IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

STEWARD HEALTH CARE SYSTEM 

LLC, et al.

Plaintiffs and Counterclaim Defendants,

)

)

)

)

v.

)

)

)

C.A. No. 2022-0289-SG

TENET BUSINESS SERVICES 

CORPORATION, et al.,

Defendants and Counterclaim Plaintiffs.

)

)

)

)

MEMORANDUM OPINION

Date Submitted: May 9, 2023

Date Decided: August 18, 2023

Michael A. Barlow and Adam K. Schulman, of ABRAMS & BAYLISS LLP, 

Wilmington, Delaware; OF COUNSEL: Anthony Bongiorno and Jessica Reese, of 

QUINN EMANUEL URQUHART & SULLIVAN, LLP, Boston, Massachusetts; 

Rollo C. Baker IV and Eric White, of QUINN EMANUEL URQUHART &

SULLIVAN, LLP, New York, New York, Attorneys for Plaintiffs and Counterclaim

Defendants Steward Health Care System LLC, Steward Medical Group, Inc., Steward 

PGH, Inc., Steward NSMC, Inc., Steward CGH, Inc., and Steward HH, Inc.

Lewis H. Lazarus, K. Tyler O’Connell, Albert J. Carroll, and Barnaby Grzaslewicz

of MORRIS JAMES LLP, Wilmington, Delaware; OF COUNSEL: Timothy W. 

Knapp, Brendan E. Ryan, and Kent J. Hayden, of KIRKLAND & ELLIS LLP,

Chicago, Illinois, Attorneys for Counsel for Defendants and Counterclaim Plaintiffs 

Tenet Business Services Corporation and Tenet Healthcare Corporation.

GLASSCOCK, Vice Chancellor
1

This matter is before me on the parties’ cross motions for partial summary 

judgment. The motions entail resolution of a dispute over discrete contractual 

language in an asset purchase agreement. That agreement writ large is the subject 

of this litigation, of which what follows is but a part. The assets sold include 

Florida hospitals. The discrete language in question involves allocation, between 

buyers and sellers, of benefits paid by the state of Florida to the hospitals. The 

language is difficult, in part because the drafting is not ideal. In larger part, it is 

difficult because understanding it requires reference to a governmental program, 

the Florida Direct Payment Program (the “DPP”). The DPP is not only referenced 

in the contract but is the explicit subject of the language in question, through which 

the parties agreed to apportion the payments, referred to as “distributions”. As I 

described it in intentionally simplified form in an earlier opinion in this matter 

addressing a request for preliminary injunction:

Under the DPP, Florida established “special assessments” that it 

charges to participating hospitals. Florida’s Agency for Health Care 

Administration . . . then places the revenue generated from those 

assessments into a fund, which is matched by federal funds. The 

combined total is then sent to “Managed Care Organizations,” who in 

turn distribute the funds to participating hospitals “as supplemental 

Medicaid reimbursements” (“DPP Distributions”). Those DPP 
2

Distributions are “directly link[ed] . . . to utilization of inpatient and 

outpatient services” and “occur retroactively.”1

Once the scheme for repayment under the program is understood and the 

contract is read as whole, the language is not ambiguous and the parties’ intent is 

readily resolved, in favor of the Defendant/Counterclaim Plaintiffs, the sellers in 

the transaction. The parties have submitted extrinsic evidence on which I do not 

rely but find supportive of my understanding of the contract language. My 

rationale is set out below.

I. BACKGROUND

A. Factual Background

I discussed the facts giving rise to this action in my prior Memorandum 

Opinion dated August 1, 2022,2and I limit myself here to only those facts necessary 

to understand this opinion. The Plaintiffs are the buyers and the Defendants the 

sellers in the transaction at issue. The parties to this action (the “Buyers” and the 

“Sellers”, collectively the “Parties”) executed an Asset Purchase Agreement (the 

“APA”) on June 16, 2021, to facilitate the sale of a group of hospitals in Florida.

3

 

Though this dispute spans contracts beyond the APA itself and includes multiple 

1

Steward Health Care Sys. LLC v. Tenet Bus. Servs. Corp., 2022 WL 3025587, at *3 (Del. Ch. 

Aug. 1, 2022) (“Steward I”) (citations omitted).

2

See id.

3

Id. at *2.
3

provisions within that document,

4

this opinion focuses on issues relating to APA 

Section 8.22, which details the distribution of DPP payments.

5

 The Parties also 

moved for summary judgment with respect to responsibility for repayments under 

another governmental program, the Accelerated and Advanced Payment Program. I 

leave those issues, which are fact-intensive, for trial. 

1. The DPP

The DPP is a Florida state-sponsored, federally-approved program designed 

to address uncompensated Medicaid costs borne by Florida’s hospitals.6 Under the 

DPP, Florida established “special assessments” that it charges participating 

hospitals.7 Florida’s Agency for Health Care Administration (“AHCA”) places the

assessments into a fund, and federal funds match those assessments.

8

“Managed 

Care Organizations” then distribute the matched funds to participating hospitals “as 

supplemental Medicaid reimbursements” (“DPP Distributions”).9 Those DPP 

Distributions are “directly link[ed] . . . to utilization of inpatient and outpatient 

services” and “occur retroactively,” in the sense that reimbursements, when paid,

4

See id. at *4.

5 Verified Compl. Ex. 1, Dkt. No. 1 (“APA”). 

6 Answer and Countercls. to the Verified Compl. ¶ 57, Dkt. No. 24 (“Defs.’ Answer and 

Countercls.”); Answer to the Verified Countercls. ¶ 48, Dkt. No. 34 (“Pls.’ Answer”).

7 Defs.’ Answer and Countercls. ¶ 57; Pls.’ Answer ¶¶ 50–51.

8

Id.

9 Defs.’ Answer and Countercls. ¶ 57; Pls.’ Answer ¶ 51.
4

would be for a then-historical period during which assessment fees had been incurred

and services performed.10

To institute the DPP, on November 16, 2020, AHCA submitted an application 

to the federal Centers for Medicare and Medicaid Services (“CMS”) for a “rating 

period” covering “October 1, 2020 through September 30, 2021.”11 On April 26, 

2021, CMS approved a revised version of the application for the October 1, 2020 to 

September 30, 2021 rating period.12

The Buyers and Sellers dispute how DPP Distributions should be allocated 

under the terms of the APA. As explained in detail below, the APA includes 

10 Transmittal Aff. Barnaby Grzaslewicz, Esq. Supp. Defs.’ Answering Br. Opp’n Pls.’ Mot. 

Summ. J. and Br. Supp. Defs.’ Cross-Mot. Summ. J. Ex. 4 at 5, Dkt. No. 44 (“CMS Approval 

Letter”). This comports with Buyers’ counsel’s knowledge of the DPP.

