Category: Courts of Appeals

Papa v. DHS (Administrative Rules)

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In Papa v. DHS (2016AP2082/2017AP634), the court held that a challenge to a Wisconsin Department of Health Services (DHS) policy failed because the policy was not an administrative rule with the force of law.

Medicaid-certified nurse Kathleen Papa and Professional Homecare Providers, Inc. (PHP) filed the instant claim against DHS regarding Topic #66 in DHS’s Medicaid Provider Handbook. Topic #66 states that Medicaid providers must “meet all applicable program requirements” for reimbursement. If providers fail to meet all requirements, DHS can recoup payments from the providers.

Papa and PHP argued that Topic #66 was an illegal unpromulgated administrative rule and that the policy exceeded DHS’s explicit statutory authority under Wis. Stat. Ch. 227. The court held that Topic #66 is not an unpromulgated administrative rule because it does not have the “force of law” (Wis. Stat. § 227.01(13)). According to the court, Topic #66 simply summarizes existing law found elsewhere. Furthermore, PHP failed to show that DHS was enforcing Topic #66 like a rule. In recouping payments, DHS was not enforcing Topic #66 but was enforcing other statutes and rules referred to in the Topic.

Because the court found Topic #66 was not an administrative rule, Papa and PHP could not obtain a declaratory judgement via Wis. Stat. Ch. 227 judicial review of administrative rule proceedings.

In a dissent, Judge Reilly agreed that Topic #66 is not an administrative rule. However, the dissent argued Papa and PHP should be entitled to relief based on that fact. Under Topic #66, DHS was enforcing a requirement and recouped payments without legal right by statutes or properly promulgated administrative rules, in violation of 2011 Act 21 requirements in Wis. Stat. Ch. 227.

Tarrant v. DHS (Medicaid Eligibility)

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In Tarrant v. DHS (2018AP1299), the Court of Appeals District II held that testamentary trusts are countable unearned income for determining Medicaid eligibility.

The state Department of Health Services (DHS) denied Christine Tarrant’s application to renew medical assistance because her monthly payments from a testamentary trust combined with other income exceeded Medicaid eligibility limits. Tarrant appealed DHS’s decision, arguing that testamentary trusts are not “unearned income” countable toward determining Medicaid eligibility.

The court agreed with DHS and ruled against Tarrant. Federal law and state guidance in the Medicaid Eligibility Handbook do not specifically include testamentary trusts as countable unearned income, but the lists of countable unearned income sources are not exclusive. The regulations do include trusts as sources of unearned income, and the court rejected Tarrant’s argument that testamentary trusts should not be included because this particular type of trust is not specifically named. Under the court’s decision testamentary trusts are countable unearned income for DHS in determining Medicaid eligibility.

Pranke Holding LLC v. DOT (Eminent Domain)

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In Pranke Holding LLC v. DOT (2018AP1646), the Court of Appeals District I held that a business was not due rental losses after an eminent domain taking on its property.

The Department of Transportation (DOT) acquired part of Pranke Holding’s property through eminent domain. The taking closed off one of four access points to the property. Subsequently, a restaurant leasing the building on the Pranke property terminated its lease, citing DOT’s eminent domain activities.  When Pranke was unable to rent the building after the restaurant terminated the lease, Pranke filed a claim for rental losses as a result of an eminent domain taking under Wis. Stat. § 32.195(6).

Section 32.195(6) provides that reimbursement for rental losses is due when 1) the losses are “directly attributable” to the taking and 2) the losses exceed normal vacancy in the area. The court of appeals found that Pranke did not meet the § 32.195(6) requirements. According to the court, the letter terminating the restaurant’s lease with Pranke did not establish that the eminent domain taking was “directly attributable” to its terminating the lease. Pranke also did not show sufficient evidence that its rental losses exceeded the “normal rental or vacancy experience for similar properties in the area.” Because Pranke did not meet the statutory requirements, DOT did not owe rental losses for the eminent domain taking.

Mallett v. LIRC (Worker’s Compensation)

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In Mallett v. LIRC (2017AP1601), the Court of Appeals District I held that part of a worker’s compensation claim was barred by issue preclusion but directed further litigation on the plaintiff’s other claims.

Gregory Mallett filed and received awards for worker’s compensation claims in both 1981 and 1983. LIRC denied a 2007 claim that the 1983 injury and previous work had contributed to Mallett acquiring an occupational disease. Mallett filed the instant claim from the Work Injury Supplemental Benefits Fund in 2014, alleging his work in 1984, in addition to the 1981 and 1983 injuries, caused an occupational disease.

The Labor and Industry Review Commission (LIRC) agreed with the Fund that issue preclusion barred Mallett’s claims because the 1981 and 1983 injuries had already been litigated and because Mallett lacked evidence to prove his 1984 work caused the occupational disease.

