A preliminary hearing on Prague City Hall’s lawsuit against the company that owns the local hospital was postponed in federal court Friday, leaving city officials increasingly anxious about their state of health care for the rural community.

The rural municipality, with a population of about 2,500, sued CAH Acquisition Company 7 LLC and its owner HMC/CAH Consolidated in January for breach of contract and to force the company to continue normal operations. The city is asking for $39,000 for the contract breach, but City Manager Jim Greff said the potential damages to the town cannot be measured.

If the Prague Community Hospital and its emergency clinic close under CAH’s management, Greff said, residents would have to drive at least 20 minutes out of town to the next health care center. And the hospital employs at least 50 full-time positions.

“Injunctive relief is necessary to prevent immediate and irreparable harm to plaintiffs as well as the hospital, its patients and the community,” the city’s original court filing states.

The company is being represented by Peter W. Brolick with the Riggs, Abney, Neal, Turpen, Orbison & Lewis law firm. Brolick said Friday he could not discuss the ongoing litigation.

The Prague hospital is designated as a Critical Access Hospital by the Centers for Medicare and Medicaid Services under the U.S. Department of Health. Such hospitals receive cost-based reimbursements from CMS, intended to improve their performance and reduce the risk of closure.

Prague officials said CAH 7 should be holding those payments in trust to pay hospital employees, insurance and vendors. However, Greff said the company is behind in payroll and does not seem to be making any efforts to run the hospital in accordance with the city’s lease agreement for the property.

Patti Davis, president of the Oklahoma Hospital Association, said such conflicts are becoming more common in Oklahoma, in large part due to flux in health care funding at the federal and state level. Davis said she could not speak specifically to the Prague situation.

“With the Affordable Care Act, our hospitals took cuts in exchange for Medicaid expansion that did not occur,” Davis said. “Plus, our state budget has had Medicaid cuts since 2010 to the magnitude of about 14 percent. So for small hospitals that don’t have very much margin, these continued cuts have certainly driven some to desperate situations.”

“With Oklahoma being No. 2 on the list of most uninsured in the country, a lot of our rural hospitals – which are, by statute, required to provide care to whoever shows up for care on their doorstep – are dealing with a great deal of uncompensated care,” said Andy Fosmire, vice president for rural health at OHA.

According to the lawsuit, HMC/CAH Consolidated owns and operates 10 small community hospitals in the Midwest, including four in Oklahoma. In addition to Prague, the company operates in Drumright, Fairfax and Stigler. The municipality of Prague accuses HMC shareholders of diverting reimbursements in a billing scheme.

The case has been postponed until Feb. 19. Greff and attorney Cori Loomis with Christensen Law Group, which is representing the city, both said they would like to see a resolution that doesn’t require a long court case.

“Time is of the essence,” Loomis said. “The hospital has dwindling supplies, even though there’s supposedly a temporary restraining order in place to ensure the operator (CAH) will continue to operate it. But they’re not.”