Financial trouble forces SWRMC to close

Southwest Regional Medical Center shut down on Friday, Sept. 26 at 5 pm due to financial issues.

Roger Rieger, SWRMCs chief operating officer, delivered the news to employees on Friday afternoon after the hospital learned it was unable to make payroll. Employees wages were garnished, and, in addition to not knowing what lies ahead for the hospitals future, they were not paid on Friday.

An employee was seen leaving the hospital in tears just minutes before its doors locked for the time being, while others were carrying boxes out of the building.

The hospitals closing comes as a response to a judgment made last April against the hospital in favor of CIT Group, operating under the trade name of Toshiba America Medical Credit, for an MRI machine that was loaned to the hospital in 2008.

Visiting Judge William Walker, a retired judge in Clermont County, ruled in favor of CIT Group following a lawsuit filed on Aug. 13, 2013, awarding CIT Group $731,747.01 in addition to a 7.5 percent tax, court costs of $1,658.21, attorney fees of $76,900, and a per diem of $106.14 until the judgment is satisfied.

According to a memorandum in opposition of a motion to quash non-wage garnishments filed by CIT Groups legal counsel, Brian Muething and Joseph Lehnert of Keating Muething Klekamp PLL, on Sept. 18, SWRMC was not cooperating under the terms of the judgment or previous agreements between the two parties.

Since entry of judgment, Southwest has made no attempt to satisfy a single cent of CITs judgment, Muething wrote in the memorandum. When contacted on Friday evening, Muething declined to comment, instead pointing to the expansive case docket.

This is the second time in as many weeks that SWRMC has faced the wrath of creditors who are demanding large sums of money that the hospital seemingly cant afford to pay all at once.

On Sept. 16, a number of items, including furniture and medical equipment, were taken from the hospital and loaded into moving vans, only for the trucks to return later that day after an agreement on a new pay schedule was reached.

The medical center owes a judgment of more than $350,000 to Georgetown Emergency Group, according to court documents, though the hospitals legal counsel, Robert Hoskins, believes that the hospital has already paid one third of the total cost.

Hoskins stated that the hospital closing took him by surprise, as he was busy all day Friday in negotiations with CIT Groups legal counsel as well as SWRMC President and CEO Dr. Krishna Surapaneni.

I thought we were still negotiating, Hoskins said in a phone interview. Were closer in the last 20 minutes than we had been for weeks. I dont know whats going on over there. Ive been working with Dr. Krishna all day on this negotiation. I dont think the parties are that far apart.

Despite Hoskins belief that a deal could be reached within the next 72 hours, it seems unlikely that the hospital will reopen any time soon without an influx of cash.

The medical center entered into two leases with CIT Group for medical equipment, including the MRI machine, signing the first on Feb. 27, 2008 and the second on March 5, 2008, according to the lawsuit. On May 26, 2011, CIT Group declared a default under the leases because of the hospitals repeated failure to make the required monthly payments.

On June 1, 2011, CIT Group and the hospital entered into a forbearance agreement, stating that the hospital would make regular and on-time monthly payments of $25,000 for 12 months until $300,000 had been paid back to CIT Group. Then the hospital would be obligated to pay for the MRI machine and other equipment as per the lease schedules, which called for payments of around $30,000 per month combined between the two leases.

Even though the two signed the new agreement, it appears that SWRMC failed to make payments for the MRI machine, leaving CIT Group with no choice but to file a lawsuit in order to force the hospital to pay for using the machine as well as repossess the machine.

On Aug. 14, CIT Groups legal counsel asked that funds from insurance companies and Social Security that were meant for the hospital be diverted, or garnished, and collected by CIT Group, as a means of recouping its losses.

Then, SWRMC filed a motion to quash non-wage garnishment, but following the memorandum filed by CIT Group, Magistrate W. Kenneth Zuk denied the motion to quash on Sept. 25, on the basis that SWRMC did not specifically cite any state or case law to support their position.

This is the latest administrative mess that the hospital has been dealing with in September alone, and it includes an ongoing conflict between it and Ohios largest pension system, the Ohio Public Employee Retirement System. OPERS alleges that a number of SWRMC employees were paying into the states pension fund from Dec. 2012 through March 2014 despite being ineligible. However, SWRMC is arguing that the employees should still be eligible on a legal technicality that could hold up in court.