“THE COURT: Can we revisit something you said earlier? I just want to make sure I understand 

your position. Your position is that at the time of contracting, the parties didn't know that the DPP 

program would both assess and distribute benefits retroactively. That is, they didn't know that 

they were going to be assessed and paid a year after the year in which they were incurred. 

ATTORNEY BAKER: If I said that, I did not intend to say that. . . .

ATTORNEY BAKER: So I thought the question was, at the time the DPP was signed, was there 

certainty as to the time period in which assessments would be collected and payments made. And 

the answer to that was no, and that at the time the APA was signed, the different types of 

distributions were a possibility. I believe that at the time of signing, the parties did understand that 

the amount of payments that hospitals would be receiving would be based on a historical rating 

period.

THE COURT: Okay. So they knew at the time of signing that it would be post-September 30, 

2021, when assessments and benefits would be paid for the 2021 year. 

ATTORNEY BAKER: For the 2021 year? 

THE COURT: For the year from October 1, 2020 through September 30, 2021, both assessments 

and benefits would be incurred and paid after September 30th. They knew that. 

ATTORNEY BAKER: Correct. But they didn’t know when closing would occur.” Tr. 7.12.2022 

Oral Arg. 28:4–29:13, Dkt. No. 82.

11 CMS Approval Letter at 1.

12 See id.
5

provisions governing the allocation of DPP Distributions based on contractually 

defined “Program Year” periods in relation to when “Closing” occurs.13 The Buyers 

argue that they are entitled to the entirety of the DPP Distributions based on the 

2020-21 rating period. In contrast, the Sellers contend that, after certain deductions,

they are entitled to approximately 10/12ths of the DPP Distributions for the period 

in question, and Buyers should receive only 2/12ths of the DPP Distributions.

2. The APA’s DPP Provision

APA Section 8.22 (the “DPP Provision”) governs the division of DPP 

Payments, with allocation governed by “Program Year.”14 Program Year is defined 

as “the program year (i.e., October 1 through September 30) in which assessments 

are collected and payments are made with respect to the Healthcare Business in 

connection with the Florida Directed Payment Program.”15

For the “Program Year in which Closing occurs”—the “straddle” year in 

which ownership transitioned from Sellers to Buyers—Buyers are reimbursed for 

assessments they paid and the “DPP Payment Amount.”16 The remainder of these

13 See APA § 8.22.

14 Id.

15 Id.

16 Id.
6

“DPP Straddle Distributions” is divided between the Sellers and the Buyers on a 

prorated per diem basis. 

With respect to any reimbursement or distribution with respect to the 

Healthcare Business arising out of, attributable to or received in 

connection with the Florida Directed Payment Program and relating to 

the Program Year in which the Closing occurs (the “DPP Straddle 

Distributions”), Buyers shall first receive from the DPP Straddle 

Distributions an amount equal to the total assessments paid by Buyers 

or their Affiliates with respect to the Healthcare Business in connection 

with the Florida Directed Payment Program plus the DPP Payment 

Amount, and, to the extent there is any remaining portion of the DPP 

Straddle Distributions after such payment to Buyers, then the Parties 

shall prorate such remaining amount of the DPP Straddle Distribution 

on a per diem basis with (i) Sellers receiving a portion of such 

remaining DPP Straddle Distributions based on a fraction, the 

numerator of which is the number of calendar days in such Program 

Year that are prior to and include the Closing Date and the denominator 

of which is 365 and (ii) Buyers receiving a portion of such remaining 

DPP Straddle Distributions based on a fraction, the numerator of which 

is the number of calendar days in such Program Year that follow the 

Closing Date and the denominator of which is 365.17

Buyers are entitled to 100% of the DPP Distributions for Program Years after 

the straddle year. 

Buyers shall be entitled to 100% of any reimbursement or distribution 

with respect to the Healthcare Business arising out of, attributable to or 

received in connection with the Florida Directed Payment Program and 

relating to any Program Year after the Program Year in which the 

Closing occurs (the “Post-Closing DPP Distributions”).

18

17 Id.

18 Id.
7

Sellers, on the other hand, are entitled to the DPP Distributions in Program 

Years prior to the Program Year in which the Closing occurs.

Sellers shall be entitled to 100% of any reimbursement or distribution 

with respect to the Healthcare Business arising out of, attributable to or 

received in connection with the Florida Directed Payment Program and 

relating to any Program Year prior to the Program Year in which the 

Closing occurs (the “Pre-Closing DPP Distributions” . . .).19

Closing occurred on August 1, 2021.20 The Program Year associated with the 

Closing thus ended on September 30, 2021. Assessments and payments under the 

DPP began in October 2021, after the Program Year in which Closing occurred, 

relating to services performed in the 2020-21 Program Year.

21

3. The Negotiations

Ralph de la Torre, Steward’s Chairman and CEO, led the negotiations on 

behalf of Buyers.22 Saum Sutaria, Tenet’s CEO, led negotiations on behalf of 

Sellers.23 Over the course of negotiations, both Buyers and Sellers were represented 

by counsel.24

19 Id.

20 Defs.’ Answer and Countercls. ¶ 60; Pls.’ Answer ¶ 134.

21 See Pls.’ Br. Further Supp. Their Mot. Summ. J. 20, Dkt. No. 53; Defs.’ Answering Br. Opp’n 

Pls.’ Mot. Summ. J. and Br. Supp. Defs.’ Cross-Mot. Summ. J. 44, Dkt. No. 43 (“Defs.’ Answering 

Br.”).

22 Transmittal Aff. Adam K. Schulman, Esq. Supp. Pls.’ Suppl. Br. Supp. Their Mot. Summ. J.

(“Schulman Aff.”) Ex. 2 at 8:14–16, Dkt. No. 158 (“de la Torre Dep.”).

23 de la Torre Dep. 51:19–52:6.

