In Papa v. DHS (2020 WI 66), the Wisconsin Supreme Court ruled that DHS’s practice of recouping wages from Medicaid providers for minor documentation errors fell outside the boundaries of its explicit statutory authority.

Facts

In Wis. Stat. § 49.45(3)(f)1.-2, the Wisconsin Legislature authorizes the Department of Health Services (DHS) to audit in-home Medicaid providers for fraud or overpayment and recoup any funds paid in error. But under a DHS policy dubbed the “Perfection Rule,” auditors began recouping payments for minor imperfections in documentation.

For example, one in-home Medicaid providerdid not bill a minor patient’s parent’s insurance since it was previously established the insurance would not cover her services. Even though she indisputably did the work and received payment for it, DHS recouped her payments.

The Perfection Rule led to many providers declaring bankruptcy and leaving the profession altogether after DHS demanded hundreds of thousands of dollars in previously paid wages.

Decision

A unanimous court (Justice Hagedorn did not participate) found DHS exceeded the boundaries of its explicit authority when it recouped funds for documentation errors for work with no evidence of fraud or overpayment. Under Wisconsin law, administrative agencies can only act with the authority explicitly granted to them by the Wisconsin legislature. Wis. Stat. §227.10(2m).

In this case, the court established clearly for the first time that all inquiries into the lawfulness of an agency’s action must begin with its explicit authority. Wis. Stat. §49.45(3)(f)1.-2 allows DHS to recoup where the Medicaid provider cannot prove the work was done. The statute did not specify that payments could be recouped for less than fraud or overpayment, nor did any administrative rule. Accordingly, the court held the Perfection Rule fell outside DHS’s explicit authority

In Town of Delafield v. Centra Transport Kriewaldt (2020 WI 61), the Wisconsin Supreme Court held that federal transportation law does not preempt the town’s seasonal weight restriction on certain roads.

Facts

Delafield posted signs identifying a seasonal weight restriction prohibiting vehicles over six tons from driving on designated town roads. A Central Transport delivery truck over six tons was subsequently issued a citation for driving on one of the designated roads while making a delivery to a Delafield resident.

Federal law (U.S. Code Title 49 s. 31114(a) and Title 23 s. 658.19) requires towns provide “reasonable access” between the interstate and terminals. Central Transport argued that the federal transportation law preempts the town’s weight limit because it did not allow Central Transport reasonable access between the interstate and the place of delivery in the town. Furthermore, Central Transport said federal law requires town weight limits be based solely on safety considerations, and Delafield’s limits were based on protecting roads during spring weather.

Decision

The court found that Delafield did grant “reasonable access” because it provided adequate notice and a permit to exempt certain uses of the road from weight limits.

The court further found that Delafield’s weight limit did not need to be grounded solely in safety considerations. Federal law does provide an exemption for towns to impose additional safety-based weight limits for certain vehicles, but towns can impose limits for other reasons as long as they provide reasonable access.

Concurring Opinion

 In a concurring opinion, Justice Kelly (joined by Justice R. Bradley) agreed with the court’s outcome but criticized its failure to define a uniform standard of “reasonable access.” The concurring opinion would have instead ruled against Central Transport because its destination in Delafield was not a “terminal” to which the federal law at issue requires access.

Wisconsin Legislative Council recently released an issue paper overviewing employer liability for employees diagnosed with COVID-19 after returning to work.

The paper explains that Wisconsin’s Worker’s Compensation Act provides that employee injuries sustained from an illness or infection are coverable by Worker’s Compensation, but employees must prove they became ill in the course of their employment. Employees seeking Worker’s Compensation coverage for a COVID-19 diagnosis must prove their illness was caused by exposure at work. Injuries including COVID-19 are covered whether or not the employer was negligent.

The Worker’s Compensation Act provides an exclusive remedy for employees who are injured in the course of their employment, meaning that employees may not bring separate actions outside of the Worker’s Compensation system against their employer for an employment-related injury. However, employees may still bring actions against third parties other than their employer, if the third party is at least partially responsible for their injury. Employees must prove that the third party’s negligence led to their injury, which could include COVID-19 exposure.

The widespread COVID-19 pandemic leaves employers and third parties – even those following government recommended best practices – open to significant liability if their employees or customers contract the virus. A recent poll showed that one-third of employees would sue their employer over contracting COVID-19.

To protect employers from civil claims filed outside of the Worker’s Compensation system, Wisconsin Civil Justice Council, Wisconsin Manufacturers & Commerce, the Wisconsin Chapter of the National Federation of Independent Business, and other business associations are seeking COVID-19 liability protections for Wisconsin businesses as the state continues its economic restart. Read more about efforts to enact state level liability protections at https://www.wisciviljusticecouncil.org/.

In addition to recent multistate comments filed on PFAS chemicals, Wisconsin Attorney General Josh Kaul recently joined a multistate coalition supporting state net metering programs and a coalition filing an antitrust lawsuit against generic drug manufacturers.

Net Metering

AG Kaul, along with 16 other attorneys general, is urging the Federal Energy Regulatory Commission (FERC) to reject a petition to essentially end state oversight of net metering programs. Net metering allows utility customers using solar power to offset their utility bills by the amount of power their solar panels add to the grid.

New England Ratepayers Association petitioned FERC asking that it declare net metering compensation is actually a wholesale sale of energy and therefore the federal government has exclusive jurisdiction over such net metering programs. The AGs’ comments ask FERC to deny that petition. The AGs argue that states should continue to have the authority to implement net metering programs, which encourage clean energy while lowering bills for solar customers, and the federal government shouldn’t interfere with those programs.

The Wisconsin Department of Justice says 45 states, including Wisconsin, have net metering programs in place. According to WisPolitics, the U.S. Energy Information Administration estimates there are 4,827 total residential, commercial and industrial net metering customers in Wisconsin.

Generic Drug Manufacturers

AG Kaul joined a coalition of 50 states filing a lawsuit stemming from an antitrust investigation into generic drug manufacturers. This latest lawsuit in that investigation focuses on 80 topical generic drugs from 26 corporate defendants, alleging unfair competition has inflated prices. Two other lawsuits stemming from the antitrust investigation had been previously filed, and the investigation is ongoing.

In Quick Charge Kiosk, LLC v. Josh Kaul (2020 WI 54), a unanimous Wisconsin Supreme Court held that gaming and cell phone charging machines operated by Quick Charge violate Wisconsin gambling statutes.

The Quick Charge machines allow customers who insert a dollar in the machine to receive one minute of charging time and 100 credits to play the video chance game. After the charging time expires, customers can no longer play the game but can redeem their remaining credits for cash at the same rate for which they paid for the credits ($1 for 100 credits). Certain kiosks require the user to play the video chance game at least once.

Some municipalities attempted to remove the Quick Charge machines because they believed the machines were illegal gambling devices. In this case, Quick Charge filed an action seeking a declaratory judgment that the machines are in compliance with Wisconsin’s gambling statutes. The state Department of Justice moved for summary judgment, asking the court to declare the machines unlawful.

Quick Charge argued its machines are “in-pack chance promotions” and therefore should be exempt from gambling statutes. Lottery statutes in Wis. Stat. § 100.16(2) exempt “in-pack chance promotions,” and Quick Charge contended that this exemption should apply to its machines too.

The court disagreed and instead determined the Quick Charge machines are illegal gambling machines under § 945.01(3). The statutes’ prohibition on gambling machines does not include the same exception for in-pack chance promotions as it does for lotteries. Because the Quick Charge machines give players the opportunity to insert money for the chance to win something of value, they meet the definition of illegal gambling machines under Wisconsin law.