Settlements close dispute between Blount Memorial Hospital, Blount County

Blount Memorial Hospital and the Blount County government have settled litigation and a lengthy controversy over hospital ownership and governance.

Blount Memorial and the county have agreed to end a legal fight that started when the hospital filed a state lawsuit against the government in 2022. That fight, which came amid county attempts to change the makeup of the hospital board and hospital efforts to sell certain properties, escalated into federal litigation in June 2023, when Blount Memorial brought a lawsuit against the county and others over a new state law.

The settlements put a full stop on a time of extensive disagreements between Blount Memorial and the county. And they come as one part of a broader reconciliation between the county and its only hospital.

Talks between government officials and hospital leadership have recently resolved questions of property ownership — whether the hospital or the county owns assets like the Wellness Center at Springbrook in Alcoa — as well as disputes over how the hospital is managed.

Both the Blount Memorial Hospital Board of Directors and the Blount County Board of Commissioners in March approved an agreement outlining the terms of their relationship, the first such document in the hospital’s history. The settlement of pending legal questions was one aspect of the newly detailed arrangement.

Claims

Blount Memorial and the county asked that both suits be dismissed with prejudice. That leaves the hospital and the county responsible for their own attorney fees and other costs. The hospital’s attorney fees amounted to $723,670. County commissioners likewise repeatedly referenced the high costs of litigation with the hospital during public meetings in 2023.

The hospital and the government will split court costs equally, according to an agreed judgment in the state lawsuit.

The Blount County Chancery Court judgment, filed Tuesday, April 2, reads that Blount County and Blount Memorial agreed to end the state litigation, triggered when the hospital challenged county claims to ownership of hospital properties and aimed for further independence from the government. The county filed a countersuit in February 2023.

The court filing references and reiterates the terms of the March agreement between Blount County and Blount Memorial, decreeing that titles to hospital properties are divided. The county, the order and the March agreement both state, owns the hospital itself, located along East Lamar Alexander Parkway in Maryville. The hospital owns outlying properties such as the Wellness Center at Springbrook in Alcoa, per the agreement.

The federal suit is also being withdrawn. It was in part a response to a law explicitly permitting the county to contract with managers for the hospital other than Blount Memorial Hospital Incorporated, the corporation that has operated the hospital for the past 77 years.

A document detailing the county and hospital’s request to end the federal litigation reads that the agreement to drop the lawsuit “shall have no effect” on the government’s claims against the Knoxville legal firm that represented the hospital through much of the controversy, before hospital directors dispensed with the firm’s services in November 2023.

A new chapter

Hospital leaders and local officials say the resolution of the county-hospital dispute comes as a relief. “Entering into a management agreement with the county and ending the lawsuits marks a new chapter for Blount Memorial Hospital and shows how our relationship with the county has grown stronger,” interim hospital CEO Jonathan Smith told The Daily Times over email Thursday.

“The settlement reaffirms our shared commitment to collaborate and do what’s right for the well-being of our community. We are moving forward with a renewed focus on patient satisfaction and providing the highest quality care to those we serve. I am optimistic about what the future holds for Blount Memorial,” Smith continued.

County Mayor Ed Mitchell has made similar remarks. During a meeting in which county commissioners approved the document laying out the county’s relationship with Blount Memorial, he said, “I think that’s a great revitalization and a great push by our hospital to reach the unparalleled potential standard they hold for the services they provide for this county.”

“We’re on the same page now,” Mitchell continued.