Kathleen Papa v. DHS ( 2020 )

2020 WI 66
SUPREME COURT OF WISCONSIN
CASE NO.: 2016AP2082 & 2017AP634
COMPLETE TITLE: Kathleen Papa and Professional Homecare
Providers, Inc.,
Plaintiffs-Respondents-Petitioners,
v.
Wisconsin Department of Health Services,
Defendant-Appellant.
REVIEW OF DECISION OF THE COURT OF APPEALS
Reported at 388 Wis. 2d 474,934 N.W.2d 568
(2019 – unpublished)
OPINION FILED: July 9, 2020
SUBMITTED ON BRIEFS:
ORAL ARGUMENT: March 18, 2020
SOURCE OF APPEAL:
COURT: Circuit
COUNTY: Waukesha
JUDGE: Kathryn W. Foster
JUSTICES:
ZIEGLER, J., delivered the majority opinion of the Court, in
which ROGGENSACK, C.J., and ANN WALSH BRADLEY and DALLET, JJ.,
joined, and in which REBECCA GRASSL BRADLEY and KELLY, JJ.,
joined except for ¶¶46-48; KELLY, J., filed an opinion
concurring in part and dissenting in part, in which REBECCA
GRASSL BRADLEY, J., joined.
NOT PARTICIPATING:
HAGEDORN, J. did not participate.
ATTORNEYS:
For the plaintiffs-respondents-petitioners, there were briefs
filed by Diane M. Welsh, Aaron G. Dumas, and Pines Bach LLP,
Madison. There was an oral argument by Diane M. Welsh.
For the defendant-appellant, there was a brief filed by Steven
C. Kilpatrick, assistant attorney general; with whom on the brief
was Joshua L. Kaul, attorney general. There was an oral argument
by Steven C. Kilpatrick.
An amicus curiae brief was filed on behalf of Wisconsin
Hospital Association, Inc., Wisconsin Medical Society, Inc,
Wisconsin Dental Association, Inc, Pharmacy Society of Wisconsin,
Inc., Wisconsin Health Care Association, Inc., Wisconsin Personal
Services Association, Inc., and Leading Age Wisconsin, Inc. by
Sarah E. Coyne, Matthew Splitek, James Goldschmidt, and Quarles &
Brady LLP, Madison.
2
2020 WI 66
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
Nos. 2016AP2082 & 2017AP634
(L.C. No. 2015CV2403)
STATE OF WISCONSIN : IN SUPREME COURT
Kathleen Papa and Professional Homecare
Providers, Inc.,
Plaintiffs-Respondents-Petitioners,
FILED
v. JUL 9, 2020
Wisconsin Department of Health Services, Sheila T. Reiff
Clerk of Supreme Court
Defendant-Appellant.
ZIEGLER, J., delivered the majority opinion of the Court, in which
ROGGENSACK, C.J., and ANN WALSH BRADLEY and DALLET, JJ., joined,
and in which REBECCA GRASSL BRADLEY and KELLY, JJ., joined except
for ¶¶46-48; KELLY, J., filed an opinion concurring in part and
dissenting in part, in which REBECCA GRASSL BRADLEY, J., joined.
HAGEDORN, J., did not participate.
REVIEW of a decision of the Court of Appeals. Reversed in
part, affirmed in part, and remanded.
¶1 ANNETTE KINGSLAND ZIEGLER, J. This is a review of an
unpublished decision of the court of appeals in two consolidated
cases, Papa v. Wisconsin Department of Health Services, Nos.
2016AP2082 & 2017AP634, unpublished slip op. (July 31, 2019),
Nos. 2016AP2082 & 2017AP634
reversing the Waukesha County circuit court's1 orders granting
summary judgment, declaratory relief, and injunctive relief in
favor of plaintiffs, Kathleen Papa and Professional Homecare
Providers, Inc. (hereinafter "PHP"), and granting supplemental
relief and costs and attorney fees. The court of appeals reversed
and remanded with orders to enter judgment in favor of the
defendant, Wisconsin Department of Health Services (hereinafter
"DHS").
¶2 This case requires this court to determine the scope of
DHS's authority to recoup payments made to Medicaid service
providers. PHP challenges DHS's recoupment policy, as it has been
enforced against PHP nurses to recover payments made for services
they provided to Medicaid patients. PHP argues that, after DHS
has already paid nurses for covered and provided Medicaid services,
its practice is to then audit nurses' records and seek to recover
the payments if DHS finds any documentation shortcomings.
According to PHP, DHS does not contest whether the nurse actually
provided a Medicaid patient with the covered service for which the
nurse was paid. Nor does it claim that the payment was
inappropriate or inaccurate. Rather, it recoups payments nurses
earned and received for their work because, after the fact, it
claims the nurse's supporting records are not perfect. The issue
in this case is whether DHS has the authority to enforce this
recoupment policy. The short answer is no, it does not.
1 The Honorable Kathryn W. Foster presided.
2
Nos. 2016AP2082 & 2017AP634
¶3 We conclude that PHP's challenge to DHS's recoupment
policy is ripe for judicial determination. We conclude that, under
Wis. Stat. § 49.45(3)(f)1.-2. (2017-18),2 DHS may recoup Medicaid
payments from service providers only in cases where DHS cannot
verify one of the following: (1) the actual provision of covered
services; (2) that the reimbursement claim is appropriate for the
service provided; and (3) that the reimbursement claim is accurate
for the service provided. We further conclude that DHS's
recoupment policy exceeds its recoupment authority. Finally, we
conclude that the circuit court's order for supplemental relief
did not expand the scope of its original order, but that its order
for costs and fees was erroneous. Accordingly, we reverse in part,
affirm in part, and remand.
I. FACTUAL BACKGROUND
¶4 The Medicaid Program provides free or low-cost health
care for low-income people, families, and children, pregnant
women, the elderly, and people with disabilities. "'Medicaid is
a cooperative federal-state program through which the Federal
Government provides financial assistance to States so that they
may furnish medical care to needy individuals.'" Newcap, Inc. v.
DHS, 2018 WI App 40, ¶4, 383 Wis. 2d 515, 916 N.W.2d 173 (quoting
Wilder v. Virginia Hosp. Ass'n, 496 U.S. 498, 502 (1990)).
"[S]tates voluntarily opt into the federal scheme and thereby bind
themselves to abide by the rules and regulations imposed by the
All subsequent references to the Wisconsin Statutes are to
2
the 2017-18 version unless otherwise indicated.
3
Nos. 2016AP2082 & 2017AP634
federal government in return for federal funding." Gister v. Am.
Family Mut. Ins. Co., 2012 WI 86, ¶14, 342 Wis. 2d 496, 818
N.W.2d 880. The States administer Medicaid pursuant to federal
requirements set forth in Title XIX of the Social Security Act.