24 Schulman Aff. Ex. 3 at 75:9–17, 84:22–3, Dkt. No. 158 (“Wales Dep.”); Schulman Aff. Ex. 4

at 29:7–10, Dkt. No. 158, (“Maloney Dep.”).
8

At the start of negotiations, the DPP was a possibility rather than a 

probability.25 The program was awaiting approvals from CMS, the Florida state 

legislature, and Miami-Dade County.26

Sellers sought to include estimates of the potential DPP Distributions in their 

valuation and included an annual receivable of $29.1 million in projected DPP 

Distributions.27 However, given the risk of the DPP not coming to fruition, the 

Parties agreed to discount the DPP Distributions by the likelihood of non-passage.28

In January 2021, the Parties executed a letter of intent for the sale of the 

hospitals with a $1 billion price tag.29 That price included the agreed upon value of 

the DPP.30

On January 28, 2021, in accordance with the letter of intent, the Sellersdrafted first draft of the APA included a $1 billion purchase price and an adjustment 

in the event that the DPP failed to be enacted.31 

The Sellers proposed the first pro-rating provision on March 18, 2021.32 The 

provision called for pro rata division of DPP Distributions “received by Buyers . . . 

25 Wales Dep. 135:5–20.

26 Schulman Aff. Ex. 5 at STE_DE_0002872, Dkt. No. 158.

27 Id. at -2872.

28 de la Torre Dep. 158:16–22; Schulman Aff. Ex. 11 at STE_DE_0023402-3404, Dkt. No. 159.

29 Schulman Aff. Ex. 7 at STE_DE_0024535, Dkt. No. 158.

30 Id. at -4535 n.5 (“In the event the legislation regarding the Directed Payment Program impacting 

the Hospitals is not enacted by the closing, then the parties will discuss an appropriate adjustment 

to the Purchase Price.”).

31 Schulman Aff. Ex. 8 at ALSTON00008331, -8343 n.3, Dkt. No. 158.

32 See Schulman Aff. Ex. 9 at ALSTON00007253, Dkt. No. 158.
9

following the Closing Date . . . that relate to any measurement period under the DPP 

Program that ends on or prior to the Closing Date.”33 The Parties discussed the value 

of the DPP and on April 19, 2021, Sellers sent a revised draft of the APA decreasing 

the purchase price, removing the pro rata provision, and adding a provision for an 

upwards price adjustment for DPP assessments paid by Sellers prior to Closing.34 

The Buyers agreed with these changes and added that they were entitled to “all 

reimbursements and distributions . . . received in connection with the Florida 

Directed Payment Program, whether such reimbursements or distributions relate to 

measurement periods before or after the Closing Date.”35 Subsequent drafts 

maintained the zero sum DPP Provision but allowed Sellers reimbursement for DPP 

assessments paid to CMS.36 

By June 2021, DPP passage looked likely. Notably, in late April 2021, the 

DPP received state approval,37 and on May 6, 2021, it received CMS approval for 

33 Id. at -7339.

34 Schulman Aff. Ex. 14 at Tenet00000910, -0917, -0978, Dkt. No. 159.

35 Schulman Aff. Ex. 15 at Tenet00009987, -9992, Dkt. No. 159; Pls.’ Suppl. Br. in Supp. of Their 

Mot. for Summ. J. 9, Dkt. No. 157 (“Pls.’ Suppl. Br.”).

36 Schulman Aff. Ex. 16 at Tenet00001381, -1383, -1388, Dkt. No. 159; see Schulman Aff. Ex. 17 

at ALSTON00006002, -6004, -6009, Dkt. No. 159; Schulman Aff. Ex. 18 at STE_DE_0002485, 

-2487, -2492, Dkt. No. 160; Schulman Aff. Ex. 19 at STE_DE_0027538, -7540, -7545, Dkt. No. 

160.

37 Schulman Aff. Ex. 20 Dkt. No. 160. 
10

the measurement period October 1, 2020 through September 30, 2021.38 The final 

puzzle piece was local approval and implementation.39

Certainty, or at least near certainty, has value, and on May 8, 2021, Sellers 

“blew up the deal” and stated that they were no longer interested in pursuing the 

transaction.40 Internally, Sellers had discussed abandoning the transaction in light 

of the DPP’s approvals.41

Negotiations began anew in June.42 Sellers sought an increased purchase 

price.43 Specifically, Sellers sought an increased price of between $1.07 and $1.15 

billion.44 In addition, Sellers proposed that they should receive a pro rata portion of 

the DPP Distribution but did so outside of the purchase price.45 As such, they 

expected their DPP Distribution share would be $31 million. In connection with 

their renewed proposal, Sellers noted, 

38 Schulman Aff. Ex. 21 Dkt. No. 160; Schulman Aff. Ex. 22 Dkt. No. 160. 

39 Schulman Aff. Ex. 20.

40 Schulman Aff. Ex. 24 (“Tenet has gone pencils down on the deal. They are reconsidering price 

now that the DPP is likely passing and the business is performing well.”), Dkt. No. 160; Schulman 

Aff. Ex. 6 at 55:4–15, Dkt. No. 158. 

41 Schulman Aff. Ex. 23 (“Don’t flip (though your new center of gravity probably helps prevent 

that) but I may blow up Miami deal. DPP fully approved. No Medicaid cuts. Your BD successful 

so far. And they are demanding 137M in working capital (we are off by 75M with our estimates 

closer to 65M) which means effective multiple on the deal is 7. Just the working capital difference 

pays the capital.”), Dkt. No. 160.

42 Schulman Aff. Ex. 25 at Tenet00010771, Dkt. No. 160; Maloney Dep. 201:12–16. 

43 Schulman Aff. Ex. 26 at STE_DE_0021283 (“Considering the elimination of DPP risk and the 

substantially increased performance at the hospitals, the Miami hospitals have increased in 

valuation”), Dkt. No. 160.

44 Id. at -1285.

45 Id.
11

• In April, DPP funding was approved by the Florida legislature and 

contemplated Florida Medicaid cuts were not approved by the state 

legislature 

• In addition to these positive developments, the Florida Market 

continues to outperform performance targets due to improved acuity 

and payor mix 

• Through May, the Miami hospitals are 27% ahead of plan. As a result, 

we now expect the market to achieve $115 - $125mm in pre-DPP 

EBITDA ($120mm equates to performing at plan for the final 7 

months). [. . . .]

