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Children's Comprehensive Services Faces New Challenge at Montana Facility.

NASHVILLE, Tenn.--(BUSINESS WIRE)--June 9, 1999--

William J Ballard, Chairman and Chief Executive Officer of Children's Comprehensive Services, Inc. ("CCS") (Nasdaq/NM: KIDS), today announced that an investigation by the Montana Department of Justice of two previously reported suicides that occurred at the Company's Montana facility during the spring of 1998 has resulted in a Complaint filed against the Company by the state of Montana. The Complaint alleges that a misdemeanor under the Montana Criminal Justice Code was committed in connection with the incidents. If successful in establishing the misdemeanor charge, the State could impose a maximum penalty of a $1,000 fine. Further, if the State is successful, CCS is subject to losing its eligibility to receive further Medicaid payments in the state of Montana.

Mr. Ballard said, "We were surprised and disappointed to learn of this development. The Company and its Montana operations have fully cooperated with, and successfully concluded, investigations by the following outside organizations: the Montana Department of Public Health and Human Services (Health Care Facility Licensure Bureau and Health Care Facility Certification Bureau); the Joint Commission on Accreditation of Health Care Organizations; the Health Care Financing Administration; OSHA; the Montana Department of Family Services; the Montana Department of Correction; the Montana Board of Nursing; Montana Community Partners; and the Montana Advocacy Program. In addition, we have completed an exhaustive internal review of our Montana operations and also engaged an independent compliance firm that also conducted an in-depth review. Excepting the current situation, the Company's prompt, open response has resulted in CCS being in good standing with all reviewing authorities and the average census of our residential treatment program at the Montana facility being higher today than at any time since we purchased the facility in June 1997.

"We do not believe the charges to be justified and intend to vigorously contest the Complaint. Should these efforts fail and Medicaid, CCS's major source of funding in Montana, no longer be available, management will consider a range of options, including providing services for at-risk and troubled youth funded by private and non-Medicaid government sources or the possible cessation of operations in the state. Should management determine to cease Montana operations, the immediate impact on operating results would be negligible in that the current fiscal year's operating results have been severely curtailed by the events noted. However, the recent performance of the Montana operations has been much improved, and the opportunity to benefit from these advancements in future years would be lost."

To take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, you are hereby cautioned that this release contains forward-looking statements that are based upon current expectations and involve a number of risks and uncertainties. Actual operations and results may differ materially from those expressed in the forward-looking statements made by the Company. Please refer to CCS's filings with the Securities and Exchange Commission for additional information. The Company disclaims any intent or obligation to update these forward-looking statements.

Children's Comprehensive Services provides education, treatment and juvenile justice services for at-risk and troubled youth either directly or through management contracts. It currently offers these services through the operation and management of nonresidential specialized education programs and day treatment programs and both open and secured residential treatment centers to approximately 4,300 youth in 14 states. More information about Children's Comprehensive Services is available on the Company's Website at
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Publication:Business Wire
Geographic Code:1U8MT
Date:Jun 9, 1999
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