42 U.S.C. §§ 1396-1396w-5. "The State of Wisconsin has joined the
federal Medicaid system, and has consequently committed itself to
following the federal law governing that system." Gister, 342
Wis. 2d 496, ¶14. DHS administers Wisconsin's medical assistance
program. Wis. Stat. § 49.45(1).
¶5 DHS has Medicaid-related responsibilities, including
those "relating to fiscal matters, the eligibility for
benefits . . . and general supervision of the medical assistance
program." Wis. Stat. § 49.45(2)(a)1. DHS is required to
"reimburse providers for medically necessary and appropriate
health care services . . . when provided to currently eligible
medical assistance recipients." Wis. Admin. Code § DHS 107.01(1)
(May 2019).3 And, relevant to this case, federal law requires DHS
to audit participating health care providers' records to ensure
that all Medicaid payments are proper. See 42 U.S.C.
§ 1396a(a)(42)(A) ("[T]he records of any entity participating in
the plan and providing services reimbursable on a cost-related
basis will be audited as the Secretary determines to be necessary
to insure that proper payments are made under the plan[.]").
All subsequent references to Wis. Admin. Code DHS ch. 107
3
are to the May 2019 register date unless otherwise indicated.
4
Nos. 2016AP2082 & 2017AP634
¶6 Under Wisconsin law, DHS may conduct audits "to verify
the actual provision of services or items available under the
medical assistance program and the appropriateness and accuracy of
claims for reimbursement submitted by providers participating in
the program." Wis. Stat. § 49.45(3)(g)1. The Office of the
Inspector General ("OIG") conducts audits for DHS. After an audit,
DHS may recoup payments. DHS "shall" "recover money improperly or
erroneously paid or overpayments to a provider." Wis. Stat.
§ 49.45(2)(a)10.a.; Wis. Admin. Code § DHS 108.02(9)(a) (Jan.
2019)4.
¶7 PHP is a non-profit professional organization for
independent nurses. Kathleen Papa and other PHP nurses are
certified Medicaid service providers who work in independent
practice and provide in-home care. When PHP nurses provide care
for Medicaid patients, the nurses are reimbursed by Wisconsin's
medical assistance program.
¶8 On December 14, 2015, PHP filed a complaint for
declaratory and injunctive relief, challenging DHS's recoupment
policy. PHP alleged that DHS sought:
recoupment of monies paid to independent nurses for
Medicaid-covered services the nurses actually provided,
merely because post-payments audits have found that the
services or documentation fail to meet any single one of
numerous, evolving requirements set forth in federal and
state law, updates issued by DHS, the online Medicaid
Handbook, as well as other standards deemed relevant by
individual auditors in DHS's [OIG].
4 All subsequent references to Wis. Admin. Code DHS ch. 108
are to the January 2019 register date unless otherwise indicated.
5
Nos. 2016AP2082 & 2017AP634
Essentially, PHP alleged that it is DHS's practice to seek
recoupment of payments already paid to nurses for covered services
they actually provided, absent any assertion that the
reimbursement claims for those services were either inappropriate
or inaccurate, simply because a post-payment audit found that the
nurse's records were not perfect. As a shorthand, we will refer
to this alleged recoupment policy as DHS's "Perfection Policy."
¶9 PHP alleged that DHS's Perfection Policy was: (1) an
unpromulgated rule under Wis. Stat. § 227.10; (2) "inconsistent
with Chapter 49 of the Wisconsin [Statutes] and chapters DHS 107
and 108 of the Administrative Code"; and (3) an unconstitutional
taking. PHP attached to the complaint a copy of Topic #66 from
DHS's Medicaid Provider Handbook.5 Topic #66 states:
For a covered service to meet program requirements, the
service must be provided by a qualified Medicaid-
enrolled provider to an enrolled member. In addition,
the service must meet all applicable program
requirements, including, but not limited to, medical
necessity, PA (prior authorization), claims submission,
prescription, and documentation requirements.
PHP alleged that DHS's "statement of general policy" on recoupment
exceeds its statutory authority.
The "[p]rovider handbook" is "a publication developed by
5
[DHS] for the use of providers which outlines program policies and
includes instructions on claim filing and other aspects of
participation in" the medical assistance program. Wis. Admin.
Code § DHS 101.03(141) (May 2019); see also Wis. Admin Code § DHS
108.02(4) ("[DHS] shall publish provider handbooks, bulletins and
periodic updates to inform providers of changes in state or federal
law, policy, reimbursement rates and formulas, departmental
interpretation, and procedural directives such as billing and
prior authorization procedures, specific reimbursement changes and
items of general information.").
6
Nos. 2016AP2082 & 2017AP634
¶10 On March 18, 2016, PHP moved for summary judgment. In
support of its motion, PHP submitted affidavits from several nurses
describing the Perfection Policy. Kathleen Papa and Shanda M.
Hubertus, the past and current presidents of PHP, each stated:
During audits of PHP members, I have observed that OIG
has sought to recover Medicaid funds based on a finding
of alleged minor noncompliance with a Medicaid Provider
Update, a Handbook provision, an Administrative Code
provision, or other standard or policy.
Nurses H.U., M.S., J.G., and G.R. stated that they each had been
the subject of an OIG audit. OIG sought to recoup approximately
$58,000, $15,000, $48,000, and $36,000 from each of them,
respectively. The nurses alleged that the recoupments were "for
care that OIG did not dispute was provided to a Medicaid patient,
following OIG's prior authorization for the services." OIG did
not contest that the nurses actually provided authorized services
for which they were paid. Rather, OIG's recoupment efforts were
based on "noncorrelation between the medication record, the record
of treatment and the nurse's clinical notes." Nurse D.Z.-G. stated
that OIG had sought to recoup about $58,000 from her because she
"did not submit claims for reimbursement to the minor patients'
parents' employer-based health plans despite the fact that it had
previously been established that the employer-based health plans
would not cover the private duty nursing services."6
¶11 Finally, counsel for PHP submitted an affidavit. He
attached to it a DHS brief filed in another case, in which OIG
6 DHS submitted an affidavit contesting Nurse D.Z.-G.'s
allegations as "inaccurate" and "misleading."
7
Nos. 2016AP2082 & 2017AP634
sought to recoup money paid to a PHP nurse "merely because she did
not counter-sign the Prior Authorization/Care Plan Attachment."
In that case, DHS concluded its brief by asserting:
A Medicaid provider may only be reimbursed for
covered services if she meets all of the program
requirements in the law, administrative rules, and
applicable Medicaid Handbook provisions. . . . [Nurse
N.M.] failed to countersign [the patient's] Care Plan
before she provided the ordered nursing services.
The Administrative Law Judge should find that the
State of Wisconsin Department of Health Services is
authorized to recoup $7,358.51 from [Nurse N.M.] for
payment she received from the Medicaid program for non-
covered services . . . .