• Given the likely timing of the transaction and Tenet's lobbying efforts 

to secure the passage of DPP legislation we have also included the 

impact of Tenet retaining its pro-rata share of the 2021 DPP payment46

Accordingly, Sellers followed up with an APA draft dated June 11, 2021, that 

increased the purchase price to $1.1 billion.47 The purchase price, however, was 

exclusive of the new DPP Provision which allocated distributions “relating to 

measurement periods before the Closing Date” on a pro rata basis.48

8.22 DPP Distributions. With respect to any reimbursement or 

distribution with respect to the Healthcare Business arising out of, 

attributable to or received in connection with the Florida Directed 

Payment Program and relating to measurement periods before the 

Closing Date (the “DPP Distributions”), the Parties shall prorate such 

amounts on a per diem basis with (i) Sellers receiving a portion of the 

DPP Distributions based on a fraction, the numerator of which is the

number of calendar days in the calendar year in which the Closing 

occurs that are prior to and include the Closing Date and the 

denominator of which is 365 and (ii) Buyers receiving a portion of the 

DPP Distributions based on a fraction, the numerator of which is the 

number of calendar days in the calendar year in which the Closing 

46 Id.

47 Second Suppl. Transmittal Aff. Barnaby Grzaslewicz, Esq. (“Second Suppl. Grzaslewicz Aff.”)

Ex. 13 at Tenet00004179, -4195, Dkt. No. 165; Schulman Aff. Ex. 27 at ALSTON00001352, -

1368, Dkt. No. 160.

48 Second Suppl. Grzaslewicz Aff. Ex. 13 at Tenet00004195; Schulman Aff. Ex. 27 at 

ALSTON00001368, -1438.
12

occurs that follow the Closing Date and the denominator of which is 

365.

49

On June 14, the Parties met at Sellers’ headquarters in Dallas, Texas.50 Buyers 

state that they agreed to increase the purchase price.51 Post-close DPP Distributions 

were also discussed.52 In deposition, when asked about the DPP discussions at the 

June 14 meeting, Buyers’ deal counsel stated, 

I recall, generally speaking, that we were concerned with the language 

that [Sellers’] counsel Alston & Bird sent across in the June 12 revised 

APA. I recall that we had discomfort about the fact that it had words 

relating to a measurement period, and I was being concerned that that 

was very vague and swishy language. I also remember us being 

concerned that there was no discussion of we, [Buyers], were entitled 

to post-closing period amounts. I recall those two things being raised 

in the June 14 meeting. I don’t recall the specifics of the conversation.53

An internal Sellers email sent on the day of the meeting stated that “[Buyers 

have] now agreed to pay us $1.10 billion at closing, and we will also receive 

49 The drafting history documents here follow the convention that deleted language (from the prior 

draft) is struck through and added language is underlined. 

50 Wales Dep. 165:11–16; Maloney Dep. 47:15–22. 

51 Pls.’ Suppl. Br. 13.

52 Buyers contend that “because they had already agreed to the additional $100 million, Buyers 

did not agree to guarantee Sellers a pro rata share of the Year 1 DPP distributions, as Sellers had 

demanded.” Pls.’ Suppl. Br. 13. The evidence cited includes testimony by Buyers’ chief 

negotiator, de la Torre, and its deal counsel. In deposition, de la Torre stated “we didn’t agree to 

[pro rate DPP distributions.]” de la Torre Dep. 61:4–10. Deal counsel, when asked about the June 

14 meeting, stated that he was concerned with the “measurement period” language and the lack of 

discussion that “Steward, w[as] entitled to post-closing period amounts.” Wales Dep. 176:14–

177:7.

53 Wales Dep. 176:19–177:7.
13

our pro-rata share of this year’s supplemental revenue program, estimated to 

be $25-30 million.”

54

That evening, Buyers’ counsel sent the following markup to Sellers:

8.22 DPP Distributions. With respect to any reimbursement or 

distribution with respect to the Healthcare Business arising out of, 

attributable to or received in connection with the Florida Directed 

Payment Program and relating to measurement periods beforethe 

program hear (i.e., October 1 through September 30) in which the 

Closing Dateoccurs (the “DPP Distributions”), the Parties shall prorate 

such amounts on a per diem basis with (i) Seller receiving a portion of

the DPP Distributions based on a fraction, the numerator of which is 

the number of calendar days in the calendarsuch program year in which 

the Closing occurs that are prior to and include the Closing Date and 

the denominator is 365 and (ii) Buyers receiving a portion of the DPP

Distributions based on a fraction, the numerator of which is the number 

of calendar days in the Calendar such program year in which the 

Closing occurs that follow the Closing Date and the denominator of 

which is 365. Buyers shall be entitled to 100% of any reimbursement 

or distribution with respect to the Healthcare Business arising out of 

attributable to or received in connection with the Florida Directed 

Payment Program and relating to any program year after the year in 

which the Closing occurs.

Buyers eliminated “measurement periods,” replaced them with cleanly denominated 

“program years,” and clarified that they were “entitled to 100% of any 

reimbursement or distribution . . . relating to any program year after the year in which 

the Closing occurs.”55

54 Second Suppl. Grzaslewicz Aff. Ex. 2, Dkt. No. 165.

55 Schulman Aff. Ex. 28 at ALSTON00002211, Dkt. No. 160.
14

Sellers revised the draft and sent it back to the Buyers on June 15, 2021.56 In 

the revised draft, Sellers had accepted Buyers’ changes relating to DPP 

Distributions.

57

 Sellers also laid the groundwork for the division of DPP 

Distributions into three periods by adding language guaranteeing Sellers 100% of 

any DPP Distributions made in a “program year prior to the program year in which

the Closing occurs” and adding the defined terms “DPP Straddle Distributions,” 

“Post-Closing DPP Distributions,” and “Pre-Closing DPP Distributions.”58 

On June 15, 2021, the Parties’ counsel spoke by phone “to walk through some 

of [Buyers’] changes . . . in an effort to finalize this agreement.”

59

 The proposed 

changes included: (i) clarifying the meaning of “program year,” and (ii) making clear 

that if there were any DPP Straddle Distributions, Buyers would receive back any 

assessments they paid into the DPP before any DPP Straddle Distributions were 

divided pro rata.

60

 The next day, by email, Buyers’ counsel followed up to ask if 

Sellers’ counsel had run the changes by their client.61 Sellers’ counsel replied in the 

negative but stated that the concept made sense on its face, and noted that Sellers’ 

counsel would need to see the language before advising Sellers.

62

56 Schulman Aff. Ex. 29 at ALSTON00001713, -1804-1805, Dkt. No. 160.

57 See Schulman Aff. Ex. 29. 

58 Id. at ALSTON00001804-1805.

59 See Schulman Aff. Ex. 30 at 82:20–84:3, Dkt. No. 161; Schulman Aff. Ex. 31 at 

STE_DE_00031427, Dkt. No. 161.

