Attorney general allows MSHA purchase of Unicoi Co. hospital to proceed

Brad Hicks • Oct 31, 2013 at 11:41 AM

ERWIN — The pending conveyance of Unicoi County Memorial Hospital to Mountain States Health Alliance is nearing finalization, as the Tennessee Attorney General’s office issued a letter of no action to attorneys representing the UCMH Board of Control on Wednesday.

The move by the attorney general to take no action on the transaction clears the way for its closing to occur.

The letter states the attorney general’s office has completed its review of the documents provided by UCMH and MSHA in connection with the proposed transaction between the two health care entities.

“This office has determined that it will take no action at this time regarding the transaction,” the letter states.

Aside from opting to take no action, the attorney general’s office could have denied the sale or requested more information.

“That means the state will not take any action to delay the process at all,” MSHA spokeswoman Teresa Hicks said of the office’s move to take no action.

Hicks said MSHA and UCMH will now work to finalize the transaction documents to ensure closing takes place. She said this process is expected to be complete by Friday morning. MSHA officials have announced that a celebration marking the completion of the acquisition process will be held at that time.

It was more than 15 months ago that the UCMH Board of Control, after being advised to do so by a consulting firm hired by the board, reached out to MSHA and Wellmont Health System to see what each organization would offer in acquiring Unicoi County’s financially-struggling hospital. Both of the health care systems submitted proposals, and the board’s Executive Committee subsequently chose to move forward with MSHA’s proposal in a closed strategic planning session.

In early October 2012, the UCMH board held a public meeting to formally accept the MSHA proposal but, when the meeting was opened for public comment, the board moved to table its acceptance of the MSHA proposal and allow other organizations interested in acquiring UCMH to submit proposal. MSHA and Wellmont would submit revised acquisition proposals the following week.

At a late November public meeting, the board voted to approve the revised MSHA proposal. In March, it approved MSHA’s final definitive agreement.

However, the UCMH board announced in June that the sale of UMCH to MSHA had been delayed due to three concerns the attorney general’s office, which must review the sale process, had regarding process. These concerns were the board’s failure to comply with the state’s Open Meetings Act during the process, its failure to obtain sale approval from the town of Erwin and Unicoi County per the UCMH charter, and concerns over how monetary contributions outlined in the MSHA proposal would be spent.

In July, the board held a public meeting at which it again voted to accept the MSHA proposal in an effort to address the Open Meetings Act concern. This meeting came after Wellmont announced it had concerns over the legality of the process, declared both its and MSHA’s revised proposals “null and void,” called for the selection process to begin anew. Late that month, the Erwin Board of Mayor and Aldermen approved a resolution to accept UCMH’s sale to MSHA per the board’s decision. The Unicoi County Commission approved a similar resolution in August.

Documentation to demonstrate the concerns had been addressed were previously submitted to the attorney general’s office, which initiated a 45-day review period. Wednesday’s letter follows this second review.

The attorney general’s letter requests, upon completion of the transaction, that a representative of UMCH provide to the attorney general’s office a sworn affidavit that the transaction has closed along with a copy of the closing documents. It also states that the attorney general “reserves the right to act in the public interest” if additional matters develop.

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