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The Beaver Countian has obtained a copy of a confidential internal memo written to the Board of Commissioners by County Solicitors concerning an ongoing dispute between Comprehensive Healthcare Management Services and the County over payments for the sale of Friendship Ridge.

The memorandum was presented to the Board of Commissioners by Chief County Solicitor Garen Fedeles and Assistant Solicitor Nathan Morgan, and has been the subject of closed-door discussions by the Board during executive sessions following public meetings.

As the public controversy involving the sale of Friendship Ridge has been ongoing for nearly two years, and as very little information has been provided to the general public about the matter outside of investigative reporting by the Beaver Countian, this publication has made a decision to release the memorandum in full.

The May 30th memo predates an investigative report published by the Beaver Countian on June 2nd, which revealed that former Chief County Solicitor Joseph Askar had been working as an attorney for Comprehensive Healthcare Management Services starting shortly after the sale of Friendship Ridge in 2014 but while still employed as an attorney for the county. Askar had attempted to collect well over $1 million in payments from Medicaid on behalf of Comprehensive Healthcare following the sale of Friendship Ridge — monies for services provided to patients while the facility was still owned by Beaver County but inexplicably never billed for at the time.

(Note: The following document was formatted by the Beaver Countian for publication.)



TO: Board of Commissioners
FROM: Law Department
DATE: May 30, 2017
RE: Propriety of Comprehensive’s $4.2 Million Demand

Following our recent meeting with Comprehensive, we have reached a point where we need to determine how to move forward. As such, the following memorandum is an analysis of the basis for, and legal validity of, Comprehensive’s assertion the County owes it $4 million.


In late 2012, the County contracted to sell Friendship Ridge to Comprehensive HealthCare Management Services (“Comprehensive”). This highly technical and multi-faceted contract was closed in March of 2014. Around August of 2015, questions began to arise as to whether Comprehensive still owed the County monies relative to the sale of Friendship Ridge. The County employed a forensic accountant to conduct an independent audit of the transaction. As you are aware, the Nottingham Group, LLC, provided the County with a copy of its audit dated September 26, 2016, which concludes Beaver County is owed the sum total of $1,275,979.26 from Comprehensive. This audit, along with supporting documentation, was provided to Comprehensive. Comprehensive’s responsive letter denied the conclusion of the audit; and further asserted that it was actually the County that owed Comprehensive over $4 million. As its responsive letter provided little detail as to how the $4 million was calculated, representatives of Comprehensive and the County met in early May 2017 to discuss the competing claims.


Comprehensive’s argument can really be broken down into two categories: (1) areas in which they disagree with some conclusions reached in the County’s forensic audit; and (2) the amount of Comprehensive’s assumption of liabilities.

A. Disagreements with the County’s Forensic Audit

1. Late Deposits – $143,000

One area in which the forensic audit determined that Comprehensive “owed” the County monies is with respect to “late deposits.” Specifically, the County’s forensic audit concludes a “substantial number of checks which had dates as early as October of 2013” had not been deposited into the relevant bank account as of the March 1, 2014 Operations Closing Date. The reason this is significant is because these monies would have been County property should they have been deposited prior to the closing; however, as they were not deposited prior to the closing they became the property of Comprehensive. In other words, Comprehensive gained $143,000 by simply not depositing checks until after the closing. The audit concludes that “since CHM co-managed the facility during this period, it should have been incumbent upon them to ensure that all funds on hand as of the Operations Closing Date were properly deposited into the Friendship Ridge Bank Account.”

The further the checks are dated from the closing date (i.e. a check dated in October compared to a check dated a day before the closing) the stronger the County’s position on this matter. Without seeing exactly when all the checks were dated, there is some uncertainty as to how a Judge would handle this issue.

2. Cost Savings Payment – $300,000

The County’s audit also states “a former employee of Beaver County directed that an even $300,000 payment be made to Comprehensive shortly after the Operations Closing.” The audit explains:

This provision for a savings incentive was apparently included in the Operations Transfer Agreement to provide a financial incentive for Comprehensive to cut costs during the period in which they co-managed Friendship Ridge, while it was still owned by Beaver County. Thus, Beaver County would realize a cost savings and Comprehensive would share in on-half the benefits of its cost saving efforts for Beaver County.

According to the County’s audit there were not savings and so Comprehensive was not owed any money relative to the “cost saving” provision. In fact, the audit states “expenses were not reduced during the Closing Period, but rather they increased.” As such, no payment was due under the Cost Savings provision, and the payment of $300,000 to Comprehensive was in error.

Here again, Comprehensive disagrees. They purport a verbal agreement was reached between them and County employee(s), whereby the County acknowledged that it owed Comprehensive $300,000 pursuant to the cost saving provision.

This office believes the County will likely prevail on this issue. A written contract can only be amended in writing. Although Comprehensive alleges an agreement was signed for this $300,000 payment, they readily admit they are unable to locate a signed copy of this agreement. As such, they are unlikely to succeed on this issue.

B. Comprehensive’s Assumed Liabilities Exceed the Liabilities Disclosed by the County prior to Closing

The overwhelming majority of Comprehensive’s entire request (in terms of dollars) is based upon one theory: the liabilities actually assumed by Comprehensive grossly exceed what was disclosed to Comprehensive prior to the closing. Comprehensive states that it has assumed liabilities in the amount of $4,939,671.35 after the transfer. However, Comprehensive argues pursuant to the balance sheet and disclosures associated therewith it was only required to assume liabilities totaling $1,583,523.36.