60 See Schulman Aff. Ex. 35 at ALSTON00002987, Dkt. No. 161.

61 Schulman Aff. Ex. 36 at ALSTON00018419, Dkt. No. 161.

62 Id.
15

Buyers followed up with proposed changes.63

8.22 DPP Distributions. With respect to any reimbursement or 

distribution with respect to the Healthcare Business arising out of, 

attributable to or received in connection with the Florida Directed 

Payment Program and relating to the program year (i.e., October 

through September 30)Program Year in which the Closing occurs (the 

“DPP Straddle Distributions”), Buyers shall first receive from the DPP 

Straddle Distributions an amount equal to the total assessments paid by 

Buyers or their Affiliates with respect to the Healthcare Business in 

connection with the Florida Directed Payment Program, and, to the 

extent there is any remaining portion of the DPP Straddle Distributions 

after such payment to Buyers, then the Parties shall prorate such 

amountsremaining Amount of the DPP Straddle Distribution on a per 

diem basis with (i) Sellers receiving a portion of thesuch remaining

DPP Straddle Distributions based on a fraction, the numerator of which 

is the number of calendar days in such program yearProgram Year that 

are prior to and include the Closing Date and the denominator of which 

is 365 and (ii) Buyers receiving a portion of thesuch remaining DPP 

Straddle Distributions based on a fraction, the numerator of which is 

the number of calendar days in such program yearProgram Year that 

follow the Closing Date and the denominator of which is 365. Buyers 

shall be entitled to 100% of any reimbursement or distribution with 

respect to the Healthcare Business arising out of, attributable to or 

received in connection with the Florida Directed Payment Program and 

relating to any program yearProgram Year prior to the program 

yearProgram Year in which the Closing occurs (the “Post-Closing DPP 

Distributions”), and Sellers shall be entitled to 100% of any 

reimbursement or distribution with respect to the Healthcare Business 

arising out of, attributable to or received in connection with the Florida 

Directed Payment Program and relating to any program yearProgram 

Year prior to the program yearProgram Year in which the Closing 

occurs (the “Pre-Closing DPP Distributions” and collectively with the 

DPP Straddle Distributions and the Post-Closing DPP Distributions, the 

“DPP Distributions”). For purposes of this Section 8.22, “Program 

Year” means the program year (i.e., October 1 through September 30) 

in which assessments are collected and payments are made with respect 

63 Schulman Aff. Ex. 35 at ALSTON00002987.
16

to the Healthcare Business in connection with the Florida Directed 

Payment Program.

The changes included creating and defining the term “Program Year” as well 

as ensuring Buyers were remunerated for the total assessments they paid prior to pro 

rata distribution of the remainder of DPP Distributions.64 Sellers discussed this 

penultimate draft among themselves65 and later sent a revised draft that was 

substantively the same regarding the DPP to Buyers. 

On June 16, 2021, the Parties executed the APA.

66 The transaction closed on 

August 1, 2021.67

B. Procedural History

This matter and the related matter concerning arbitration of APA Section 2.568

have been hard-fought. Buyers filed the initial complaint (the “Complaint”) in this 

action as well as a motion to expedite on March 25, 2022.

69

 The Complaint brought 

four causes of action, seeking a declaratory judgment affirming Buyers’ 

interpretation of the APA and Sellers’ alleged breaches of these agreements, specific 

performance of the APA and a Transition Services Agreement (the “TSA”), a 

64 Id.

65 Schulman Aff. Ex. 37 at Tenet00007617–7619, Dkt. No. 161.

66 See APA. 

67 Defs.’ Answer and Countercls. ¶ 60; Pls.’ Answer ¶ 134.

68 See Tenet Healthcare Corp. v. Steward Health Care Sys. LLC, 2023 WL 2778295, at *1 (Del. 

Ch. Apr. 4, 2023).

69 See Verified Compl., Dkt. No. 1 (“Compl.”). 
17

permanent injunction directing Sellers to comply with the agreements and enjoining 

termination of the TSA, and attorneys’ fees pursuant to the prevailing party 

provision of the APA.70 The Parties jointly requested expedition on April 6, 2022,

which I granted on April 7, 2022.71 Sellers filed their answer and counterclaims on 

April 22, 2022.72 Sellers’ countercomplaint brought eight causes of action, seeking 

a declaration affirming Sellers’ conception of contractual offset rights, damages for 

breaching the APA by not remitting DPP Distributions, damages for breaching the 

TSA, a declaration that Sellers were entitled to terminate the TSA, damages for 

breach of the implied covenant of good faith and fair dealing, quantum meruit

damages, the right to collect any damages from Buyers’ parent organization, and 

attorneys’ fees.73 

On May 3, 2022, Buyers moved for summary judgment on all claims and 

counterclaims.74 Buyers’ answer to the counterclaims followed shortly.75 Sellers 

cross-moved for summary judgment on May 24, 2022.76 In the course of briefing 

the cross-motions for summary judgment, Buyers filed a motion for preliminary 

70 Id. ¶¶ 123–155.

71 Stipulation and [Proposed] Order Governing Expedited Trial Schedule, Dkt. No. 18; Judicial 

Action Form, Dkt. No. 19.

72 Defs.’ Answer and Countercls.

73 Id. ¶¶ 120–220.

74 Pls.’ Mot. Summ. J., Dkt. No. 31. 

75 Pls.’ Answer. 

76 Defs.' Cross-Mot. Summ. J., Dkt. No. 42. 
18

injunction on June 11, 2022.77 By letter, I informed the Parties that the motion for a 

preliminary injunction would be heard on July 12, 2022, alongside the motions for 

summary judgment.78 Briefing on the cross-motions for summary judgment and the 

motion for a preliminary injunction concluded on July 6, 2022.79 

I held oral argument on July 12, 2022, and issued a Memorandum Opinion on 

August 1, 2022.

80

 In that Memorandum Opinion, I granted the Buyers’ motion for 

a preliminary injunction but reserved decision on the cross-motions for summary 

judgment to allow the Parties to determine if expedition was still required.

81

 The 

Parties agreed that expedition was no longer necessary but disagreed as to whether 

a decision should be rendered on the record as it stood.82 Buyers requested that I 

permit additional discovery and briefing regarding the Parties’ intent.

83

 Sellers 

disagreed.84 I instructed the Parties to perform discovery and supplement their 

motions for summary judgment.85

77 Pls.' Mot. Prelim. Inj., Dkt. No. 51.

78 Letter to Counsel, Dkt. No. 54. 

79 Pls.’ Reply Br. Supp. Their Mot. Prelim. Inj., Dkt. No. 62. 

80 Judicial Action Form, Dkt. No. 75. 

81 Steward I at *11.

82 Letter to The Honorable Sam Glasscock III from Michael A. Barlow, Dkt. No. 92 (“Pls.’ Aug. 

26, 2022 Letter”); Letter to The Honorable Sam Glasscock III from Lewis H. Lazarus, Dkt. No. 

93 (“Defs.’ Aug. 26, 2022 Letter”).

83 Pls.’ Aug. 26, 2022 Letter at 2.

84See Defs.’ Aug. 26, 2022 Letter.

85 Tr. 11.29.22 Telephonic Status Conference, Dkt. No. 134; see also Tr. 10.25.2022 Telephonic 

Status Conference, Dkt. No. 123. 
19

Supplemental briefing of the summary judgment motions began March 17, 

2023,

86 and concluded March 31, 2023.87

 I held oral argument on the supplemented

motions for summary judgment on May 9, 2023, and I consider the motions fully 

submitted as of that date.

88

II. ANALYSIS

“Under Court of Chancery Rule 56, summary judgment may be granted if 

‘there is no genuine issue as to any material fact and . . . the moving party is entitled 

to judgment as a matter of law.’”89 

“When interpreting a contract, this Court ‘will give priority to the parties’

intentions as reflected in the four corners of the agreement,’ construing the 

agreement as a whole and giving effect to all its provisions.”

90

 As such, to divine 

the intent of the parties’ to a contract, the Court always starts with the text.91 “When 

the contract is clear and unambiguous, [the Court] will give effect to the plainmeaning of the contract’s terms and provisions.”

92

 To do so, the Court will “read a 

86 See Pls.’ Suppl. Br.

87 See Pls.’ Reply Br. Supp. Their Mot. Summ. J. and Opp’n Defs.’ Cross-Mot. Summ. J., Dkt. 

No. 170. 

88 Judicial Action Form, Dkt. No. 176. 

89 Roma Landmark Theaters, LLC v. Cohen Exhibition Co., 2021 WL 2182828, at *6 (Del. Ch. 

May 28, 2021) (quoting Ct. Ch. R. 56(c)).

90 Salamone v. Gorman, 106 A.3d 354, 368 (Del. 2014) (quoting GMG Cap. Invs., LLC v. Athenian 

Venture P’rs I, L.P., 36 A.3d 776, 779 (Del. 2012)).

91 Sunline Com. Carriers, Inc. v. CITGO Petroleum Corp., 206 A.3d 836, 846 (Del. 2019).

92 Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159–60 (Del. 2010).
20

contract as a whole and . . . give each provision and term effect, so as not to render 

any part of the contract mere surplusage.”

93

“[A] contract is ambiguous only when the provisions in controversy are 

reasonably or fairly susceptible of different interpretations or may have two or more 

different meanings.”94 Conversely, where there is only one reasonable interpretation 

of the contractual language, the contract is unambiguous.95 

“[E]xtrinsic evidence may not be used to interpret the intent of the parties, to 

vary the terms of the contract or to create an ambiguity” in an otherwise 

unambiguous contract.96 However, if ambiguity is present, extrinsic evidence may 

be used to “arrive at a proper interpretation of contractual terms.”

97

Put simply, the contract in question anticipates the DPP to operate in discrete 

“Program Years.” The Sellers interpret the APA to require proration of any DPP 

Distributions relating to the Program Year in which the Closing occurred, October 

1, 2020 through September 30, 2021 (the “CPY”), on the basis of the fraction of that 

year each of the Parties owned the hospitals for whose services reimbursements were 

made. Per Sellers, this results in about 80% of payments relating to the CPY 

belonging to Sellers. The Buyers, for their part, note that the DPP Distributions

93 Kuhn Const., Inc. v. Diamond State Port Corp., 990 A.2d 393, 396–97 (Del. 2010).

94 Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. 1992).

95 Sassano v. CIBC World Markets Corp., 948 A.2d 453, 462 (Del. Ch. 2008).

96 Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228, 1232 (Del. 1997).

97 Id.
21

relating to the period set out above were not made until early 2022, and thus occurred 

in the Program Year after Closing occurred; and, per their reading of the APA, all 

the reimbursements belong to Buyers. In my assessment of the motion for a 

preliminary injunction in Steward I, I considered Sellers’ chances of prevailing on 

the merits of the DPP issue and concluded that success was “substantially 

conceivable.”98 I specifically adopt, without repeating in full, the analysis of this 

issue in Steward I. The additional evidence produced since that time has not changed 

my thinking on the matter and served only to solidify it. Simply put, the Sellers’ 

interpretation of the DPP Provision is correct; this is clear when the agreement is 

examined as a whole, even in light of the Buyers’ extrinsic evidence interpreted in 

their favor. The Parties created a scheme for prorating payments relating to the CPY, 

which operates under the Sellers’ construction of the contract but is largely 

impracticable under that of the Buyers.

As stated, the allocation of DPP Distributions depends on the interaction of 

the “Closing” and “Program Year.”99 Of those, only “Program Year” is in 

question.

100

 The APA provides that “[f]or purposes of this Section 8.22, ‘Program 

Year’ means the program year (i.e., October 1 through September 30) in which 

98 Steward I at *7.

99 Id. at *8.

100 Compl. ¶ 60; Defs.’ Answer and Countercls. ¶ 135.
22

assessments are collected and payments are made with respect to the Healthcare 

Business in connection with the Florida Directed Payment Program.”

101

The Parties here agree that this provision is unambiguous but disagree on its 

meaning. Buyers’ interpretation hews closely to the plain text of the “Program 

Year” clause in isolation but is problematic viewed in light of the DPP Provision 

and APA as a whole. In context, I find the Sellers’ interpretation is the logical 

reading of the DPP Provision. 

Buyers contend that based upon the plain language of the “Program Year” 

definition they are entitled to the entirety of the DPP Distributions. Specifically, 

“Closing” occurred on August 1, 2021, and thus the Program Year in which the 

Closing occurred—the CPY—was October 1, 2020 to September 30, 2021. 

However, the first round of “assessments and distributions” began in October

2021, reimbursing hospitals for procedures undertaken during the prior CPY.

102

 

Noting that “Program Year” is defined by when “assessments are collected and 

payments are made,” the Buyers contend that the “DPP Payments” all relate to the 

“Program Year after the Program Year in which the Closing occurs”—October 1, 

2021 to September 30, 2022—which, under the APA, belong to Buyers. 