The appeals court partially set aside the LIRC decision. The court agreed that issue preclusion barred Mallett’s argument that the 1981 and 1983 injuries were a cause of the occupational disease. Those claims had already been litigated and assessed fairly by LIRC. However, the court found Mallett’s alleged injuries stemming from his 1984 work had not yet been litigated and remanded the case to LIRC for additional fact finding.

Park Meadows Homes Association, Inc. v. American Family Mutual Insurance Co. (Compelled Appraisal)

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In Park Meadows Homes Association, Inc. v. American Family Mutual Insurance Co. (2018AP1484), the Court of Appeals District I held that American Family could invoke a policy’s appraisal clause after litigation began and did not breach its contract or act in bad faith.

Park Meadows submitted a claim to its insurer American Family for property damages after a storm. American Family paid the claim. Park Meadows later presented a claim for a full roof replacement but provided no cost estimate. American Family denied the claim for the roof replacement, and Park Meadows filed the instant lawsuit.

During the litigation, American Family moved to compel appraisal, pursuant to its policy with Park Meadows. The policy allowed either party to compel appraisal if there was a disagreement on the amount of a loss. The policy also required Park Meadows to provide the amount of the loss to American Family in the event of a loss.

The circuit court ordered appraisal. An appraisal panel issued an award to Park Meadows, and American Family paid the award. The circuit court then granted summary judgment in favor of American Family. Park Meadows appealed, arguing that American Family could not invoke the appraisal clause of the policy once the dispute had moved to litigation.

Citing the 1991 case Lynch v. American Family Insurance Co., the court of appeals held that American Family could invoke the appraisal clause after the commencement of litigation. Lynch said that an insurer cannot invoke an appraisal clause subsequent to the filing of a lawsuit when it had the opportunity to invoke appraisal prior to the lawsuit. In this case, American Family did not have a prior opportunity to invoke appraisal because Park Meadows had not provided the insurer the amount of the loss. Without an amount of loss, there was no disagreement on the amount on which American Family could compel appraisal prior to the lawsuit. Without an opportunity to invoke the appraisal clause before Park Meadows began the litigation, American Family could move to compel appraisal during the litigation.

The court of appeals further found that Park Meadows pointed to no genuine issues of material fact regarding its breach of contract and bad faith claims against American Family. Therefore, the court upheld summary judgment in favor of American Family.

Jossund v. Heim Plumbing, Inc. (Fraudulent Misrepresentation)

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In Jossund v. Heim Plumbing, Inc. (2018AP209), the Court of Appeals District II allowed fraudulent misrepresentation claims against US Bank to proceed because the complaint alleged misrepresentation by US Bank’s agent.

Benjamin and Kristina Jossund purchased a house through US Bank. When they found defects in the plumbing, they filed the instant lawsuit against the plumbing inspector and its insurer, the realtor, and US Bank. The complaint contained four causes of action related to misrepresentation and also alleged negligence. A circuit court allowed the claims to proceed against the plumbing inspector and realtor but granted US Bank’s motion to dismiss. The Jossunds appealed.

The court of appeals partially reversed the circuit court. The Jossunds’ complaint failed to suggest US Bank itself made misrepresentations damaging to the Jossunds. However, previous case law shows that sellers may be held liable for their agents’ representations. In this case, the court found the complaint did sufficiently specify misrepresentations by the realtor, which was acting as an agent of US Bank by negotiating the sale on the bank’s behalf.

Because the misrepresentation claims were against US Bank’s agent, the court allowed the four misrepresentation claims to proceed. The court dismissed the negligence claim against US Bank.

Village of Slinger v. Polk Properties, LLC (Property Zoning & Assessment)

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In Village of Slinger v. Polk Properties, LLC (2017AP2244), the Court of Appeals District II held that agricultural use of a residentially zoned property was not a legal nonconforming use, so the village was entitled to recover daily forfeitures and the value of residential taxes on the land. The case arises from the same underlying facts addressed in the 2018 Supreme Court decision Thoma v. Village of Slinger.

Polk purchased farmland to develop into a residential neighborhood. Polk then successfully petitioned the Village of Slinger to rezone the agricultural land to residential and signed a declaration related to its proposed residential development requiring residential use of the land. Polk later had trouble selling the lots and in the meantime continued agricultural use of the land. The village commenced this action enjoining Polk’s agricultural use.

The court of appeals addressed several issues in this case. First, the court determined that Polk’s agricultural activities on the property were not a legal nonconforming use of the residentially zoned property. Polk had already committed to agricultural use by 1) seeking the rezoning from village, 2) entering into a development agreement wherein the property was zoned residential, and 3) signing the declaration requiring residential use. There was no exception in the declaration allowing agricultural use. Additionally, Wis. Stat. § 236.293, related to restrictive covenants, prevented Polk from amending the declaration without a waiver from the village.

