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Court says state owes $3.55 million for child services

New Hampshire Sunday News

November 24. 2011 8:30PM

The state must pay $3.55 million to seven residential care providers to resolve a lengthy billing dispute over caring for children, the state Supreme Court ordered this week.

The state Division for Children, Youth and Families had cited budget concerns for not paying rate increases dating back to the 2004 fiscal year, but the court said leftover money elsewhere in the state Department of Health and Human Services budget could have been shifted to pay the providers.

In its 12-page decision, the court wrote that 'the functionality of state institutions depends on the trust and confidence of New Hampshire citizens. Allowing the State to disregard its contractural obligations would undermine this trust.'

The providers also are challenging payments for the 2007 through 2010 fiscal years.

Concord attorney Lisa Snow Wade, who represents the providers, welcomed the decision.

'After nearly eight years of refusing to make good on its contracts, the State must keep its promise and reimburse these nonprofit organizations for the services they provided to New Hampshire's neediest children,' she said in an e-mail.

The providers will be paid what was due them under their contracts with the state, plus interest, Wade said

The providers are Chase Home for Children in Portsmouth; Child and Family Services, based in Manchester although the program at issue was in Concord; Pine Haven Boys Center in Allenstown; Hannah House in Lebanon; Orion House in Newport; NFI North, based in Contoocook, but the programs at issue were in Jefferson and Bethlehem; and Odyssey House, which is no longer in operation, but the organization and programs were located on the Seacoast, according to Wade.

NFI North was underpaid the most, by more than $888,000, while Child and Family Services was shortchanged the least, by more than $138,000, according to the court papers.

Wade said the providers have administrative appeals pending for fiscal years 2007 through 2010, meaning the state could owe even more money. Wade declined further comment regarding those years, saying 'they are still the subject of ongoing litigation.'

An administrative hearing panel ruled that DCYF had underpaid the providers for fiscal years 2004 through 2006 but said it lacked the authority to require DCYF to issue payments, according to court records. In 2007, the state Supreme Court ruled the state underpaid the providers but said the agencies would have to sue to recover their money.

Senior Assistant Attorney General Nancy Smith said Wednesday that DHHS officials were in the process of determining whether they have the $3.55 million in their budget or would need to ask the Legislature to appropriate funds to pay the judgment.

In explaining why DHHS didn't shift funds, Smith said: 'Since the Legislature had not approved the money to fund the rate increases, there'd be no point to go to the fiscal committee to move money from a different line to pay for something the Legislature didn't approve.'

The dispute concerned the rates that the state Division for Children, Youth and Families paid for services to place children deemed delinquent, abused or in need of services.

'Starting in fiscal year 2004, the rates were set according to state law, which required that rates reflect the reasonable actual costs of providing the services that the state requires,' Wade said. 'Previously, rates were generally carried over from year-to-year and did not reflect the real and actual costs of providing services.'

Provider service agreements 'require that the organizations get paid in accordance with the relevant state laws and rules,' Wade said.

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