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Medical foundation will continue to oversee sale dollars

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By Susan Sharp

In a court battle that has persisted for 10 years, seen lawyers replaced and had filings entered on the heels of each other, another opinion has been handed down. This one came last week from the state court of appeals.

For the LaFollette Medical Foundation the decision means it will retain control of the financial proceeds from the sale of the former LaFollette Medical Center. At one time those proceeds were estimated to be around $9 million. Under the rules governing the foundation, the money is to be used for the best interest of the public and its health.

The city of LaFollette has routinely contested the disbursement of the funds, who the rightful owner of the monies is and who should oversee it.

However, after last week’s decision, the city of LaFollette must abide by the order all the parties agreed to in April 2006. In that order, it was stipulated that the all of the funds, except $1.3 million, would be put in a trust under the control of the newly formed LaFollette Medical Foundation. The funds to be held out were earmarked for potential liabilities.

The city had appealed that order making a two-fold claim. As its first argument officials with the city claimed the document had been improperly entered by the court, appeals court records said. Because there was not a motion or petition preceding the order and process was not served on attorneys representing the city, it was an invalid order, according to LaFollette’s argument presented to the court. However, Justice Herschel Pickens Franks, who drafted the opinion, didn’t have the same outlook. Chancery court, where the case was heard, had jurisdiction over the matter, he said. Franks also said a skipped step in the way the order was handled was not enough to void it because the court did have proper authority in the case.

Next, it was alleged that LaFollette officials had no knowledge of the LaFollette Medical Foundation. However, the panel of three justices took a different view.

Franks deemed that argument erroneous.

Citing newspaper reports over several months discussing the formation of the foundation and transfer of the funds, Franks said the evidence supports the city was aware of the foundation and its intentions. He also said in his opinion that when the city attempted to have the agreed order negated it waited too long to make that move. In fact, 17 months had passed between the two filings, appeals court records said.

After upholding the funds would remain under the control of the foundation, the state appeals court said the city of LaFollette would be responsible for the cost of the appeals process.

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