MUSKOGEE COUNTY, Oklahoma - The City of Muskogee and Saint Francis Hospital are locked in a legal battle over millions of dollars.

The hospital says it doesn’t have to pay taxes because it’s a not for profit organization, but the city says the hospital owes the city money, and the need is critical.

"You are looking at close to a million dollars that we’re out in our budget here in Muskogee," said Muskogee Superintendent Jarod Mendenhall. "It's a lifeblood, it’s teacher salaries, it affects teaching and learning inside what we do on a daily basis." 

Muskogee Medical Center Authority’s Jim Blair is in charge of negotiating with the hospital. He said in the hospital’s 40-year lease it agreed to pay what is called an "in-kind" payment every year, but Blair said it hasn’t been paid since 2017. 

"Part of the provisions of the lease required an in-kind payment that was based on the ad valorem assessment which goes to our public schools, vo-tech and library," said Blair.  

Blair said if the hospital continues not to make the payments, then the school district and other entities could be denied over $30 million throughout the term of the contract.

"Our board and myself, if we agree to a reduction, we are under a lot of public scrutiny and people will ask 'hey what did you do to our schools,' so from this way it's going to go to the courts and hopefully it will be resolved and we can all work together," said Blair. 

Saint Francis released a statement to News On 6 saying in part:

"As a nonprofit, Saint Francis is not subject to ad valorem taxes. We continue to substantially support the communities we serve and the healthcare needs of the region."

County Commissioner Ken Doke explained that the "in-kind" payment is not a tax. "This is something that mimics a tax in the form of an in-kind payment," Doke explained. "There is a lot of money in the balance that could have a positive effect on our community and is worth our attention." 

The lawsuit is against Saint Francis and its owner LifePoint Health. Muskogee leaders said they hope it's a path towards compromise, not conflict. 

"In a county that is already struggling, we just came off from the flooding that occurred this past spring. We hope that cooler heads prevail," said Mendenhall.  

"At the end of the day, Saint Francis has been a good thing for Muskogee, they have made good investments and added jobs. We hope that the lawsuit will settle this quickly and amicably, in a way that it protects healthcare, while at the same time not being a detriment to our public schools," said Doke. 

Muskogee leaders said the hospital's 2019 payment is due next month. 

 

Full lease agreement attached below: