Opinion ID: 2060673
Heading Depth: 1
Heading Rank: 3

Heading: The Contract, Reimbursement Rates, and Actions of the Parties

Text: In 1983, [2] pursuant to the CCPA, the DOC and the County of Morris entered into the Morris County Correctional Facility Assistance Contract (MCCFAC). That contract provided that the County would construct a forty bed addition and make renovations to its county correctional facility in exchange for $2,156,676, which the Legislature had appropriated to the DOC to assist the County in meeting the construction costs of its facility. On the completion of that facility, the County was required to make available to the DOC forty cells to house forty minimum or medium security state prisoners, with certain restrictions on the identity of such prisoners. Paragraph 11 set forth the method for computing the per diem reimbursement rates required under the CCPA as well as the forty-year term of the contract: The Department shall pay the County a per-diem rate for housing of State prisoners in the 40 cells reserved for such prisoners in the county correctional facility. The rate shall be 75% of the average of the budgeted daily costs of housing state prisoners in the State prisons at Trenton, Rahway and Leesburg during that fiscal year. The 75 per cent per-diem rate shall remain in effect until such time as the total monies retained by the Department because of the discount equals $120,680.00. Thereafter, the County shall continue to make available to the Department a total of 40 cells for use by State prisoners, but the per-diem rate shall be 100 percent of the average daily cost of housing State prisoners in the State prisons at Trenton, Rahway and Leesburg during that fiscal year. The County shall continue to make 40 cells available to the Department for use by State prisoners for the useful life of the facility, as set forth in N.J.S.A 40A:2-22 (forty years). At the end of this period, the Commissioner and the County shall reassess the need for continued use of the 40 cells by the Department, and may negotiate a continuation of this agreement upon such terms as are deemed appropriate. Paragraph 12 provided that the ordinary and reasonable costs of housing the State prisoners in the county facility, including the costs of housing, facility maintenance, security, food, routine medical and dental care, prescriptions, transportation, and salaries of County personnel used to provide those services would be encompassed in the per diem rate. Furthermore, the DOC also was required to reimburse the County for the costs of all extraordinary and necessary medical, dental, surgical, psychiatric, and hospital services. According to interrogatory answers by the Commissioner of the DOC, the County `began to house state inmates pursuant to the MCCFAC [the contract] in Fiscal Year 1986, beginning with the period October 1, 1985, through December 31, 1985.' County of Morris, supra, 296 N.J. Super. at 32, 685 A. 2d 1342 (alterations in original). At that time, `the average of the budgeted daily costs of housing state prisoners in the state prisons at Trenton [New Jersey State Prison], Rahway [East Jersey State Prison] and Leesburg [Bayside State Prison] ... was $36.51.' Ibid. (alterations in original). For various other years, according to the Appellate Division, the average per capita costs for state prisoners, which were supposed to be the measure of payment under the contract, were the following: 1985  $36.87; 1986  $36.51; 1987  $42.74; 1988  $45.43; 1989  $48.26; 1990  $49.79; 1991  $53.13; 1992  $51.75; 1993  $56.87. Id. at 29 n. 1, 685 A. 2d 1342. Prior to the time that the DOC began to house contract prisoners in Morris County, any state prisoners housed in the County's facilities were executive order prisoners. According to statements by William Fauver, the Commissioner of the DOC, the reimbursement rates for executive order prisoners were initially determined through separate negotiations with each county. As that became too cumbersome, the DOC set a uniform rate of compensation comparable to the costs of housing prisoners in one or various state prisons. The per diem reimbursement rate for executive order prisoners was $42.95 per inmate for fiscal year 1981, $45.00 beginning in fiscal year 1985, and $58.50 as of 1994. Ibid. On September 7, 1984, before any state prisoners were housed in the County under the MCCFAC, Commissioner William Fauver wrote a letter to Captain John Delaney of the Morris County Jail stating: Please be advised that the Department of Corrections has increased the per diem rate for housing State-sentenced inmates in the county facilities to $45.00 effective July 1, 1984. This rate will be paid through Fiscal Year 1985 to all counties who are housing State-sentenced inmates beyond the fifteen-day exclusionary period. That letter made no explicit mention of the type of prisoners  executive order, contract, or both  to which it was referring. Approximately one year after that letter, state prisoners were first housed in Morris County under the MCCFAC. Based on Fauver's letter, the County submitted invoices to the DOC under the contract in the amount of $45 per prisoner per day. The State paid the DOC that amount. The $45 rate paid under the contract was, for three years (1985-1987), more than the average daily cost of housing in state prisons, the amount referred to in the contract. Thus, for those years, the State overpaid the amounts due. In the years subsequent to 1988, however, the $45 amount was lower than that required under the contractual terms. Therefore, for that period, the State underpaid the rates in the contract. In all that time, neither party inquired into nor questioned the propriety of the $45 amount. County of Morris, supra, 296 N.J. Super. at 33, 685 A. 2d 1342.