101 APA § 8.22.

102 Pls.’ Br. Further Supp. Their Mot. Summ. J. 20; Defs.’ Answering Br. 44, Dkt. No. 43.
23

This reading, focusing myopically on the definition of Program Year, leads 

to incongruities. Notably, given that there were no assessments or distributions in 

the period between October 1, 2020 and September 30, 2021, under the Buyers’ 

reading that period was not a Program Year. But Closing undoubtedly occurred 

during that non-Program Year period. In that case, there was no “Program Year in 

which the Closing occurs.” Absent a “Program Year in which the Closing occurs,” 

the DPP Provision is nugatory, as the three periods of distribution—Pre-Closing, 

Straddle, and Post-Closing—are defined in relation to the “Program Year in which 

the Closing occurs.”103

Further, though this is not the case here, the DPP Provision leaves open the 

possibility that “assessments are collected” and “payments are made” in different 

October 1 through September 30 periods. In such an instance, there would be no 

contractual “Program Year” relating to those payments. Thus, Buyers’

construction is unworkable under the proration scheme read as a whole.

The Sellers argue that the prepositional phrase “in which” in the Program 

Year definition should more properly be read as “for which.”

104

 Akin to taxes or 

an end of year bonus, where “in” is used to refer to the year accrued rather the year 

103See APA § 8.22 “Program Year in which the Closing occurs (the ‘DPP Straddle Distributions’),” 

“Program Year after the Program Year in which the Closing occurs (the ‘Post-Closing DPP 

Distributions’),” “Program Year prior to the Program Year in which the Closing occurs (the ‘PreClosing DPP Distributions’ . . . ).”.

104 Defs.’ Answering Br. 35–36.
24

paid, “in” here, in Sellers’ view, arises out of or relates to a previously completed

time period.105 Thus, in their interpretation, “‘Program Year’ means the program 

year (i.e., October 1 through September 30) [for] which assessments are collected 

and payments are made with respect to the Healthcare Business in connection with 

the Florida Directed Payment Program.” 

As explained above, this reading harmonizes the contract as a whole. APA 

Section 8.22 memorializes the Parties’ intent that reimbursements or distributions 

“with respect to the Healthcare Business arising out of, attributable to or received 

in connection with the [DPP] and relating to the Program Year in which the 

Closing occurs” are DPP Straddle Distributions,

106 for which the Parties provided a 

proration formula based upon the fraction of the Program Year for which each 

party owned the facilities to which the DPP Distributions “relate.” “Relating to” 

suggests that the DPP Distributions could take place at any time, the operative fact 

being the Program Year in which incurred. The Buyers’ construction of the 

Program Year definition would frustrate this expressed intent.

Under Sellers’ definition, October 1, 2020 through September 30, 2021,

comprises the Program Year in which Closing occurred, and relating to which

“assessments are collected and payments are made.” This reading gives meaning 

105 Id. at 3–4, 36.

106 APA § 8.22 (emphasis added).
25

to all the language and avoids the absurd results that Buyers’ construction entails.

Thus, DPP Distributions relating to the CPY of October 2020 through September 

2021 would be “Straddle Distributions” divided on a “my watch, your watch” 

basis.

Put differently and as stated in my prior Memorandum Opinion,

[T]he [Buyers]’ reading of the Program Year definition is unworkable 

in context to the rest of the APA's DPP Distribution provision. No 

assessments were collected and no payments were made during the 

October 1, 2020 through September 30, 2021 time period. Therefore, 

if the [Buyers] are correct that Program Years are defined by when 

“assessments are collected and payments are made,” that would mean 

that there was no “Program Year in which Closing occurs.” And if 

there is no “Program Year in which Closing occurs” (i.e. DPP 

Straddle Distributions), then there can be no “Program Year after the 

Program Year in which Closing occurs” (i.e. Post-Closing DPP 

Distributions), and there can be no “Program Year prior to the 

Program Year in which Closing occurs” (i.e. Pre-Closing DPP 

Distributions). 

Indeed, for there to be a “Program Year in which Closing occurs” 

under [Buyers’] reading, Closing would have had to be October 1, 

2021 or later. And for there to be a “Program Year prior to the 

Program Year in which Closing occurs” under [Buyers’] reading, 

Closing would have had to be October 1, 2022 or later. But the 

parties negotiated a Termination Date of October 1, 2021, after which 

either party could terminate the APA if Closing had not yet occurred.

The APA allows for an extension of the Termination Date only until 

December 1, 2021. Thus, under the [Buyers’] reading, the “DPP 

Straddle Distributions” could only exist if the parties closed the APA 

on the Termination Date or exercised an extension. And “Pre-Closing 

DPP Distributions” could only exist if the parties blew the Outside 

Date by a full year. The existence of a Termination Date suggests that 

the parties intended to close the Sale by that date. It is unlikely that 
26

the parties negotiated a bespoke allocation of DPP Distributions that 

would only be relevant if they failed to do so by a full year.107

In light of this understanding, Sellers’ reading, in the context of the APA, is 

the reasonable interpretation, based on the four corners reading of the contract 

itself.

I do not find the language ambiguous, reading the contract as a whole. The 

Parties have provided extrinsic evidence, which to my mind only reinforces my 

understanding of the meaning of the APA. To the extent I considered extrinsic 

evidence, my decision would be the same. 

Here, the crucial commercial context is the structuring of the DPP itself as it 

relates to the timing of assessments and distributions. Buyers suggest that during 

negotiations, the timing and structure of DPP Distributions was unsettled. In a 

Miami Market Proforma EBITDA Analysis that Sellers sent to Buyers in January 

2021, Sellers sent an overview to the DPP. 

This DPP requires each participant hospital to pay an assessment (the 

non-federal share) into a local provider participation fund (“LPPF”).

Each LPPF’s membership is comprised of the hospitals in the 

respective counties mentioned above. After collecting provider fees 

from its member hospitals, the LPPF (via an intergovernmental 

transfer) sends the total collected provider fees to the state of Florida. 

The state draws down federal matching funds (the Federal Share) 

based on the applicable Federal Medical Assistance Percentage. The 

total non-Federal and Federal share is then distributed to Managed 

Medicaid payers, who then distribute these fees to the LPPF members. 

107 Steward I at *10.
27

The distribution of the pool of funds is based on Medicaid Managed 

Care paid in-network inpatient admission and outpatient visits.

Although authorization for the state Medicaid agency was granted as a 

result of emergency powers utilized by the Governor, the Florida 

legislature will ultimately need to formally authorize implementation 

of the DPP through a budget proviso during the 2021 legislative 

session in March — May of 2021. Furthermore, the bill has received 

bipartisan support as a beneficial program. The Centers for Medicare 

and Medicaid Services must approve the DPP; assuming CMS 

approves the DPP, it is expected that eligible hospitals will receive 

their first quarterly DPP payment beginning May 2021. Hospitals 

would receive quarterly DPP payments, based on each hospital's 

inpatient and outpatient utilization in the prior quarter.108

Buyers argue that this shows that payments were expected to be made before the 

closure of the relevant measurement period.109 However, even in the light most 

favorable to the Buyers, it is clear that payments relate to past services. 

