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The Hospital Authority of Ben Hill County files complaint against Phoebe Putney Health System

Fitzgerald hospital officials accuse Health System and Phoebe Dorminy Medical Center of breach of contract

The Hospital Authority of Ben Hill County has filed suit for breach of contract after Phoebe Putney Health System announced it would no longer be managing Dorminy Medical Center. (Staff photo: Carlton Fletcher)

The Hospital Authority of Ben Hill County has filed suit for breach of contract after Phoebe Putney Health System announced it would no longer be managing Dorminy Medical Center. (Staff photo: Carlton Fletcher)

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An attorney representing the Hospital Authority of Ben Hill County has told The Albany Herald that a suit the Authority has filed against Phoebe Putney Health System will hopefully be resolved outside of court. (Staff photo: Carlton Fletcher)

FITZGERALD — The day before Phoebe Putney Health System officials announced on Dec. 13 that they would discontinue managing Dorminy Medical Center in Fitzgerald, the Hospital Authority of Ben Hill County filed a complaint in Ben Hill County Superior Court against Phoebe for breach of contract, court documents show.

The complaint, filed at midday on Dec. 12, says that the Hospital Authority was notified by Phoebe officials on Dec. 11 that Phoebe would not be honoring the contracts entered into in September 2010 to manage Dorminy Medical Center, which became known as Phoebe Dorminy Medical Center.

In response, the Authority filed the complaint, contending that Phoebe has breached the contracts, both written and oral; committed anticipatory breaches of the contracts, both written and oral, and committed tortious acts arising from duties contained and arising from the contracts, as well as duties arising under law.

“As a result thereof, plaintiff has been damaged and has suffered irreparable harm, and in some instances, have no adequate remedy at law,” the complaint says. “Plaintiff prays that the Court inquire into the matter and grant to plaintiff such relief, both legal and equitable, as to the Court may seem equitable and just.”

A media announcement sent out by Phoebe officials on Dec. 13 said that Phoebe and the Ben Hill County Hospital Authority, for the past several months, had been evaluating their agreement in which Phoebe Dorminy — Phoebe’s subsidiary — had been managing the hospital and that both parties had mutually agreed to dissolve the affiliation.

“Phoebe’s first priority has been and continues to be to ensure a seamless transition for the employees and continued quality patient care,” a statement Thursday from Phoebe Putney Health System said. “To that end, Phoebe is currently working to help stabilize transition efforts so that Dorminy Medical Center may continue its role as a vital source of health care.”

John Croley, the attorney representing the Hospital Authority, said that — contrary to reports — the split was not mutually agreed upon, and that the Authority had actually requested Phoebe to remain.

“They informed us they were pulling out, and that was not our desire — and we did file suit,” he said.

Croley said that a meeting took place Thursday with officials at Phoebe, as well as the counsel involved. The hope is that the matter will be resolved before it is brought into a courtroom.

“That has not yet occurred, but we are optimistic that it will,” he said.

To that end, Croley said, there has been an open-ended extension put on the table to see if the issues can be resolved out of court. If negotiations do not prove fruitful, then the litigation will move forward and the relief the Authority is seeking through the suit — likely in the form of monetary damages and possibly equitable relief — will then come into play, he said.

A dollar figure has not yet to be specified, but would be if necessary, the attorney said.

Documentation from Georgia Attorney General Sam Olens’ office said that the governing board of the Hospital Authority of Ben Hill County approved a letter of intent to affiliate with Phoebe and lease the hospital to Phoebe on Sept. 21, 2010. The governing board approved the lease agreement, subject to review by Olens, at a meeting on Jan. 25, 2011.

The Authority proposed to lease the hospital assets to Phoebe Dorminy Medical Center for an initial term of 10 years. During the term of the lease, Phoebe Dorminy was to assume the Authority’s debt obligations in full and pay $20,000 in cash the first year and up to $50,000 in cash each year thereafter to the Authority to offset expenses. Phoebe Dorminy was to be responsible for all aspects of the ongoing maintenance and operation of the hospital, including covering any ongoing losses, and to maintain the existing services at the facility, documents show.

The lease also was to require Phoebe Dorminy to return to the Authority net assets at the conclusion of the lease equal or greater in value to that transferred at the beginning of the lease, thus mandating that assets of no less than $6.1 million be transferred back to the Authority at the conclusion of the lease, the documentation from Olens’ office shows.

A public hearing was held at the Fitzgerald hospital on June 6, 2011, after which the parties sent notification that they wished to move forward. The assimilation of Dorminy was signed off on in July 2011, with the lease set to become effective soon after.

Officials at Phoebe have since terminated plans to enter into a long-term lease agreement, and are working to dissolve the management agreement that was in place.