Counsel for PHP also attached a final decision in another case
where DHS successfully recouped $8,944.85 from Nurse S.M. for
failure to counter-sign her patients' care plans or maintain
documentation of required registered nurse supervision.
II. PROCEDURAL POSTURE
¶12 The circuit court granted PHP's motion for summary
judgment. On September 27, 2016, the circuit court determined the
case was ripe for judicial determination and granted declaratory
relief. It declared:
[DHS's] authority under Wis. Stat. §§ 49.45(3)(f) and
49.45(2)(a)10[.] to recover payments from Medicaid
providers is limited to claims for which either (1) [DHS]
is unable to verify from a provider's records that a
service was actually provided; or (2) an amount claimed
was inaccurate or inappropriate for the service that was
provided[.]
The circuit court further declared that DHS's recoupment policy
"imposes a 'Perfection Rule' which exceeds [DHS's] authority," and
8
Nos. 2016AP2082 & 2017AP634
that this policy, including Topic #66, is "a rule not properly
promulgated under Wis. Stat. § 227.10(1)."7 The circuit court also
"grant[ed] a temporary injunction enjoining [DHS] from applying or
enforcing the Perfection Rule."8
¶13 On October 20, 2016, DHS filed a notice of appeal. Then,
on January 12, 2017, PHP filed a motion for supplemental relief or
for contempt of court. PHP asserted that DHS was violating the
circuit court's declaratory judgment and injunction. The circuit
court granted PHP's motion for supplemental relief. Pursuant to
Wis. Stat. §§ 806.04(8) and 808.07(2)(a)3., the circuit court
ordered:
1. [DHS] shall not issue a notice of intent to
recover Medicaid payments to, or otherwise recoup funds
from, a Medicaid provider if the provider's records
verify that the services were provided and the provider
was paid an appropriate amount for such services,
notwithstanding that an audit identified other errors or
noncompliance with [DHS] policies or rules;
2. [DHS] shall not further any agency action,
including an administrative proceeding, currently
underway in which [DHS] seeks to recoup Medicaid
payments from a Medicaid provider, if the provider's
records verify that the services were provided and the
provider was paid an appropriate amount for such
services, notwithstanding that an audit identified other
errors or noncompliance with [DHS] policies or rules;
and
7 The circuit court referred to a "Perfection Rule." Because
we make no determination whether the DHS's recoupment practice
constitutes a rule, we refer to it as a "Perfection Policy."
8 The circuit court also concluded that there was no
unconstitutional taking. PHP did not pursue the takings claim on
appeal, so we do not review that conclusion.
9
Nos. 2016AP2082 & 2017AP634
3. [DHS] shall pay the Plaintiffs' costs and
attorneys' fees incurred for prosecuting this Motion.
In a separate order, the circuit court ordered DHS to pay PHP's
"costs and attorneys' fees in the amount of $25,284.50."
¶14 DHS filed an amended notice of appeal and a motion to
consolidate its appeals of the circuit court's original and
supplemental orders. The court of appeals granted the motion to
consolidate.9 Then, on July 31, 2019, the court of appeals reversed
the circuit court orders in a split decision. Papa, unpublished
slip op., ¶19.
¶15 The majority focused its analysis exclusively on Topic
#66. It declined to review a broader recoupment policy because it
construed PHP's complaint as alleging only that Topic #66 was an
unpromulgated rule. Id., ¶12. The majority concluded that Topic
#66 "does not have the force of law and therefore does not
constitute an administrative rule." Id., ¶17. It further stated,
"This conclusion leaves PHP without a basis for its requested
relief pursuant to Wis. Stat. § 227.40(1)." Id., ¶19. The dissent
agreed with the majority's conclusion that Topic #66 is not an
administrative rule. Id., ¶20 (Reilly, P.J., dissenting). But,
for the dissent, whether Topic #66 is a rule did not dispose of
the case. The dissent concluded, "The simple fact is that the
circuit court found that DHS was enforcing standards, thresholds,
and requirements found in Topic #66 as a mechanism to take [PHP's]
DHS also filed a motion to stay the circuit court's orders
9
pending appeal, but the circuit court denied the motion.
10
Nos. 2016AP2082 & 2017AP634
property without the legal right to do so. See Wis. Stat.
§ 227.10(2m)." Id., ¶21 (Reilly, P.J., dissenting).
¶16 We granted PHP's petition for review.
III. STANDARD OF REVIEW
¶17 We review the court of appeals' decision reversing the
circuit court's order granting PHP's motion for summary judgment.
"'We review summary judgment rulings independently, applying the
well-established standards set forth in Wis. Stat. § 802.08.'"
Benson v. City of Madison, 2017 WI 65, ¶19, 376 Wis. 2d 35, 897
N.W.2d 16 (quoting Marks v. Houston Cas. Co., 2016 WI 53, ¶35, 369
Wis. 2d 547, 881 N.W.2d 309). Summary judgment is appropriate
when there is no genuine issue of material fact and the moving
party is entitled to judgment as a matter of law. Wis. Stat.
§ 802.08(2).
¶18 DHS argues that this case is not justiciable because it
is not ripe. Ripeness is a question of law which we review de
novo. Olson v. Town of Cottage Grove, 2008 WI 51, ¶38, 309
Wis. 2d 365, 749 N.W.2d 211.
¶19 This case requires us to determine the scope of DHS's
authority to recoup payments made to Medicaid service providers.
"The question of the scope of an agency's authority requires the
interpretation of relevant statutes [and regulations], which
presents a question of law, which we review de novo." Lake Beulah
Mgmt. Dist. v. DNR, 2011 WI 54, ¶23, 335 Wis. 2d 47, 799 N.W.2d 73
(citing Anderson v. DNR, 2011 WI 19, ¶25, 332 Wis. 2d 41, 796
N.W.2d 1). We do not defer to agency interpretations. Wis. Stat.
11
Nos. 2016AP2082 & 2017AP634
§ 227.57(11) ("Upon review of an agency action or decision, the
court shall accord no deference to the agency's interpretation of
law."); see also Tetra Tech EC, Inc. v. DOR, 2018 WI 75, ¶108, 382
Wis. 2d 496, 914 N.W.2d 21. Statutory and regulatory
interpretation begin and end with the language of the relevant
statutes and regulations if their meaning is plain. State ex rel.
Kalal v. Circuit Court for Dane Cty., 2004 WI 58, ¶45, 271
Wis. 2d 633, 681 N.W.2d 110.
¶20 We also review the court of appeals' reversal of the
circuit court's supplemental order and order for costs and attorney
fees. Whether a circuit court may order a state agency to pay
costs and attorney fees is a question of law we review de novo.
DOT v. Wisconsin Personnel Comm'n, 176 Wis. 2d 731, 735, 500
N.W.2d 664 (1993).
