordered the group to pay damages in the amount of $36,079.96 in costs and $112,011.70 in attorney fees to the county. In the meantime, CAH filed counter claims against the county as well as County Chairman Kevin Austin and Hugh Chatham Memorial Hospital, claiming they were in cahoots to remove CAH as hospital operations group in order to replace it with Hugh Chatham Memorial Hospital based in Elkin.
Those counter claims by CAH also have been considered settled as part of the agreement.
A major concern for the county throughout the case has been the Medicare/Medicaid liabilities associated with the hospital during CAH’s tenure as operator. In Powell’s report to the board, he explained that Dennis Davis, chief legal officer for CAH, wanted Yadkin County to pay the $1,700,000 liability to the Centers for Medicare and Medicaid Services (CMS). Powell said there were also additional liability amounts for CMS. As part of the settlement agreement, CAH has agreed that it is liable for all of the CMS obligations.
“Therefore Yadkin County will have no liability for any of these amounts going forward with a re-opening of the hospital,” Powell said.
In conclusion, Powell said the settlement agreement will “save Yadkin County hundreds of thousands of dollars in attorneys fees, costs and expenses that would have been paid going forward had the lawsuits continued to conclusion.
“Our outside counsel and my office have researched and evaluated the possibility that even if we obtained a significant judgment in these legal actions, what would be the possibility of collecting the damages awarded,” Powell said. “It is our opinion that the primary obligor of these potential damages would be the corporate entity, CAH Acquisition Company 10, LLC, whose only asset was the operations of Yadkin Valley Community Hospital. It is likely that if we obtained a large judgment against all these corporate defendants, they would have probably declared bankruptcy leaving us with small percentage claims against bankrupt entities. The value of these claims would be far outweighed by the tremendous legal costs involved.”
Commissioner Frank Zachary said it was a good thing to have the case settled at last.
“I’d like to say that the last point that the county attorney made, to wage this battle, create all this carnage, even if we prevailed, we’d be unsatisfied,” he said. “The better part of valor would be to end this thing and move forward.”
Commissioner Marion Welborn said he felt the Medicaid liability was one of the most important factors in the settlement.
Austin agreed, saying the total liability to CMS could be upwards of $5 million.
“The release of all this liability from CMS I think puts us in a much stronger position to bargain for that provider to come into the space now. I think that’s a big plus,” said Commissioner David Moxley.
“The air’s cleared now for going forward,” Powell said.
Kitsey Burns Harrison may be reached at 336-679-2341 or on Twitter @RippleReporterK.