By Taylor Sisk
A federal judge for the Eastern District of North Carolina ruled on Tuesday that HMC/CAH Consolidated Inc., which formerly operated the Yadkin Valley Community Hospital, was in contempt for closing the 22-bed hospital when a temporary restraining order to keep it open was in effect.
The judge ordered HMC/CAH to pay damages to Yadkin County for expenses the county has incurred that include the cost of additional emergency services from the day the hospital closed until it reopens. The county must submit to Judge Terrence Boyle a plan to reopen the hospital and an assessment of the damages.
Judge Boyle’s ruling also stipulated that HMC/CAH will be given an opportunity to purge its contempt order by providing opportunities for patients to receive their medical records and by returning county property.
HMC/CAH, a Missouri-based private equity firm, acquires and manages rural critical access hospitals with the goal of “replacing those older hospitals with new, state-of-the art facilities,” according to the company’s website.
The company filed for Chapter 11 bankruptcy in 2011 after losing money for several years and then having a financing deal fall through. The company never managed to build a new facility at the Yadkin Valley Community Hospital site. HMC/CAH also owns Washington County Hospital in Plymouth.
Yadkin County Attorney Edward Powell said that around lunchtime on May 22, county officials learned that hospital administrators planned to cease operations the following morning.
Later that afternoon, the county filed a temporary restraining order in superior court in Raleigh to keep the hospital open. Records indicate that the restraining order was emailed at 5:59 p.m. to Dennis Davis, chief legal officer for Rural Community Hospitals of America, which manages the hospital for HMC/CAH.
At 6:04, Davis responded, “The hospital is already closed.”
According to affidavits filed by employees of the hospital, administrators told staff at around 6 p.m. to complete treatment of the remaining patients in the emergency department and discharge them, and began shutting down the hospital. The patients were discharged at about 6:40. There were no inpatients.
But in a document filed with the court on June 15, HMC/CAH officials countered that they did not receive notice of the temporary restraining order until after the hospital had closed.
They further alleged that at approximately 5 p.m., the hospital was “surrounded by Yadkin Valley County Sheriff’s officers,” and administrators were informed that the hospital staff was being evicted.”
Powell termed this a “totally inaccurate portrayal” of events. He said no civil process of eviction was filed and that Sheriff Ricky Oliver had sent the deputies out to try to ensure that no property was removed from the premises.
HMC/CAH officials acknowledged that they had intended to close the hospital the following morning.
As things stand
HMC/CAH’s lease agreement with the county had been due to expire at the end of April, but was later extended to the end of July. Negotiations between the two sides had not gone well, and the county issued a request for proposals for operation of the hospital.
HMC/CAH officials wrote to the county in May expressing concerns that the process was taking too long, creating a state of uncertainty that was “more and more destructive to the hospital.”
The officials wrote at the time that the hospital had lost the services of key personnel. According to the June 15 document submitted to the court, they informed the county that “if clinical and patient support operations deteriorate further, there is a reasonable likelihood that the hospital will not be able to remain open for business until July 31st.”
The county has been in negotiations with Hugh Chatham Memorial Hospital in nearby Elkin to purchase HMC/CAH’s operations licenses and sign a long-term lease.
Powell said on Friday that the county would now “continue negotiations in earnest with Hugh Chatham concerning a new lease of the facility.”[box style=”2″]This story was made possible by a grant from the Winston-Salem Foundation to examine issues in rural health in North Carolina. [/box]