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Tri-Lakes Hospital

Medicaid, Tri-Lakes agree on amount owed, taxes still pending

By John Howell Sr.

U. S. Bankruptcy Judge David Houston has set a July 24 court date in Aberdeen to hear objections to a settlement agreement between the State Division of Medicaid and Tri-Lakes Medical Center.

Medicaid and Tri-Lakes agree that the net amount due Medicaid from Tri-Lakes is $24.3 million. The settlement agreement was included in the “Motion For Authority To Settle and Compromise Certain Disputed Claim” filed Monday, July 13.

But the agreement also allows a new owner to be “free and clear” of the liability, “ … expressly conditioned on … new ownership and management of Tri-Lakes that does not include any ownership or management control, directly or indirectly, of any person or entity (or related party) that was a member of the Board, a director or officer of Tri-Lakes, provided management services to Tri-Lakes, or provided any management or financial consulting or Medicaid program consulting to Tri-Lakes prior November, 2007 …”

The list of “Precluded Persons or Entities” named in the agreement is lengthy. It includes Batesville Hospital Management, Batesville Emergency Physicians, Emergent Health, MTV Healthcare Consulting, Health Care Engineers, United Hospice, Batesville Specialty Hospital, Robert Corkern, Missy Hutto Corkern, Ray Shoemaker, Barry Morrison, Bonnie Moore, Doris Elaine Ellet, Tammy Hutchinson, John Gregory, Sarah Dale Ball, Robert Gray, Raymond Belk, David Ball, George Randolph and David Vance.

Tri-Lakes Medical Center, which filed for bankruptcy in August 2007, is nearing an asset sale under section 363 of the Bankruptcy Code.

In April, Alliance Health Partners was selected as “stalking horse” bidder in the asset sale. Alliance, which includes Batesville physicians Drs. Mike Havens and Billy Haire, and Meridian gastroenterologist Dr. Thomas Crowson, among others, bid $14 million for the hospital.

Yet unresolved in the bankruptcy is the hospital’s ad valorem tax liability to Panola County. Collectively, Panola Chancery Clerk Jim Pitcock and Tax Assessor/Collector David Garner have filed claims totaling almost $2 million in real estate taxes with the court. The claims are based on the contract signed at the 2005 purchase of the hospital by Physicians and Surgeons Hospital Group which agreed to pay the ad valorem taxes even though state law exempts non-profit hospital from the taxation.

In June, UPS Capital Business Credit, the bank which financed the USDA-guaranteed loan for the $27 million hospital purchase, filed objection to the claims by the Panola County officials, citing the state law permitting the tax exemption, among other reasons.

On July 8, in a “Second Amended Omnibus Objection to Claims,” UPS Capital stated that it “further objects to the amount of this claim, as James R. Pitcock, the Chancery Clerk of Panola County, is affiliated with one of the groups expressing an interest in purchasing the hospital and in that regard stated: ‘Property Taxes can be reduced to the amount of School Taxes which is about $150,000 per year FOR 2007 and 2007.’”

Contacted about the statement in the objection, Pitcock said he was not part of any group seeking ownership of the hospital nor had he been part of a proposal offering to reduce hospital taxes.

Andrew R. Turner, an attorney for UPS Capital Business Credit, said that he was “unable to comment at this time,” regarding the bank’s amended objection.