OPINION ISSUED DECEMBER 11, 1992
PRESSLEY RIDGE SCHOOL
DEPARTMENT OF HEALTH AND HUMAN RESOURCES
Michael J. Betts, Attorney at Law, for claimant.
John E. Shank, Deputy Attorney General, for respondent.
Claimant and respondent entered into a contract on or about July 1, 1990, and terminated as of June
30, 1991. Claimant operates certain facilities for youth offenders who are in the custody of the
respondent State agency. A dispute arose between the parties as to the calculation of the final
payment due claimant under the terms of the contract.
The contract states, in part:
V. CONTINGENCY PLAN/GOOD FAITH EFFORT
It is anticipated and believed that, at a minimum, thirty percent (30%) of Provider's operating
expenses are for services related to the health needs of the residents. It is further believed that all or
most of said services can be supported with revenue from Title XIX Medicaid and/or other
It is, however, recognized that, unless Provider has previously been certified as a Medicaid Provider,
payments from Medicaid may not be immediately forthcoming. Therefore the decreasing rates
specified in Section IV of this Agreement have been designed to address the possible time lag
associated with receiving Medicaid reimbursement.
In the event that at least thirty percent (30%) of aggregate costs are not reimbursable by Medicaid
or other third-party payments, Department agrees to cover the short-fall up to the level of FY
1989-90 Social Service funding, PROVIDED THAT Department determines that Provider has made
a good faith effort to receive Medicaid and/or other reimbursement for all services possible.
The intent of this provision in the contract was further clarified in correspondence dated July 24,
1990, wherein Ruth Ann Panepinto, Ph.D., Commissioner, Bureau of Community Support, for
respondent, stated as follows:
Enclosed is the contract between our agencies for the operation of the status offender facilities at
both Laurel park and Grant Gardens for FY 1990-91. The intent of this contract is to decrease social
service funding while at the same time allowing Pressley Ridge to recover all legitimate program
costs for FY 1990-91. The Department's participation is limited to $1,048,353 even though we
understand that your projected costs for these two programs is $1,308,304. We believe that revenue from Medicaid will cover the projected deficit. If income exceeds the projected $1,308,304, the
contract mechanism for repayment to the Department will prevail. (Emphasis supplied).
Claimant brought this action to recover $156,297.00 which respondent refused to pay to the claimant
under the terms of the contract as respondent contends that claimant is not entitled to recover its
The Court is of the opinion that the contract is unambiguous and that the intent of the parties is clear.
Respondent agreed to reimburse claimant up to a cap of $1,048,535.00. Claimant was able to obtain
funding from Medicaid to cover a portion of its costs; however, claimant incurred a shortfall of
$156,297.00. Respondent agrees that the amount of the shortfall is not in dispute and, further, that
claimant made a good faith effort to obtain Medicaid or other reimbursement for all services
rendered. Therefore, the Court has determined that the terms of the contract as quoted herein above
provide that claimant is entitled to recover the amount of its shortfall.
Accordingly, the Court is of the Opinion to and does made an award to claimant in the amount of
Award of $156,297.00.