Hospital employees finally get back pay settlement

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By Dave Taylor

Former Carroll County hospital employees who worked for Associated Healthcare Systems Inc., headquartered in Brentwood, Tenn., have received more than $560,000 in back pay the company owed to them from 2007.

Associated Healthcare Systems operated Carroll County Regional Medical Center, which is now Carroll County Memorial Hospital, from July 2004 until April 2007, according to current CCMH chief executive officer Kanute Rarey. AHS hospital operations ended in April 2007 with former employees not being paid.

The hospital’s current board of directors, administrators, hospital attorney Ruth Baxter and members of Carroll County Fiscal Court met with current and former employees of the hospital Thursday, Dec. 17, to announce a ruling handed down earlier in the day in a Lexington bankruptcy court which released the back pay to the employees. CCMH Board Chairman Jean Pyles issued checks to those former AHS employees who were present.

When the hospital’s board of directors terminated the lease with AHS in April 2007, hospital operation was taken over by the local CCMH Corporation, according to Rarey. Associated Health Systems filed for bankruptcy in September 2007.

“Over the past two years the past employees sought back payment through the bankruptcy court,” Rarey said. “Thursday those wages were finally paid.”

“There were a large number of employees there,” Carroll County Judge-Executive Harold “Shorty” Tomlinson said of Thursday’s meeting. “There was a lot of jubilation there as you can expect.”

The payout included three weeks wages, vacation pay, sick pay and in some cases retirement money, Rarey said. More than 140 checks are being distributed to the past employees that filed claims with the bankruptcy court.

Total payout of the settlement was $560,661.47, which netted the employees $412,143.62 after taxes, according to Tomlinson.

Rarey said the hospital’s administration and board of directors are very excited that all the former employees of AHS finally received the back pay that they deserved.

“The hospital has worked hard to provide information and cooperate with the bankruptcy court to see that AHS employees were paid,” Rarey said. “Some of those employees that worked for AHS are now employees at Carroll County Memorial Hospital. We know it is a great help to our employees and their families to receive the back pay and a relief to all of those employees that were left unpaid by the former hospital operator.”

Tomlinson said the situation was tough for employees. “They had earned that money. They really deserve a lot of credit, because they continued to operate the hospital without pay,” the judge-executive said. “They’ve been patient all this time. The employees are to be commended. We’re really proud of the way they’ve hung in there.”

Tomlinson praised the work of hospital attorney Ruth Baxter for her diligence in the lengthy process of pursuing the case in bankruptcy court.

“Ruth represented the employees in the proceedings,” Tomlinson said. “She made a big difference for them in court. It was really good to finally get this over with. It’s a nice Christmas present for the employees.”

A deadline passed in July for AHS to comply with a June 18 court order to make payments to the CCMH employees. Hospital attorney Ruth Baxter told The News-Democrat on July 24, that Mark Miller, an attorney in Nicholas County who is the trustee in this case, had received all materials needed to calculate vacation pay and sick leave 10 days prior to a July 20 deadline. Wage claims and 401k payments had been approved by the Court in June.

News of the problems at CCMH appeared in the January 31, 2007 edition of The News-Democrat when it was reported that payments to employees’ 401(k) retirement plans had gone unpaid in the previous year.

A week later, the newspaper reported deeper trouble as it was learned federal and state taxes had gone unpaid. The report stated that while taxes had been withheld from hospital employees, more than $300,000 was owed in federal and state taxes. In a separate story in the same issue, it was reported that due to a computer program error, employees had not had the 2006 occupational tax withheld from paychecks and they would need to repay those funds.

In the March 14, 2007 issue of The News-Democrat, the plan for repayment of the occupational was reported. Employees had begun repaying the funds weekly and payments were taken to the Carroll County Clerk’s office weekly also. Amounts as high as $1,400 per employee were owed.

The lease between AHS and CCMH was terminated by the hospital board of directors, April 1, 2007. Alliant Management Systems of Louisville was hired to oversee the hospital and help sort out the facility’s financial situation.

It was learned in the second week of April, 2007 that AHS accounts had been frozen and employee paychecks had been held. CCMH employees filed suit on May 9, 2007, against AHS for not paying the employees for three weeks. At the same time several other hospitals operated by AHS of Brentwood, Tenn., were either filing for bankruptcy or being taken back over by boards of directors in a move similar to CCMH.