IV. ANALYSIS
A. The Issues Presented
¶21 PHP argues that the Perfection Policy is unlawful under
Wis. Stat. § 227.40(1) for two reasons. PHP first argues that
DHS's Perfection Policy is an unpromulgated administrative rule.
Alternatively, PHP argues the Perfection Policy is an invalid
guidance document. PHP also argues that the Perfection Policy,
whether a rule, a guidance document, or neither, is unlawful
because it exceeds DHS's statutory recoupment authority under Wis.
Stat. § 49.45(3)(f). See Wis. Stat. § 227.10(2m). Finally, PHP
argues that the circuit court's supplemental order and order for
costs and attorney fees were proper.
12
Nos. 2016AP2082 & 2017AP634
¶22 DHS has several counter-arguments. It argues that this
case is a review of Topic #66 specifically, and not a broader
Perfection Policy. Regarding Topic #66, DHS argues that it is not
a rule. It also argues that, even if Topic #66 is a guidance
document, PHP's guidance document claim is not properly before
this court. Regarding the Perfection Policy, DHS denies its
existence. It also argues that PHP's claim is not ripe and that
the alleged Perfection Policy is not a rule or guidance document.
Next, DHS argues that neither Topic #66 nor the Perfection Policy
exceeds DHS's recoupment authority. Finally, DHS argues that the
circuit court's supplemental order was improper because it
expanded the scope of the original order while DHS's appeal was
pending. And it argues that sovereign immunity bars the circuit
court's order for costs and attorney fees.
¶23 Accordingly, the parties present this court with a
variety of issues. But we narrow them to three.10 To do so, we
clarify (1) the scope of the challenge (Topic #66 or the Perfection
Policy), and (2) the proper inquiry (rule, guidance document, or
excess of recoupment authority).
¶24 First, we must determine whether PHP's complaint
challenged Topic #66 only or, more broadly, the Perfection Policy.
Both the court of appeals and DHS view this case as a challenge to
10"Typically, an appellate court should decide cases on the
narrowest possible grounds. State v. Blalock, 150 Wis. 2d 688,
703, 442 N.W.2d 514 (Ct. App. 1989). Issues that are not
dispositive need not be addressed. Gross v. Hoffman, 227 Wis. 296,
300, 277 N.W. 663 (1938)." Maryland Arms Ltd. P'ship v. Connell,
2010 WI 64, ¶48, 326 Wis. 2d 300, 786 N.W.2d 15.
13
Nos. 2016AP2082 & 2017AP634
Topic #66 exclusively. Papa, unpublished slip op., ¶¶17, 19. But
the complaint and the circuit court's original order both make
clear that this case presents a review of DHS's Perfection Policy,
not just Topic #66.
¶25 PHP's complaint alleged that DHS "has a 'statement of
general policy' that [it] may recoup payment from Medicaid
providers for covered services that have been provided, and for
which Medicaid has reimbursed, if a post-payment audit finds that
the services fail to meet all applicable program requirements."
Topic #66 was attached to the complaint. But the complaint itself
consistently refers not to Topic #66, but to a "statement of
general policy." PHP's Claim Two alleges it is DHS's policy "that
any compliance imperfection causes the services to be 'non-
covered' and therefore an 'overpayment.'" PHP alleges that this
policy "has no basis in regulation or statute" and "is in excess
of DHS's authority." Accordingly, the complaint alleges that DHS's
recoupment policy requires perfection and exceeds DHS's actual
recoupment authority. The complaint is not limited to Topic #66.
¶26 Furthermore, the circuit court determined that Topic #66
is just an example of DHS's recoupment policy. It concluded that
DHS's "recoupment policy" requires perfection. And it described
the "recoupment policy" as "including the standard as set forth in
the Medicaid Provider Handbook at Topic #66." (Emphasis added.)
Thus, this case is not limited to a narrow review of Topic #66
only. This case presents a broader challenge to DHS's Perfection
Policy, of which Topic #66 is just an example.
14
Nos. 2016AP2082 & 2017AP634
¶27 Second, we clarify what the proper inquiry is——whether
the Perfection Policy is an unpromulgated rule, is a guidance
document, or exceeds DHS's recoupment authority. The proper
inquiry is whether the Perfection Policy exceeds DHS's recoupment
authority. We need not decide whether the Perfection Policy is a
rule or a guidance document.11 It makes no difference in this
case. Regardless, Claim Two of the complaint clearly alleged that
the Perfection Policy is in excess of DHS's recoupment authority.
DHS may not adopt a Perfection Policy if that policy is in excess
of its recoupment authority. See Wis. Stat. § 227.10(2m).
Accordingly, the scope of DHS's recoupment authority is the crux
of this case.
¶28 Thus narrowed, the issues we review in this case are:
whether PHP's Perfection Policy claim is ripe; whether the
Perfection Policy is in excess of DHS's recoupment authority; and
whether the supplemental order and order for costs and attorney
fees were proper.
B. Ripeness
¶29 DHS argues that PHP's challenge to the Perfection Policy
is not justiciable because it is not ripe. "A court must be
DHS disputes whether PHP's guidance document claim is
11
properly before this court because PHP's complaint did not plead
a guidance document claim. Nor could it have. The legislature
amended Wis. Stat. § 227.40(1) to permit such a claim during the
pendency of this appeal. See 2017 Wis. Act 369, § 65. PHP argues
that it pled a § 227.40(1) claim and that the amendment should
therefore apply retroactively to this case. But we need not decide
whether that amendment would apply retroactively to this case
because we need not decide whether the Perfection Policy is a
guidance document.
15
Nos. 2016AP2082 & 2017AP634
presented with a justiciable controversy before it may exercise
its jurisdiction over a claim for declaratory judgment." Olson,
309 Wis. 2d 365, ¶28. A controversy is justiciable when: (1) a
"right is asserted against [a defendant] who has an interest in
contesting it"; (2) the controversy is "between persons whose
interests are adverse"; (3) the plaintiff has a "legally
protectable interest" in the controversy; and (4) the controversy
is "ripe for judicial determination." Id., ¶29 (citing Loy v.
Bunderson, 107 Wis. 2d 400, 410, 320 N.W.2d 175 (1982)). "'If all
four factors are satisfied, the controversy is "justiciable," and
it is proper for a court to entertain an action for declaratory
judgment.'" Id. (quoting Miller Brands-Milwaukee, Inc. v. Case,
162 Wis. 2d 684, 694, 470 N.W.2d 290 (1991)).
¶30 Ripeness is the only factor at issue here. The purpose
of ripeness is "'to avoid courts entangling themselves in abstract
disagreements.'" Olson, 309 Wis. 2d 365, ¶43 (quoting Miller
Brands-Milwaukee, 162 Wis. 2d at 694). Courts resolve concrete
cases, not abstract or hypothetical cases. That being said, "the
ripeness required in declaratory judgment actions is different
from the ripeness required in other actions" because declaratory
judgments are prospective remedies. Id. A plaintiff need not
prove an injury has already occurred. Id. Rather, the facts must
be "sufficiently developed to allow a conclusive adjudication."
