Tri-Lakes Medical

Published 12:00 am Friday, May 16, 2008

Hospital attorney presents bill; directors question court order

By John Howell

In the ongoing saga of the Tri-Lakes Lakes Medical Center bankruptcy, Physicians and Surgeons Hospital Group (PSHG) attorney Craig Geno has filed application with the court to be paid $111,428 in fees and $4,163.72 in expenses for his representation of the non-profit organization.

The hospital’s board of directors have filed a motion with the court asking for clarification of what their attorney describes as “McCarthy era style ‘loyalty’ oaths” imposed by a court order, and former Tri-Lakes administrator Ray Shoemaker has purchased the Humphreys County Memorial Hospital.

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A hearing is scheduled June 4 to consider Geno’s motion for the payment. He has previously received $50,335.80 for fees and expenses covering the period from the bankruptcy filing date of August 23, 2007 through October 23, according to court records.

The April 29 motion of PSHG directors George Randolph, Raymond Belk and Dr. David Ball addresses a January 22 “Order Granting Adequate Protection to UPS Capital Business Credit” which requires them to affirm their “duty of loyalty and duty of care as a Board Member.” It requires them to “… use their good faith efforts to promote the Hospital to the local physician community; support the Hospital’s mission promoting the health of the community …, support the Hospital by insuring the medical staff is accountable to the governing board for the quality of care provided … .”

Failure to comply would constitute a “terminal offense,” allowing a director or directors to be removed, the order states.

UPS provided the 90-percent-USDA-guaranteed loan for the hospital’s purchase from the City of Batesville and Panola County.

The April 29 motion of the board of directors was triggered by an email on April 10 from attorney Andrew Turner stating that if he did not receive the loyalty letters from directors by April 30, “I will take such additional steps as will protect UPS’ interest in this matter.

Through Michael Coury, attorney for the trustees individually, the trustees replied that the debtor’s attorney, Geno, had told them they could not be compelled “to execute such a letter.” Directors were told that the order “merely imposed a duty upon the Debtor (PSHG) to make a request upon Board Members to execute such a letter,” their motion states.

The trustees’ motion also cites conflicts between the court’s order and Mississippi laws governing the duties of directors of a non-profit corporation and the ambiguity of the order.

“State law imposes no duty that directors sign McCarthy era style ‘loyalty’ oaths,” the motion continues. Bankruptcy Judge David Houston is asked to clarify the language or to set aside the paragraph that requires the “loyalty oath.”

The Humphreys County facility in Belzoni will be renamed Patients’ Choice Medical Center of Humphreys County LLC according to a news release from Rural Healthcare Developers (RHD) where Shoemaker is Chief Executive Officer.

Shoemaker was affiliated with Tri-Lakes Medical Center from 2003 until early 2007 when he abruptly departed.

The 34-bed critical access hospital was purchased April 30 from the Humphreys County Board of Supervisors and its hospital board.

For the past 16 months Shoemaker has served as administrator.

RHD also manages the Choctaw County Medical Center, the nursing home and senior care unit in Ackerman, Patients’ Choice Behavioral Health in Pineville, KY; and Trinity Hospital in Erin, TN and is reopening a hospital in Okolona.