Filing provides details about issues
Robbinsville – Graham County and its insurance carrier have asked a judge to dismiss a lawsuit filed by Smoky Mountain Urgent Care.
In turn, the county is making demands of its own.
Graham County said Smoky Mountain Urgent Care is in breach of contract and asked a judge to award the county damages, lawyer fees, anything else the judge feels is appropriate – and to evict Smoky Mountain Urgent Care from the building it leases from the county.
Earlier this year, Dr. David Castor, MD, who runs the clinic in Robbinsville, obtained a restraining order and filed a lawsuit against the county to fight an eviction notice.
Castor has argued that, except for staffing issues caused by COVID-19, he has been in compliance with the agreements he signed with the county. He has said the county is trying to evict his practice for trivial reasons – and if it is successful, it will put numerous people out of work and leave the county without an urgent care clinic.
In its response, the county asked the case be dismissed on grounds that Castor has failed to state a claim upon which relief can be granted.
The letter Castor attached as an exhibit to his lawsuit “fulfills the notice requirements of the Building Lease Agreement and the plaintiff fails to allege that it cured the default or was otherwise in compliance with the Building Lease Agreement within the time permitted to cure.”
The county’s insurer, RLI Insurance Company, asked the lawsuit be dismissed against it on grounds that Castor has failed to state a claim against it upon which relief can be granted and on grounds that it is not a proper party to this action.
The county moved to strike some allegations in the original complaint, saying that “such allegations are irrelevant, immaterial, impertinent, and would serve only to unduly prejudice Defendant Graham County.”
The county denied that it breached the Building Lease Agreement or unlawfully removed Smoky Mountains Urgent Care from the leased building.
The county admitted that there is an “actual controversy between the Plaintiff and Defendant Graham County relating to their respective rights and obligations under the terms of the Lease Agreement.”
When it began
According to the county’s court filing, in 2014 and 2015, the Graham County Board of Commissioners began exploring the possibility of establishing an urgent care facility in Graham County, in order to meet previously-unmet urgent care needs, including the offering of diagnostic services such as x-ray, ultrasound, CT and mammogram.
In January 2016, with grant money obtained by the county, the county contracted for a feasibility study to analyze the feasibility and potential viability of an urgent care facility and related diagnostic services in the county. The results of the feasibility study were positive, so the county continued pursuing its vision of establishing a local urgent care facility, including the provision of the diagnostic services.
Castor is the owner and Chief Executive Officer of Smoky Mountain Urgent Care, PC. By April of 2016, discussions were underway between authorized county representatives and Castor about having him serve as medical director of the proposed urgent care facility and having him and his practice, Smoky Mountain Urgent Care, PC, operate the facility.
Starting in June of 2016, the county purchased and renovated a building in order to move the county’s Department of Social Services and Health Department out of the building at 21 S. Main St., Robbinsville, and make room for the urgent care facility and related diagnostic equipment.
Throughout 2016 and 2017, the county applied for and obtained grant funding – in excess of $900,000 – for use in purchasing imaging equipment, including CT, mammogram and ultrasound, and for use in renovating the building to house the the diagnostic equipment, along with X-ray equipment Castor agreed to provide.
From Feb. 28, 2018, through April 1, 2018, Castor wrote a series of letters to the Certificate of Need Section of the North Carolina Department of Facility Services and/or the Healthcare Planning and Certificate of Need Section of the North Carolina Division of Health Service Regulation, in support of a Certificate of Need (“CON”) application for the proposed urgent care facility and diagnostic services. In a letter dated Feb. 28, 2018 Castor confirmed that he would provide a standard X-ray machine to the proposed facility.
In a letter dated March 1, 2018, Castor confirmed his willingness to serve as medical director for the county’s proposed diagnostic center.