Id. (citing Milwaukee Dist. Council 48 v. Milwaukee Cty., 2001 WI
65, ¶41, 244 Wis. 2d 333, 627 N.W.2d 866). "The facts on which
the court is asked to make a judgment should not be contingent or
uncertain, but not all adjudicatory facts must be resolved as a
16
Nos. 2016AP2082 & 2017AP634
prerequisite to a declaratory judgment." Id. (citing Miller
Brands-Milwaukee, 162 Wis. 2d at 694-95).
¶31 We conclude that PHP's challenge to DHS's recoupment
policy is ripe for determination, and therefore justiciable. There
is nothing hypothetical, abstract, contingent, or uncertain about
the experiences of PHP's nurses described in their affidavits.
Nor is there anything hypothetical or abstract about the brief and
final decision attached to PHP's counsel's affidavit. The record
here is "sufficiently developed to allow a conclusive
adjudication." Olson, 309 Wis. 2d 365, ¶43. The record supports
a conclusion that DHS is actively enforcing a Perfection Policy
against nurses to recoup payments for services that they actually
provided to Medicaid patients. Accordingly, we proceed to the
merits.
C. Recoupment Authority
¶32 The crux of this case is the scope of DHS's recoupment
authority. "No agency may implement or enforce any standard,
requirement, or threshold, . . . unless that standard,
requirement, or threshold is explicitly required or explicitly
permitted by statute or by a [promulgated] rule . . . ." Wis.
Stat. § 227.10(2m). Thus, DHS may not implement or enforce the
Perfection Policy unless it is explicitly required or permitted to
17
Nos. 2016AP2082 & 2017AP634
do so by statute or a previously promulgated rule.12 Id. We look
to the statutes and promulgated DHS rules to determine the scope
of DHS's explicit recoupment authority. We begin with the relevant
statutes.
¶33 Wisconsin Stat. § 49.45(2) sets forth a series of DHS
obligations in its administration of the medical assistance
program. Under § 49.45(2)(a)10.a., DHS "shall,"
[a]fter reasonable notice and opportunity for hearing,
recover money improperly or erroneously paid or
overpayments to a provider by offsetting or adjusting
amounts owed the provider under the program, crediting
against a provider's future claims for reimbursement for
other services or items furnished by the provider under
the program, or requiring the provider to make direct
payment to [DHS] or its fiscal intermediary.
Accordingly, DHS has the authority, indeed the obligation, to
recoup improper or erroneous Medicaid payments and overpayments.
That grant of authority raises two questions: What makes a payment
improper, erroneous, or an overpayment?; and, how does DHS so
determine? We find the answers a little further down in the same
statute.
12While the parties dispute whether the Perfection Policy is
a rule, they agree that it was not promulgated as such.
Accordingly, the Perfection Policy cannot be and is not a source
of its own authority. See Wis. Stat. § 227.10(2m) ("No agency may
implement or enforce any standard, requirement, or threshold,
including as a term or condition of any license issued by the
agency, unless that standard, requirement, or threshold is
explicitly required or explicitly permitted by statute or by a
rule that has been promulgated in accordance with this
subchapter . . . .") (Emphasis added.)
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¶34 Under Wis. Stat. § 49.45(3)(f)1., DHS may audit
providers' records to ensure that Medicaid payments are not
improper, erroneous, or overpayments:
Providers of services under this section shall maintain
records as required by [DHS] for verification of
provider claims for reimbursement. [DHS] may audit such
records to verify actual provision of services and the
appropriateness and accuracy of claims.
§ 49.45(3)(f)1. Under the plain language of subd. 1., DHS may
require service providers to maintain records, and may audit those
records to ensure that services are actually provided and claims
for reimbursement for those services are appropriate and accurate.
¶35 Under Wis. Stat. § 49.45(3)(f)2., the result of a
subd. 1. audit determines DHS's authority to recoup payments:
[DHS] may deny any provider claim for reimbursement
which cannot be verified under subd. 1. or may recover
the value of any payment made to a provider which cannot
be so verified. The measure of recovery will be the
full value of any claim if it is determined upon audit
that actual provision of the service cannot be verified
from the provider's records or that the service provided
was not included in s. 49.46(2) or 49.471(11). In cases
of mathematical inaccuracies in computations or
statements of claims, the measure of recovery will be
limited to the amount of the error.
§ 49.45(3)(f)2.
¶36 The plain language makes clear that DHS's audit and
recoupment authority focus on the "actual provision" of covered
services, "the appropriateness" of claims, and the "accuracy of
claims." Wis. Stat. § 49.45(3)(f)1.-2. DHS may require service
providers to "maintain records." § 49.45(3)(f)1. It "may audit
such records to verify actual provision of services and the
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Nos. 2016AP2082 & 2017AP634
appropriateness and accuracy of claims." Id. And it "may recover
the value of any payment made to a provider which cannot be so
verified." § 49.45(3)(f)2. (emphasis added). The "so verified"
language, viewed in context, refers back to subd. (3)(f)1.
Accordingly, the legislature explicitly granted DHS authority to
recoup payment for Medicaid services only when an audit of a
service provider's records cannot verify the "actual provision of
services," "the appropriateness" of claims, and the "accuracy of
claims."13 § 49.45(3)(f)1.-2.; Wis. Stat. § 227.10(2m).
¶37 The plain language of Wis. Stat. § 49.45(3)(f)1.-2. does
not explicitly require or permit DHS to enforce a Perfection
Policy. We turn next to DHS promulgated rules.
¶38 DHS may "[p]romulgate rules to implement" its recoupment
authority. Wis. Stat. § 49.45(2)(a)10.c. And it has. Under Wis.
Admin. Code § DHS 106.02(9)(g) (Jan. 2014):14
[DHS] may refuse to pay claims and may recover previous
payments made on claims where the provider fails or
refuses to prepare and maintain records or permit
authorized [DHS] personnel to have access to records
required . . . .
Under this section, DHS may recoup Medicaid payments if the service
provider does not "prepare and maintain" records or refuses DHS
access to them. This provision is consistent with Wis. Stat.
§ 49.45(3)(f)2., which permits DHS to recoup payments if the actual
13DHS has other audit and recoupment authority relating to
hospitals and contractors under Wis. Stat. § 49.45(3)(f)2m. and
3., but those subdivisions are not at issue in this case.
14All subsequent references to Wis. Admin. Code DHS ch. 106
are to the January 2014 register date unless otherwise indicated.
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Nos. 2016AP2082 & 2017AP634
provision of services cannot be verified. Put simply, DHS cannot
verify the actual provision of services without a record of those
services. We note that § DHS 106.02(9)(g) does not state that
mere record imperfections of any kind may be grounds for
recoupment. Rather, it states that the complete failure or refusal
"to prepare and maintain records or permit authorized [DHS]
personnel to have access to records" at all constitutes grounds
for recoupment. § DHS 106.02(9)(g). The difference between
imperfect records and no records at all is a significant one.
