Century To Accept $282,000 Offer From Dept. Of Corrections & Not Sue

June 19, 2008

Rather than going to court, Century will settle a billing dispute with the Florida Department of Corrections for about $282,000, far less than the $569,000 they had originally hoped to receive.

“The dispute had one feel in the beginning, but now it has a different appearance,” Matt Dannheisser, the town’s attorney, told the council at a special meeting Wednesday.

Town Accountant Robert Hudson had reported to the council that the DOC owed about $569,000 in back payments. But that amount included $127,000 in interest that Dannheisser said the DOC was not willing to pay.

The dispute stemmed from billing practices that dated back to 2000. Under the town’s agreement with the DOC and Century Correctional Institute, the prison was to pay for natural gas at the rate of 120 percent of the town’s actual cost. The town’s billing system would generate a bill at the normal rate, then town employees would re-rate the bill and send a new bill about 10 days later at the 120 percent rate. That adjustment was originally done twice a year based upon the rate from nine months earlier.

But in 2000, there was spike in natural gas prices, Dannheisser said, and the town went back to the DOC that agreed to pay 100 percent of the town’s cost on a monthly basis. But they did not agree to pay the 20 percent profit margin until a new agreement was reached.

The first problem, Dannheisser said, was that there was no proof that the town ever mailed the adjusted bills to the DOC. “If we did not seek that adjustment, we’re sunk,” he said.

He said the state is allowed to pay interest on bills more than 40 days late, but only if the billing party can prove they actually sent a correct invoice.

“We have not been able to locate the corrected invoices for the Department of Corrections,” he said.

And more problems with the town’s natural gas bills for the DOC were also found.

“We discovered two anomalies going through this event,” he said. One was an over-billing of $105,000, and the other were two missing payments.

“There are two payments we can’t find,” Dannheisser said. “The department says they paid them…we simply can’t find them.”

Those payments, once for $37,400 and one for $46,100, total $78,500.

“I’ve called for copies of the checks,” Dannheisser said. He said the DOC had located a copy of one, but he had yet to see it.

When the $78,500 in missing payments and the $105,000 in over-billings are subtracted, that left the DOC owing the town $282,087.

Dannheisser recommend that the council accept the $282,087 from the Department of Corrections rather than taking DOC to court. “I would suggest that you approved taking the settlement,” he said. “They are now paying what we billed them.”

The council voted 4-0 on Nadine McCaw’s motion to accept the $282,087, with council member Henry Hawkins not present for the meeting. The amount is contingent upon the DOC proving they made the $78,500 in payments they say they have made. If not, that amount will be added to the total settlement.

While investigating the natural gas billing issue with the Department of Corrections, Dannheisser said he discovered  that Century Correctional Institure was being billed $20,400 per month for water service under a 1996 contract.

The contract had a contingency clause to raise the rate based upon the Consumer Price Index, which has gone up 36.1 percent since 1996. Based upon Dannheisser’s findings, Century Mayor Freddie McCall recommended that the prison’s base water bill be raised by the 36.1 percent, or about $7,400 per month. A motion to that effect was approved.

There were no members of the general public at Wednesday’s meeting. It was attended by the council, the attorney, a consultant and two town employees. NorthEscambia.com was the only media at the meeting.

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Written by William Reynolds · Filed Under News