Because the agricultural activity was not a legal nonconforming use, the court held Polk violated the residential zoning code. As damages, the court awarded the village the difference between the amount Polk had paid at the lower agricultural tax rate and what it should have paid at the residential rate. The court rejected Polk’s argument that the award of lost property taxes was an unlawful reassessment outside of the court’s jurisdiction.

Hanning Regency LLC v. Town of Brookfield Board of Review (Property Assessment)

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In Hanning Regency LLC v. Town of Brookfield Board of Review (2018AP1584), the Court of Appeals District II held that the Town of Brookfield proceeded on an incorrect theory of law when assessing a commercial property.

The year after Hanning Regency bought commercial properties in Brookfield, the town reassessed the properties for tax purposes at nearly double Hanning’s purchase price. Hanning appealed the assessment to the town board, then circuit court, both of which ruled in favor of the town. The court of appeals reversed, holding that the assessor and the town both failed to apply the proper statutory methodology for property assessment evaluations.

Wis. Stat. § 70.32(1) requires assessors to value property by considering 1) recent arm’s length sales, 2) recent comparable sales, and 3) other factors, including how much income the property is likely to generate. Case law has established that assessors should consider these factors in order and stop their analysis when enough information is available. In this case, the court of appeals determined that the assessor and the town board did not follow this hierarchy of tiers. Instead, the assessor and town used an income approach (tier three) when information on recent arm’s length sales (tier one) was available. Therefore, the town proceeded on an incorrect theory of law in assessing Hanning’s property, so the court of appeals ruled in favor of Hanning.

Rosneck v. LIRC (Employment Discrimination)

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In Rosneck v. LIRC (2018AP1179), the Court of Appeals District IV upheld a Labor and Industry Review Commission (LIRC) decision that the University of Wisconsin-Madison did not discriminate against employee Karen Rosneck when it declined to reclassify her position.

During a state reallocation survey of library services assistant positions, Roscneck requested administrators reclassify her from her current paraprofessional position as a library services assistant-advanced to the professional position of librarian. After an audit of her position, the administration declined to reclassify her. Rosneck filed a complaint alleging UW violated the Wisconsin Fair Employment Act by discriminating against her based on her age, sex, and prior discrimination complaints. LIRC decided against Rosneck, finding no evidence of discrimination.

The court of appeals upheld LIRC’s decision. Regarding her complaint of discrimination based on prior complaints, the court found the UW employees evaluating Rosneck’s position were likely unaware of her previous complaints. The court dismissed Rosneck’s complaint that another male employee was reclassified quicker because the male employee requested a horizontal move to another paraprofessional position, while Rosneck requested a more substantial move from a paraprofessional to professional position. Overall, there was substantial evidence to support LIRC’s decision that UW did not discriminate against Rosneck.

Anderson v. DFI (Due Process)

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In Anderson v. DFI (2017AP1670), the Court of Appeals District II held that the Department of Financial Institutions’s (DFI) notice to the plaintiff regarding his liability for involvement in illegal securities transactions violated constitutional due process.

DFI sent plaintiff Gregory Anderson a notice alleging that he was engaging in illegal securities transactions. The notice informed Anderson that an order requiring takings of $3 million in restitution plus a $25,000 civil penalty would become final unless Anderson requested a hearing within 30 days. Anderson sent a request on the thirtieth day. DFI, reading an administrative rule (Wis. Admin. Code § DFI § 8.01) in conjunction with the securities statute (Wis. Stat. Ch. 551), denied Anderson’s request because it was not timely. DFI argued the request must be received by DFI within 30 days.

In an opinion written by Wisconsin Supreme Court Justice-elect Brian Hagedorn and joined by Chief Judge Lisa Neubauer, the appeals court opted not to decide whether DFI needed to receive Anderson’s filing before the thirtieth day. The court seemed to disagree with DFI’s reading of the statute, especially since no other jurisdiction sharing Wisconsin’s Uniform Securities Act has interpreted filing requirements in this way.

But without ruling on whether DFI’s reading is correct, the court ruled in favor of Anderson by determining DFI’s notice to Anderson violated constitutional due process. Both the federal and Wisconsin constitutions require government to provide sufficient notice prior to taking private property. Reasonable notice must be given as to how the recipient of the notice can prevent the taking of his or her property. In this case, DFI did not provide reasonable notice that DFI must receive Anderson’s response by the thirtieth day.

In a dissent, Judge Gundrum agreed with DFI’s reading of the code and statute and said the DFI notice to Anderson provided reasonable notice of how to timely request a hearing; therefore, the notice did not violate Anderson’s due process rights.