Thus, § DHS 106.02(9)(g) does not explicitly require or permit DHS
to enforce its Perfection Policy either.
¶39 Moving to another promulgated rule, Wis. Admin. Code
§ DHS 108.02(9)(a) describes recoupment methods:
If [DHS] finds that a provider has received an
overpayment, including but not limited to erroneous,
excess, duplicative and improper payments regardless of
cause, under the program, [DHS] may recover the amount
of the overpayment by any of the following methods, at
its discretion[.]
The recoupment methods include: (1) offsetting or adjusting other
amounts owed the provider; (2) offsetting or crediting amounts
owed for subsequent services; or (3) requiring the provider to pay
the amount of overpayment. § DHS 108.02(9)(a)1.-3. This section
describes the methods of recoupment, but does not provide any new
information about the explicitly required or permitted grounds for
DHS recoupment.
¶40 Based on the plain language of Wis. Stat.
§ 49.45(3)(f)1.-2. and Wis. Admin. Code § DHS 106.02(9)(g), DHS
has explicit authority to recoup Medicaid payments only if DHS
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cannot verify (1) the actual provision of covered services, (2)
that the reimbursement claim is appropriate for the service
provided, and (3) that the reimbursement claim is accurate for the
service provided.
¶41 What remains is to compare this explicit grant of
recoupment authority to DHS's Perfection Policy. Nowhere does
Wis. Stat. § 49.45(3)(f)1.-2. say that the documents DHS requires
must be perfect. Nowhere does § 49.45(3)(f)1.-2. or any DHS rule
say that DHS may recoup payments from service providers based on
any particular documentation shortcomings or imperfections. No
statute or rule states that a particular documentation
imperfection renders a claim inappropriate or inaccurate under
§ 49.45(3)(f)1.-2. Nor has DHS made any effort to link the
Perfection Policy to an inability to verify that a covered service
was actually provided, that the claim for the service was
appropriate, or that the claim for the service was accurate.
Absent any explicit authority to recoup payments based on the
Perfection Policy, and absent any evidence that the Perfection
Policy is linked to verification of covered services, claim
appropriateness, or claim accuracy, we are left with a clear
conclusion. There is no legal basis for the Perfection Policy.
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¶42 We conclude that DHS's Perfection Policy has no basis
under Wis. Stat. § 49.45(3)(f)1.-2.15 No statute or promulgated
rule explicitly requires or permits recoupment based on mere
imperfection. Wis. Stat. § 227.10(2m). Rather, DHS may recoup
Medicaid payments from providers only if it cannot verify the
actual provision of covered services, the appropriateness of the
claim for the services, and the accuracy of the claim for the
services. § 49.45(3)(f)1.-2.; Wis. Admin. Code § DHS
106.02(9)(g). Thus, so long as DHS can verify that a covered
service was actually provided, the claim was appropriate, and the
claim was accurate, DHS cannot recoup payments based on a record
imperfection. A record imperfection alone is not an independent
basis for recouping payments. The Perfection Policy therefore
15DHS attempts to daisy-chain a plethora of state and federal
statutes and codes to support the requirements set forth in Topic
#66. DHS argues that Topic #66 "simply recites Medicaid law" under
these provisions. See 42 U.S.C. §§ 1396a, 1396a(a)(19), (27),
(30)(A), & (37); 42 C.F.R. §§ 430.0, 431.960(c), 440.230, 440.80,
447.45(d)(1) & (f), 455.18, 455.410, 455.412, 456.1-6; Wis. Stat.
§ 49.46(2)(b)6.g.; and Wis. Admin. Code §§ DHS 106.02(1)-(5),
106.03(2)(b), 107.02(2)(a), (e), (f) & (h), 107.03(9),
107.12(1)(c), (2)(a) & (4)(d). DHS's arguments regarding these
provisions are underdeveloped. It does not engage in detailed
statutory or regulatory interpretation. Nor does it point to a
particular provision which would justify the Perfection Policy as
a whole or the specific examples of it discussed in the affidavits
filed in this case. DHS is, of course, bound by federal and state
law. But we cannot develop DHS's arguments for it. See Clean
Wis., Inc. v. Pub. Serv. Comm'n of Wis., 2005 WI 93, ¶180 n.40,
282 Wis. 2d 250, 700 N.W.2d 768 ("We will not address undeveloped
arguments."). Rather, we note that we review the Perfection
Policy, not just Topic #66, and that DHS has not directed us to
any provision which explicitly establishes additional grounds for
recoupment beyond those set forth in Wis. Stat. § 49.45(3)(f)1.-
2.
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Nos. 2016AP2082 & 2017AP634
exceeds DHS's recoupment authority. Wis. Stat. §§ 227.10(2m),
49.45(3)(f)1.-2.; § DHS 106.02(9)(g).
¶43 We note that the court of appeals recently came to a
similar conclusion in Newcap, Inc. In that case, DHS argued that
it had authority to recoup payment for services actually provided
because Newcap "fail[ed] to retain invoices documenting its
purchase of prescription drugs that it subsequently dispensed to
Medicaid patients" and "fail[ed] to include correct National Drug
Codes (NDCs)," a unique product code, "on reimbursement claims."
Newcap, Inc., 383 Wis. 2d 515, ¶3. DHS did not link either of its
arguments to an inability to verify the actual provision of covered
services, the appropriateness of the reimbursement claim, or the
accuracy of the reimbursement claim. The court of appeals rejected
both arguments. It concluded that DHS "was not entitled to
recoupment" in that case because there was no statute or rule
explicitly stating that the failure to maintain prescription
invoices or include the correct NDC was an independent basis for
recoupment. Id., ¶45.
D. Supplemental Order And Order For Costs And Fees
¶44 When the court of appeals reversed the circuit court's
original order in this case on the merits, it also automatically
vacated the circuit court's supplemental order and order for costs
and fees. Since we reverse the court of appeals on the merits, we
must separately determine whether to reinstate the circuit court's
other orders. DHS argues that the circuit court's supplemental
order was improper because it expanded the circuit court's
injunction while this appeal was pending before the court of
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Nos. 2016AP2082 & 2017AP634
appeals. See Madison Teachers, Inc. v. Walker, 2013 WI 91, ¶¶2,
18-21, 351 Wis. 2d 237, 839 N.W.2d 388 (per curiam) (vacating a
circuit court's contempt order because the order issued while an
appeal was pending and "expanded the scope" of the circuit court's
original declaratory judgment); Wis. Stat. § 808.075(3).
