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Blount County, Blount Memorial Hospital trapped in legal battle over property

Blount Memorial Hospital sued Blount County and the Blount County Mayor in Chancery Court. This week, the county responded.

MARYVILLE, Tenn. — A legal battle over a potential property sale has ensnared Blount County and the only hospital within its lines. 

In 1946, the Blount County Commission created Blount Memorial Hospital, Inc., a non-profit to run Blount Memorial Hospital. In 1996, BMH, Inc. bought some property in Alcoa to set up its Springbrook Clinic. In 2022, the non-profit tried to sell the property for $22 million, the lawsuit said. 

In November 2022, Blount County Mayor Ed Mitchell sent a letter to the Blount Memorial Hospital Board of Directors, asking for the three board members appointed by Blount County to be removed, citing "grave" concerns he had with the hospital's operation. 

The mayor's letter argued Blount County owned all of Blount Memorial Hospital's assets and said he believed the non-profit corporation could not sell the property. 

In a lawsuit filed in Blount County Chancery Court, lawyers for Blount Memorial Hospital, Inc. argued the non-profit corporation bought the property with revenues from the hospital and so they own it, not the county. 

Blount County possesses "no authority over BMH's operation and management, other than the power to appoint directors," the lawsuit said. 

In a response, filed in Chancery Court on Feb. 7, lawyers for Blount County said "assets are owned for and on behalf of Blount County, Tennessee." 

Those lawyers argued Blount County bought the hospital and its property and cited Blount Memorial Hospital's use of bond debt issued by Blount County to fund its operations. 

Knoxville Attorney T. Scott Jones is not associated with this case, but reviewed the lawsuit for 10News. 

"It's kind of hard to say that Blount County just continues to own whatever property that the Blount Memorial Hospital Corporation purchases," Jones said. "That just seems a little bit of a stretch." 

Jones said he thinks the litigation would stretch for years, and cost taxpayers a lot of money. 

"There's going to be an enormous amount of attorney's fees associated with this litigation," Jones said. "And it seems fairly clear cut."

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