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By Taylor Sisk

Yadkin County officials announced Monday they’ve reached a legal settlement with the former operator of the Yadkin Valley Community Hospital.

The hospital, located in Yadkinville, about 30 miles west of Winston-Salem, has been closed since the operator, HMC/CAH Consolidated Inc., shut it down in May 2015 despite a temporary restraining order instructing the company to keep it open. In June, a federal judge ruled that HMC/CAH owed the county for expenses incurred.

The settlement calls for HMC/CAH to pay $250,000 to Yadkin County. The for-profit company also relinquishes its rights to any assets within the hospital grounds.

Further, the company is liable for payments owed to the Centers for Medicare and Medicaid Services.

Yadkin Valley Community Hospital in a Google Streetview photo dated May 2013. The facility now has a primary care practice operating on site, but the hospital facilities are not functioning.

In a letter to the Yadkin County Board of Commissioners, Edward Powell, the county’s attorney, wrote that his office was advised by HMC/CAH in May of last year “that they wanted Yadkin County to pay their $1,700,000 liability to CMS.”

“We understand from review of other documents that there were similar significant liabilities to CMS in addition to that amount,” he wrote.

With this settlement, however, HMC/CAH has agreed that it is liable for all of the CMS obligation.

“Therefore, Yadkin County will have no liability for any of these amounts going forward with a re-opening of the hospital,” Powell wrote.

The county has also been released from all claims made by HMC/CAH in a countersuit filed last December.

Finally, the settlement further calls for HMC/CAH to pay $14,983 to the Town of Yadkinville in compensation for property taxes.

Settling

In January, a federal judge for the Eastern District of North Carolina ordered HMC/CAH to pay Yadkin County $36,080 in costs and $112,012 in attorneys’ fees. According to County Manager Lisa Hughes, the county hasn’t received any compensation from that ruling.

Yadkin Valley Community Hospital was shut down by its operator, HMC/CAH. The
community may finally get some resolution with this month’s settlement. Photo credit: Taylor Sisk

In February, the county asked for additional compensation to go toward reopening the hospital, and for attorney and consultant fees and other costs that had not yet been taken into account.

But in his letter to the commissioners on Monday, Powell wrote that this settlement will save the 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.”

Attorneys for the county had concluded, Powell said, that even if a judge ruled the county was owed a significant amount of money, only a small percentage would likely have been collected. That’s because the actual damages would be owed not by the parent company, HMC/CAH, but by the entity within HMC/CAH that managed the hospital’s operations.

That entity’s sole asset was the operation of the hospital, and it likely would have then declared bankruptcy, Powell wrote.

“The value of these claims would be far outweighed by the tremendous legal costs involved,” he said.

‘Brighter days’

Hughes said on Monday that county officials are “very pleased” with the settlement agreement and with the conclusion of the litigation.

“Now we can focus on what is much more important to us and the citizens of Yadkin County,” she said, “re-establishing health care in the hospital facility.”

Hughes said the county intends to have the emergency department and inpatient beds open by October 2017 and to be adding physicians and other services within the facility in the meantime.

“The pending litigation has been a cloud hanging over our efforts to reopen the hospital for quite a while,” she said, “and we are ready to put that behind us and move forward.

“Brighter days are ahead.”

[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]

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Taylor Sisk

Taylor Sisk is a writer, editor, researcher, producer and documentary filmmaker who served as the rural health reporter from 2015 into 2016. He has served as a managing and contributing editor of The Carrboro...