An Illinois based company's attempt to open a hospital at the former Eastern Ozarks Regional Health System facility in Cherokee Village nearly ended last week.
Circuit Court Judge Phil Smith signed a court stay July 22 stopping the Sharp County Sheriff's Department from padlocking the building in preparation for selling the hospital buildings, equipment and property at a public auction next month.
"We served James 'Jim' Cheek with a writ of execution for an outstanding debt owed by the hospital," said Sharp County Sheriff Dale Weaver. "If he doesn't pay the bill, we'll be forced to auction off stuff until the debt is covered."
Sgt. Stan Haney with the Sharp County Sheriff's Department said Cheek's company, International Health System, bought the closed hospital earlier this year from Robert Becht and assumed Eastern Ozarks' outstanding debts.
He said one debtor, Misti Mountain Imaging of Mountain Home, won a $21,197.75 judgment against Eastern Ozarks in April.
It was this judgment that forced the Sharp County Sheriff's Department to issue a writ of execution July 11 giving Cheek 10 days to pay off the judgment or the property would be seized, Haney said.
"He (Cheek) knew this was going to happen when he made the deal to buy the hospital," Haney said. "I've told him over and over again that he was either going to have to pay the debt or get a stay from a judge, but most of the time I don't think he was listening."
If the stay had not been issued, the property would have been auctioned off within 60 days of the issuance of the writ of execution, said Weaver.
"Legally, I'm responsible for that debt if I don't serve the writ," Weaver said. "We're just trying to follow the law."
Cheek said the entire situation could have been avoided if Misti Mountain owner Bob Goss would drop the judgment order.
"Bob Goss is doing this out of spite," said an angry Cheek. "He's denying the people of Sharp County a hospital. He's been making money off that hospital since 1982 and he should just let this one go."
Cheek said if the hospital buildings are auctioned off Goss will not receive any money. He said the first mortgage on the hospital property is $2.4 million and will have to be paid before any other debtors are compensated.
"And the second mortgage is worth $400,000 and the IRS has a $400,000 lean against the property," said Cheek. "If it were sold it wouldn't even cover those debts."
Repeated phone calls to Misti Mountain Imaging were not returned.
Cheek said if the property is confiscated his attempt to open a hospital in northern Sharp County would be severely compromised.
"I've tried to find financing all over the country," Cheek said. "It's been very difficult and this is making it worse."
Cheek would not say how much he bought Eastern Ozarks for, but he said the original asking price was approximately $4 million.
During a phone interview July 21 Cheek said he would not seek a court injunction to stop the Sharp County Sheriff's Department from seizing the property.
But the next day, R.T. Starken, a local lawyer, filed a brief with Smith requesting a stay on Cheek's behalf, said Haney.
He said he wasn't sure how long the stay would last.
"It surprised me that he hired an attorney and had this done," Haney said. "He seemed to be under the impression that this couldn't happen and waited until the absolute last second to do something about it."
Haney said Cheek has had twice as much time to find a resolution to this debt. He said a previous writ of execution was presented to Cheek several months ago pertaining to the same debt, but Cheek refused to accept it.
"He said there was a typo on the physical document or something to that effect," Haney said. "Which means he's actually had twice as much time as a normal person to find a resolution to this problem."
He said Cheek tried to refuse the second writ of execution as well.
Cheek would not comment about Haney's accusations.
"I'm not at liberty to talk about those things," Cheek said.
He said one way or another the hospital situation must be resolved soon.
Eastern Ozarks Regional Health System closed last December after inspectors from the Arkansas Department of Health found multiple health code violations.
Cheek said Eastern Ozarks did not lose its hospital licensure, meaning a prospective buyer could open the hospital without having to make major structural changes that are mandated by law for new hospitals.
He said that "grandfather clause" will be gone in December and the residents in Sharp County will have to start over from scratch.
Cheek said he has not only tried to find financing to open the hospital but has even looked for someone else to take this project over if he can't.
"This is a sad situation," Cheek said. "I still hope at the end of this process Sharp County has a hospital."