Irrespective of when paid, DPP payments are tied to—"arise out of” in the 

language of the contract—the past provision of services, and reimbursements relate

to those services previously performed.

In deposition, Buyers’ deal counsel testified that he spoke with a lobbyist 

who gave him a “general overview of how the DPP program works.” He was told 

that 

because CHS had approved this within the year started October 1, 

2020, through September of 2021, it was possible that assessments 

could be made collected [sic] from the hospitals during that time 

period. So just to repeat that, that it was possible that assessments and 

108 Schulman Aff. Ex. 5 at STE_DE_0002872

109 Pls.’ Suppl. Br. 30.
28

distributions could be paid, certain assessments could be paid into the 

program during the time period of October 1, 2020, through 

September 30, 2021, and distributions paid out during that same time 

period and that it could also be the year following. This is the most 

likely outcome in this lobbyist’s mind was that it might be that second 

time period.110

This conversation, in the light most favorable to the Buyers, suggests that 

there was uncertainty of when assessments and distributions would be paid, 

but it does not speak to the purpose of those payments or their retroactive 

nature. 

Notably, the Parties negotiated knowing the retroactive nature of prospective

DPP Distributions.111 Thus, the Parties expected that distributions for periods 

between October 1 and September 30 would arrive after each period. This 

corroborates Sellers’ reading of the DPP Provision as the logical reading of the 

APA. 

Moreover, the Parties’ negotiations, set out in Section I.A.3., are supportive 

of the Sellers’ interpretation of the contract. Buyers’ reading of the contract

represents the state of play in the negotiations before the DPP became, practically 

speaking, a fait accompli, which made the hospitals more valuable. At that point, 

Sellers walked away from the contemplated deal, and used their improved leverage 

110 Wales Dep. 140:4–141:5.

111 CMS Approval Letter at 5.
29

to renegotiate. One aspect of that renegotiation was Sellers’ proposal that the Parties 

divide DPP reimbursements based on the date of sale. Specifically, Buyers’ draft of 

June 14 responsive to this proposal demonstrates that they intended to pro rate DPP 

Distributions “relating to the program year (i.e., October 1 through September 30) 

in which the Closing occurs.”112 “Relating to” shows that, irrespective of when 

payments were made, DPP Distributions were tied to the underlying services they 

reimbursed for. Buyers’ reading of the language at issue would make the proration 

provision illusory. If I were to consider this drafting history, it would only reinforce 

my view that the Parties agreed to proration for distributions relating to the Straddle 

Year, and not prorations of reimbursements highly unlikely to occur.

The Parties also provided extrinsic evidence of Buyers’ post-Closing 

conduct.113 Even if I were to consider this evidence, it further supports that Sellers’ 

reading of the DPP Provision accurately represents the Parties’ intentions as the 

evidence clearly demonstrates that, immediately following the Closing, Buyers 

adopted and acted in accordance with Sellers’ interpretation.114

112 Schulman Aff. Ex. 28 at ALSTON00002211 (emphasis added).

113 Defs.’ Suppl. Br. Supp. of Defs.’ Cross-Mot. Summ. J. and Opp’n Pls.’ Mot. Summ. J. 18–25, 

Dkt. No. 165 (“Defs.’ Suppl. Br.”); Pls.’ Suppl. Br. 20–21.

114 See, e.g., de la Torre Dep. 29:1–32:12, 119:4–19; Second Suppl. Grzaslewicz Aff. Ex. 42 at 

165:24–166:5, Dkt. No. 156.
30

III. THE AAPP ISSUE

The Parties also submitted their dispute over reimbursements associated with 

CMS’s Accelerated and Advanced Payment Program (“AAPP Program”) for 

summary judgment. The AAPP Program was a program in which CMS advanced 

Medicare funds that would, at least in part, be recouped from recipients at a later 

date.115 Prior to Closing, Sellers received these advancements.116 After Closing, the 

Buyers allegedly reimbursed or were on the brink of reimbursing CMS for amounts 

that the CMS had advanced to the Sellers before Closing.117 The Buyers are entitled 

under APA Section 8.16 to recover from the Sellers the funds that were advanced to 

Sellers but recouped from Buyers.

118

 Section 8.16 provides the process for Buyers’ 

recoupment from Sellers:

At the beginning of each calendar month following the Closing Date, 

or at some other mutually agreeable time, and until the later of 

September 30, 2022 or the latest date on which any AAPP 

Reimbursement Amounts would be due to CMS in accordance with 

CMS’ publicly announced AAPP repayment terms and conditions (the 

“AAPP Extension Date”), Buyers shall provide Sellers with a written 

statement setting forth the actual or anticipated AAPP Reimbursement 

Amounts to be paid by Buyers or recouped by CMS from any Buyer 

(or its Affiliates) in that month, in the immediately following month, 

and/or as a result of identified corrections regarding past months (each 

a “Monthly AAPP Statement”), together with reasonable supporting 

documentation (e.g., remittance advices reflecting the AAPP Program 

recoupment from the applicable month(s)).

115 Defs.’ Answering Br. 11.

116Defs.’ Answer and Countercls. ¶ 50.

117 Compl. ¶ 4.

118 APA § 8.16.
31

The Buyers contend that the Sellers did not reimburse them for the requisite 

payments and that Sellers must therefore pay them.

119

 Sellers contend that Buyers 

did not pay CMS and that the amounts owed to CMS are not “anticipated” within 

the meaning of Section 8.16.120 Accordingly, Sellers argue that they need not make 

payments to Buyers. 

Thus, the contention here is not whether paid amounts must be reimbursed, 

but rather, what amounts were actually paid or anticipated, and the proof required to 

evidence such payments.121 As such, and given the state of the record, this is a highly 

fact intensive dispute better suited for trial than summary judgment. Accordingly, I 

deny the cross-motions for summary judgment on the AAPP issue.122

IV. CONCLUSION

With respect to the allocation of DPP Distributions relating to the year ending 

September 30, 2021, the Sellers’ motion for summary judgment is granted and the 

Buyers’ denied. With respect to the AAPP Program issues, the cross-motions are 

denied. The Parties should provide an appropriate form of order.

119 Pls.’ Suppl. Br. 31.

120 Defs.’ Suppl. Br. 38–42.

121 Id.

122 Cross v. Hair, 258 A.2d 277, 278 (Del. 1969).