COLUMBUS, GA (WTVM) - A recently-sealed lawsuit filed by CHSPSC, a subsidiary of Community Health Services of Franklin, TN is now public record.
CHS is suing St. Francis Hospital of Columbus on three counts: fraud, breach of contract and litigation costs as stated in the more than 30-page document. The Brentwood, TN company claims hospital representatives lied during a meeting between both parties on Jan. 8.
During the two-hour discussion with St. Francis' chairman, trustee, CEO and attorney, the hospital assured CHS that the hospital's problems were exclusively financial, according to the document. This is referring to the facility's $30 million accounting error in November 2014.
CHS says it later learned the hospital was notified the day before their meeting that the Housing and Urban Development Office of Inspector General , or HUD, initiated a legal investigation into the hospital.
The HUD audit was to determine whether St. Francis had violated its regulatory requirements. As a potential buyer, CHS considered the audit was red flag.
The suit goes on to say as a guarantor of more than $200 million of debt owed by St. Francis, HUD could impose a financial penalty on the hospital or a subsequent buyer. It could also refer any audit findings to other government agencies, namely the Center for Medicare Services.
CMS runs the Medicare program and Medicare is St. Francis' most significant source of revenue. CHS would not comment on the lawsuit, but St. Francis released this statement in part:
"This lawsuit came as a surprise to us. We are still looking carefully at the allegations, but believe the claims are without merit and we expect to prevail in the litigation," said Richard Bradley, Chairman of the St. Francis Board of Trustees.
Click here to see the full statement.
Another Tennessee company is in the process of buying St. Francis, and here is what they had to say regarding the lawsuit:
"LifePoint is not involved in this pending litigation; therefore, it would not be appropriate for us to comment about it. We understand that St. Francis is working in good faith to resolve this matter. LifePoint is pleased about the opportunity to pursue a strategic partnership with St. Francis Hospital, and we continue to move forward with the due diligence process and necessary steps."