In a letter dated March 15, 2018 (Exhibit C), Castor confirmed his willingness to provide clinical and financial management services to the proposed urgent care facility. In the same letter, he indicated his agreement to the terms of payment in the pro forma included in the CON application, noting he had reviewed the staffing pattern and specifications of the CT and mammography unit, and indicating that he would work with the county to pursue the required accreditation for both pieces of equipment.
In another letter dated March 15, 2018, Castor confirmed he intended to develop a management services agreement to operate the proposed diagnostic center once the CON approval was granted, that he would provide management and staffing for CT, mammography and ultrasound, that he would bill and collect for those services, and that he would pay Graham County a use fee based on 25 percent of net collections for services provided through each piece of equipment.
In a letter dated March 16, 2018, Castor confirmed that he would become the medical director for the county’s proposed diagnostic center and he attested that the following services would be offered by his staff if the CON application was approved: administration, finance and billing, medical records, housekeeping, pharmacy, and laboratory.
In a letter dated April 1, 2018, Castor confirmed that his physicians who would practice at the county’s urgent care facility would refer patients to the X-ray, mammography, ultrasound, and CT services.
The CON was necessary before the urgent care facility could purchase the necessary equipment and offer CT and mammogram services to the public in Graham County,
The county’s CON application was approved on or about Oct. 30, 2018.
Around March 31, 2018, Castor and the county entered into a Building Lease Agreement for space in the building located at 21 South Main Street, for the county’s urgent care facility. The Building Lease Agreement requires that the plaintiff operate the leased premises as an urgent care facility during certain hours.
The parties’ mutual understanding of the definition of “operate” is illustrated by the aforementioned letters Castor wrote in support of the county’s CON for the urgent care facility, and includes the understanding that a medical doctor would be present at the urgent care facility at least two days per week.
Allegations
On numerous occasions since at least July 2020 – and continuing beyond Dec. 23, 2021 – it is alleged that Castor has been in default of the terms of the Building Lease Agreement due to his “failure to operate the leased premises according to the requirements of the Building Lease Agreement, including the parties’ mutual understanding of the term ‘operate.’”
Graham County has provided notice to Castor of its default of the Building Lease Agreement on at least July 24, 2020 and Nov. 23, 2021, and his default has continued more than 30 days after such notice. As a result of the default and breach of the Building Lease Agreement, Graham County has suffered damages in excess of $25,000.
The county further alleges that on or about Dec. 31, 2019, Castor and Graham County entered into an Equipment Lease Agreement for the CT and mammography equipment. The county alleges that Castor breached the Equipment Lease Agreement by its failure to charge reasonable and customary amounts for the use of the equipment covered by the agreement. Castor also breached the Equipment Lease Agreement by his failure to provide Graham County with the reporting required by the agreement and by its failure to make the payments to the county required by the agreement.
As a result of this breach of the Equipment Lease Agreement, Graham County has suffered damages in excess of $25,000.
On or about March 31, 2018, Castor and Graham County entered into a Health Services Agreement for the provision of reasonably necessary medical care for inmates or detainees of the Graham County Detention Center. Castor has breached the Health Services Agreement by its failure, on multiple occasions, to provide the care and staffing required by the agreement.
As a result of the foregoing described actions of the Plaintiff, there is an actual controversy between Castor and Graham County relating to their respective rights and obligations under the terms of the Building Lease Agreement, Equipment Lease Agreement and Health Services Agreement.
Graham County requests that the court declare that it is entitled to terminate the aforementioned agreements.
Citing case law, the county argues that the Building Lease Agreement provides for termination of the Building Lease Agreement if there be any default in the performance or observation of any of the covenants or conditions of the agreement that continue for a period of 10 or 30 days after written notice thereof. Castor failed to insert a location where written notice can be provided
Castor was provided actual notice of default on at least July 24, 2020, and was provided written notice of default at its Bryson City Post Office Box on or about Nov. 23, 2021.
The default has continued more than 30 days beyond receiving notice of default.
Based upon the foregoing facts and circumstances, Graham County believes it is entitled to immediate possession of the leased premises identified in the Building Lease Agreement.