¶45 But the circuit court's supplemental order did not
expand the scope of its original order. Rather, it clarified the
original order. The circuit court's original order declared the
Perfection Policy to be in excess of DHS's recoupment authority
under Wis. Stat. §§ 49.45(2)(a)10. and (3)(f), and enjoined its
enforcement. Its supplemental order specified that the injunction
prohibited DHS from "issu[ing] a notice of intent to recover
Medicaid payments," "further[ing] any agency action" or "otherwise
recoup[ing] funds," "if the provider's records verify that the
services were provided and the provider was paid an appropriate
amount for such services . . . ." These specifications did not
expand the scope of the original order. They merely clarified it.
Thus, the circuit court did not err when it issued its supplemental
order, and we reinstate it.
¶46 DHS also argues that the circuit court improperly
awarded PHP costs and attorney fees. DHS argues that the circuit
court's order for costs and attorney fees ran afoul of sovereign
immunity. See Wis. Const. art. IV, § 27 ("The legislature shall
direct by law in what manner and in what courts suits may be
brought against the state.").
¶47 Because the State has sovereign immunity, "[t]his court
has frequently held that costs may not be taxed against the state
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Nos. 2016AP2082 & 2017AP634
or an administrative agency of the state unless expressly
authorized by statute." Martineau v. State Conservation Comm'n,
54 Wis. 2d 76, 79, 194 N.W.2d 664 (1972) (collecting cases). Thus,
the circuit court could not order DHS to pay PHP's costs and
attorney fees unless "expressly authorized" by statute.
¶48 The circuit court cited two statutes as grounds for its
supplemental order and order for costs and attorney fees, Wis.
Stat. §§ 808.07(2)(a)3. and 806.04(8). Neither expressly
authorizes a court to order costs and attorney fees. The former
permits a circuit court to "[m]ake any order appropriate to
preserve the existing state of affairs or the effectiveness of the
judgment subsequently to be entered" while an appeal is pending.
§ 808.07(2)(a)3. And the latter permits a circuit court to grant
"[f]urther relief based on a declaratory judgment" "whenever
necessary or proper," but does not expressly include costs or
attorney fees. § 806.04(8). The circuit court did not cite Wis.
Stat. § 806.04(10) as authority for awarding costs and attorney
fees. Under Wis. Stat. § 806.04(10), "In any proceeding under
this section the court may make such award of costs as may seem
equitable and just." While that subsection allows an award of
costs generally, it does not expressly authorize an award of costs
or attorney fees against the State. Thus, the circuit court erred
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Nos. 2016AP2082 & 2017AP634
when it ordered DHS to pay PHP's costs and attorney fees.16 We
affirm the decision of the court of appeals on this single issue,
and the order for costs and attorney fees must be vacated.
V. CONCLUSION
¶49 We conclude that PHP's challenge to DHS's recoupment
policy is ripe for judicial determination. We conclude that, under
Wis. Stat. § 49.45(3)(f)1.-2., DHS may recoup Medicaid payments
from service providers only in cases where DHS cannot verify one
of the following: (1) the actual provision of covered services,
(2) that the reimbursement claim is appropriate for the services
provided; and (3) that the reimbursement claim is accurate for the
services provided. We further conclude that DHS's recoupment
policy exceeds its recoupment authority. Finally, we conclude
that the circuit court's order for supplemental relief did not
expand the scope of its original order, but that its order for
costs and fees was erroneous. Accordingly, we reverse in part,
affirm in part, and remand.
16PHP also argues that the circuit court properly ordered the
costs and attorney fees as a sanction. But the circuit court did
not find DHS in contempt or order costs and fees as a sanction.
Its order says nothing of the sort. Indeed, at the hearing on
this issue, the circuit court specifically declined to do so. The
circuit court stated, "I will not enter a finding of contempt today
against [DHS] . . . ." Absent a finding of contempt in the record,
we will not review this argument.
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Nos. 2016AP2082 & 2017AP634
By the Court.—The decision of the court of appeals is reversed
in part, affirmed in part, and the cause is remanded to the circuit
court for further proceedings consistent with this opinion.
¶50 BRIAN HAGEDORN, J., did not participate.
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¶51 DANIEL KELLY, J. (concurring in part, dissenting in
part). I join the majority except with respect to its denial of
costs. The Department of Human Services ("DHS") says it enjoys
immunity from the imposition of costs pursuant to Article IV,
Section 27 of the Wisconsin Constitution, which says "[t]he
legislature shall direct by law in what manner and in what courts
suits may be brought against the state."1 We've translated this
into a ban on imposing costs against the state except when
expressly authorized, but we've never been clear how this is
connected to the constitutional command. Instead, it appears we
stitched the principle together out of the historical genesis of
costs as an awardable litigation expense and some passing
references to the United States' sovereign immunity. Whether this
pastiche fits together neatly is not something we need to resolve
today; its historical development sufficiently demonstrates that
the court may award costs against DHS pursuant to Wis. Stat.
§ 806.04(10).2
The state's constitutional sovereign immunity applies to
1
state agencies such as DHS. See, e.g., Mayhugh v. State, 2015
WI 77, ¶13, 364 Wis. 2d 208, 867 N.W.2d 754 ("Generally, for
purposes of sovereign immunity, an action against a state agency
or board is deemed an action against the state."); German v. DOT,
2000 WI 62, ¶18, 235 Wis. 2d 576, 612 N.W.2d 50 ("The state's
sovereign immunity from suit extends to the state's agencies and
arms.")
Although the circuit court's award of costs and attorney
2
fees did not cite Wis. Stat. § 806.04(10), appellate courts "may
affirm on grounds different than those relied on by the trial
court." Vanstone v. Town of Delafield, 191 Wis. 2d 586, 595, 530
N.W.2d 16 (Ct. App. 1995).
1
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I. ORIGIN OF "EXPRESS AUTHORIZATION"
¶52 A brief review of our cases addressing what it means for
a statute to "expressly authorize" the award of costs against the
state reveals this is more a matter of basic statutory construction
than some type of heightened scrutiny called forth by the concept
of sovereign immunity. In one of our earliest cases involving
costs against the state, Noyes v. State, 46 Wis. 250, 1 N.W. 1
(1879), we resolved the issue without once mentioning sovereign
immunity or our constitution. Our attention was captured, instead,
by the interplay between common law and statutory law:
At the common law, costs were unknown. Costs are
altogether the creature of statute. Speaking of the
statute of Glocester, 6 Edw. Ch. 1, Sir Edward Coke says:
"Before this statute, at the common law, no man recovered
any costs of sute, either in plea real, personal or mixt;
by this it may be collected, that justice was good cheap
of ancient times, for in King Alfred's time there were
no writs of grace, but all writs remedialls granted
freely." 2 Inst. 288. And no known statute gave costs
against the crown.
