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City pays latest legal bill installment

Staff writer

A Bank of Hays lawsuit against the company that used to operate Hillsboro Community Hospital and 10 other defendants including the city of Hillsboro has cost the city $8,626.39 in legal bills since it was filed in early January.

City council members on Tuesday voted to pay a legal bill of $5,626.39 for the services of lawyer Tyler Heffron with Triplett Woolf Garretson. It was the third legal bill the city has paid.

The bank’s lawsuit seeks foreclosure of a mortgage originally taken out by CAH Acquisition Company #5 to build the hospital. A related company, HMC/CAH Consolidated, which signed a promissory note agreeing to be held liable for the balance of the mortgage, is also one of the 11 defendants.

The city has received three bills from the law firms Klenda Austerman and Triplett Woolf Garretson for services related to the lawsuit.

The first bill, from Klenda Austerman, came in March. That bill was $715.

The second and third bills were for Heffron’s services and were $2,520 and $5,626.39.

The city and the bank, in one of many twists, are both interested in keeping HCH operational, and jointly sought the appointment of a receiver.

Wichita lawyer Thomas Gilman, the only person who showed up at a Marion County District Court hearing to contest appointment of the receiver, filed a request the same day seeking to withdraw from representing hospital owner CAH Acquisition Co. 5 and a related company, Health Acquisition Co., because they had not paid him as agreed.

The receiver, Cohesive Healthcare Management and Consulting, filed a petition seeking Chapter 11 bankruptcy protection.

CAH Acquisition Company #5 attempted to move bankruptcy proceedings to North Carolina, but the North Carolina court denied CAH’s request to include the Kansas case.

Other defendants in the case include: the Public Building Commission of Hillsboro, owner of the property where the hospital sits; Security Bank of Kansas City, trustee for a taxable revenue bond covering the property; Marion County commissioners, because of unpaid property taxes; App Group International, which filed a financing statement claiming an interest in hospital receivables; Athenahealth, Inc., and U.S. Bank, which might be in possession of bank accounts or accounts receivable; Kansas Department of Revenue because it has filed tax warrants seeking unpaid withholding taxes.; and Mobile Cardiac Care, LLC, which was granted a default judgment in a lawsuit filed against the hospital.

Last modified May 23, 2019

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