Comprehensive’s entire argument rests upon language in the contracts such as Section 2.4(A) of the Installment Land Contract, which states in pertinent part:

The purchase Price includes the assumption of liabilities from the operation of the nursing home as set and to the extent set forth on Seller’s Financials and disclosed to Purchaser.

Another example of this language can be found in Section 2.4(B)iii, which states in pertinent part:

On the operations closing date, Purchaser or its designee will assume the liability to pay the payables accrued in the ordinary course of business… all to the extent that the same are set forth on Seller’s Financials in the ordinary course of business and consistent with past practices and as are disclosed to Purchaser.

In short, Comprehensive’s argument is that it assumed liabilities in the amount of $4.9 million; however, only $1.5 million of these liabilities were disclosed to them in the Seller’s “Financials.”


One of the difficulties that we run into in attempting to determine the legal validity or the likelihood of success in defending Comprehensive’s claims is that the terms “Financials” and “disclosed” are not defined clearly within the contract documents. Should this matter proceed to trial, the County’s argument will be that the entirety of the $4.9 million at issue was disclosed in the Financials of the County to Comprehensive by way of Comprehensive’s co-management of the facility for nearly one-half a year. In short, Comprehensive had complete access to the financial obligations of Friendship Ridge during the 5 months it co-managed the facility. Further, Comprehensive was provided with everything they requested.

Conversely, Comprehensive’s counter-argument to this position appears to be that the “disclosure” of “Financials” was to be a formal undertaking. Beaver County (under Comprehensive’s theory) had an obligation to formally submit to Comprehensive financial statements setting forth any and all liabilities. The only item (as far as this office is aware) that was formally provided to Comprehensive was access to New World. Due to the nature of New World, all of the County’s liabilities relative to Friendship Ridge are not captured on that program; and thus, Comprehensive’s position.

Under Pennsylvania law, contract interpretation starts with the intent of the parties as their intent “is contained in the writing itself.” If a contract is ambiguous, the court may consider extrinsic evidence to determine the meaning of the contract. Bohler-Uddeholm Am.; Inc. v. Ellwood Grp., Inc,. 247 F.3d 79 (3rd Cir. 2001). This would include pre-contract negotiations and the parties’ actual performance.

In this case, a strong argument can be made the contract is ambiguous as to its use of the terms “Financials” and “Disclosure.” As such, the Court would likely consider extrinsic evidence, in the form of emails from each side during the drafting of the contract, verbal communications, drafts of the contracts, etc. in order to try and define those terms.

One other long-standing and highly relevant principal of contract interpretation is that “if a contract term is found to have more than one meaning the rule of contra proferentem generally requires the language to be construed against the drafter and in favor of the other party if the other party’s interpretation is reasonable. J.D. Eckman, Inc. v. Pa. Turnpike Comm’n, 2012 WL 8667896, at 9 (Pa. Commw. Ct. May 21, 2012). Unfortunately, the County (through its attorneys, Clark Hill), prepared the contract documents. However, it can certainly be argued that both parties drafted the contract as multiple revisions and drafts were circulated prior to the final draft.

An important point that would help the County is the fact Comprehensive actually did assume the full liabilities and continued to pay them without objection, until they were presented with our demand letter.


1. The County is in a fairly strong position on the legal arguments it has to back up the audit.

2. Comprehensive’s argument that it assumed more liabilities than were disclosed to it prior to closing is definitely not “frivolous” and it is not inconceivable a Court could ultimately agree with Comprehensive and require the County to repay $4 million to Comprehensive.

3. Our ability to successfully try this case is largely dependent upon a number of individuals that no longer work for the County and whose cooperation could be difficult to procure.

4. This will be a very costly and time consuming litigation for the County. Fees for audit reviews and expert fees are definite possibilities in this case that would run into the tens of thousands. Furthermore, the County may need to look at outside counsel to handle or assist in the case.

5. What are the County’s Options:

a. Drop it and walk away – Comprehensive seems to be ok with that
     i. Benefit – No risk (ie – no chance of being ordered to pay $4 million)
     ii. Drawback – County is out $1.2 million AND angry citizens(?)

b. Push forward toward trial
     i. Benefit – Plausibly recoup $1.2 million
     ii. Drawbacks – Costly (experts/attorneys) AND risk of losing $4 million

c. Attempt to settle for amount less than $1.2 Million
(this can take different forms, this can be as simple as negotiating or as complicated as bluffing that we are prepared to take to trial)
     i. Benefit – Less risk than trying case but less $ to be recovered
     ii. Drawback – Always a risk can’t agree on figure then back to other options (deadline to file suit is November)

John Paul
John Paul is the founder of the Beaver Countian. He reports full-time for the site, specializing in investigative journalism with an emphasis on public corruption.

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Fred Sams
Fred Sams



Please. This is just Comprehensive posturing. They don’t have a leg to stand on. Sue for what they owe, plus attorney’s fees.


Tony, Joe and Dennis.
What a mess you all made.

What did you say
What did you say

I sure agree with that Valdamire!


Is the county’s new attorney in bed with this company like the county’s old attorney was? Who can we trust?


What a mess! The attorneys who handled the closing should be responsible! Wasn’t it Clark Hill attorneys and our county attorney was Joe Askar?


When Comprehensive denied the conclusion of the audit the sale should have stopped.


The sale was already complete at the time of the forensic audit!!!

Rick Suman
Rick Suman



More amazing reporting by John Paul!
Thank you!
The Friendship Ridge sale smells like shit!

Amateur Hour
Amateur Hour

It’s Amateur Hour once again in Beaver County. We don’t need no stinking F.B.I. Detectives Staub and Gall are all over this!!!! I’m also starting to become a fan of Benyo. I’ve been negative in the past however I don’t think this would go away if he were in office.