Id. at 251-52. So we concluded that, "[i]n this state, therefore,
costs are regulated exclusively by statute." Id. at 252. We were
so far from considering this a matter of sovereign immunity that
we actually suggested that costs may be awarded against the state
when it permits itself to be sued: "As a rule, costs are given to
the prevailing party in civil actions. And the statutes giving
them, might include the state, when it sues or permits itself to
be sued in civil actions." Id.
¶53 We introduced sovereign immunity to the question of
costs in Sandberg v. State, 113 Wis. 578, 589, 89 N.W. 504 (1902),
in which we said that "[n]o court is authorized to render judgment
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for costs against the sovereign state, in absence of statute giving
express authority." We based the part of the sentence addressing
immunity, interestingly enough, not on our constitution but on
what the United States Supreme Court said about the United States'
immunity. Id. (collecting cases). The "express" aspect of this
principle arose out of "the rule that general statutes are not to
be construed to include, to its hurt, the sovereign." Id. This
rebuffed our suggestion in Noyes that a general cost statute
applicable to all litigants might, without more, be applicable
against the state.
¶54 We said pretty much the same thing in Frederick v. State,
198 Wis. 399, 400, 224 N.W. 110 (1929), where we ruled that costs
against the state are not allowed absent consent "manifested by an
act of its Legislature . . . ." But the measure of how express
that manifestation must be seems to have been looser than what the
majority requires today. In Mr. Frederick's suit to recover unpaid
salary under Wis. Stat. ch. 285 (1927) (actions against the state),
there was no statute specifically allowing the court to award costs
against the state. But Wis. Stat. § 285.04 (1927) required an
audit of "the amount of damages and costs" paid in such an action.3
The statute assumed, but did not say, that costs could be awarded.
3 "Judgment, how paid: No execution shall issue against the
state on any judgment, but whenever a final judgment against the
state shall have been obtained in any such action the clerk shall
make and furnish to the secretary of state a duly certified
transcript of such judgment; and the secretary of state shall
thereupon audit the amount of damages and costs therein awarded,
and the same shall be paid out of the state treasury." Wis. Stat.
§ 285.04 (1927).
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Nonetheless, we said "[t]his is sufficient to warrant the
imposition of costs." Frederick, 224 N.W. at 110.
¶55 DHS calls our attention to DOT v. Wisconsin Pers. Comm'n,
176 Wis. 2d 731, 500 N.W.2d 664 (1993), and says we should deny
costs here for the same reason we did there. But that case
actually explains why costs should be awarded to Ms. Papa. The
Wisconsin Pers. Comm'n court considered whether attorney's fees
could be awarded against the state for a discovery violation under
the auspices of Wis. Stat. § 804.12(1)(c). We held that, although
the statute does allow for the award of fees, it does not
explicitly refer to the state, and so there was no legislative
consent. Wisconsin Pers. Comm'n, 176 Wis. 2d at 737-38. But we
also pointed the way to the award of costs in that case when we
noted that, unlike the discovery violation statute, "[t]he
legislature has expressly authorized costs to be taxed against the
state under other circumstances. See [Wis. Stat. §§] 227.485 and
814.245." Wisconsin Pers. Comm'n, 176 Wis. 2d at 738. Our
reference to the first of the two cited statutes is particularly
instructive here because it provides that the state is subject to
costs in contested cases when an administrative agency's position
does not prevail. As I explain below, costs must be available in
declaratory judgment actions just as they are in contested cases
because one type of action is simply an analog of the other.
II. THE SYMMETRY OF DECLARATORY JUDGMENTS AND CONTESTED CASES
¶56 In a declaratory judgment action, such as the one here,
the natural alignment of parties is the reverse of what they would
be had the action commenced as a contested case. See, e.g., Lister
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Nos. 2016AP2082 & 2017AP634.dk
v. Bd. of Regents of Univ. Wis. Sys., 72 Wis. 2d 282, 307, 240
N.W.2d 610 (1976) (explaining that a declaratory judgment action
allows a party to bring an action to settle "controversies of a
justiciable nature" before "a wrong has been threatened or
committed" against that party so as to provide "a remedy which is
primarily anticipatory or preventative in nature."). Our statutes
unquestionably allow costs in the latter, and the authorization is
only marginally less express in the former. Because the subject
matter of both proceedings is essentially identical (albeit in
different fora), with only the parties' positions being reversed,
it would take an active imagination to surmise that the legislature
provided consent to the imposition of costs in one type of case
but not its functional analog.
¶57 Ms. Papa was the plaintiff here only because she took
the initiative to commence the proceedings. If she had waited for
DHS to commence a contested case for the payments at issue, she
would have been the defendant. In that setting, it is beyond
question that costs against the state are potentially available if
the administrative agency's position fails:
In any contested case in which an individual, a small
nonprofit corporation or a small business is the
prevailing party and submits a motion for costs under
this section, the hearing examiner shall award the
prevailing party the costs incurred in connection with
the contested case, unless the hearing examiner finds
that the state agency which is the losing party was
substantially justified in taking its position or that
special circumstances exist that would make the award
unjust.
Wis. Stat. § 227.485(3).
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Nos. 2016AP2082 & 2017AP634.dk
¶58 In the same subchapter that provides for those costs,
the legislature authorized those like Ms. Papa to bring a
declaratory judgment action challenging an agency's rule instead
of waiting for an agency to commence a contested case: "Except as
provided in sub. (2) [the terms of which are not material here],
the exclusive means of judicial review of the validity of a rule
or guidance document shall be an action for declaratory judgment
as to the validity of the rule or guidance document brought in the
circuit court . . . ." Wis. Stat. § 227.40. An "action for
declaratory judgment" is a phrase of art and, presumably, the
legislature's institutional memory runs far enough back to
remember when it adopted the Uniform Declaratory Judgment Act in
1927 (now codified at Wis. Stat. § 806.04). Ch. 212, Laws of 1927.
And in that statute, we find the mandate that "[i]n any proceeding
under this section the court may make such award of costs as may
seem equitable and just." Wis. Stat. § 806.04(10).
¶59 The legislature expressly chose to subject the state to
a proceeding in which costs could be awarded. The question is
whether, in doing so, it manifested consent to the imposition of
costs "as may seem equitable and just." I think it did. There is
a basic symmetry between contested cases and declaratory judgment
actions, in which the only differences are the venue and the
parties' relative positions. The subject matter is the same, and
the overall purpose is the same. There is no doubt about the
availability of costs in a contested case, and Wis. Stat.
§ 806.04(10) says they are available in declaratory judgment
actions. Given that context, the allowance of costs in the latter
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Nos. 2016AP2082 & 2017AP634.dk
is sufficient to satisfy the judicially-created "express
authorization" standard. For these reasons, I respectfully
dissent from ¶¶46-48 of the court's opinion concluding that DHS
has sovereign immunity as to the costs awarded in favor of the
petitioners.
¶60 I am authorized to state that Justice REBECCA GRASSL
BRADLEY joins this concurrence/dissent.
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1