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Governor Repeals “False Claims for Medical Assistance Act”

Repeal Expected to Improve Legal Climate and Return More Money to Medical Assistance Fund

 

WCJC has accomplished one of its major objectives for the 2015-2017 state budget with the repeal of Wis. Stat. §20.931, Wisconsin’s “False Claims for Medical Assistance Act”.

The act allows private individuals, unaffiliated with the government, to sue private businesses alleging fraud against the state’s medical assistance program. The act rewards private individuals for filing these actions by providing that the person who brings a private cause of action may be awarded up to 30 percent of amounts recovered in addition to expenses, costs, and reasonable attorney fees. While the original intent of the act, to root out fraud, is admirable this law was ineffective and unnecessary.

The act, originally created in the 2007-2009 state budget act, is ineffective because the Department of Justice (DOJ) proactively prosecutes these claims on its own. Furthermore, DOJ has stated the repeal of the act could increase recoveries for the Medical Assistance program because the state will not have to pay the 30 percent “bounty” to the whistleblowers who bring a private cause of action.

The repeal of this act will not discourage legitimate whistleblowers from bringing information about fraud forward. There are already other avenues in place for whistleblowers to contact state officials, anonymously if need be, such as the governor or attorney general and report fraud. Studies have also shown that whistleblowers with legitimate claims do not have a profit motive and thus the lack of a financial award is unlikely to result in less whistleblowers coming forward.[1] Thus the act is unnecessary.

Repeal of the act was included in the Joint Finance Committee motion #495, the committee’s omnibus motion on Medical Assistance. The motion was adopted by the committee on Thursday, May 21, 2015.

WCJC is grateful for the support of the state legislature and Governor Walker in helping to better Wisconsin’s legal climate.

 

[1] Kesselheim et al., Whistleblowers’ Experiences in Fraud Litigation Against Pharmaceutical Companies, 362:19 New Engl. J. Med. 1832 (May 13, 2010).

Michigan v. EPA – SCOTUS Rules EPA Must Consider Costs in Initial Decision to Regulate

Scalia, writing for the Court, stated that “[EPA] gave cost no thought at all, because it considered cost irrelevant to its initial decision to regulate,” he continued, writing, “It is unreasonable to read an instruction to an administrative agency to determine whether ‘regulation is appropriate and necessary’ as an invitation to ignore cost.” With that the Court found the Obama Administration’s most monumental environmental regulation to date unreasonable and remained to the D.C. Circuit Court of Appeals.

The regulation in question was the EPA’s Mercury and Air Toxics Standards (MATS). MATS required coal-burning power plants to reduce emissions of mercury, arsenic, and lead by installing control technologies or retiring plants. The rule was finalized in December 2012. While reducing the amount of hazardous emissions may seem admirable, the direct benefits of the regulation were valued at $4 million to $6 million, while the annual cost to industry would be approximately $9.6 billion. EPA contested the direct benefit of the program saying that, fully implemented, the MATS would yield between $37 billion and $90 billion in health benefits. EPA did not contest the cost of the program.

Opponents of the rule argued the costs imposed on business and society versus the limited benefits were unreasonable and that the practical implication of the MATS standard would be to put many coal-burning plants out of business. Environmentalists, and the EPA, have pointed out the health benefits to the program which they argue would protect vulnerable populations, such as pregnant women.

The practical effects this ruling may be limited. Because the rule has been implemented for two years just under 70% of coal burning power plants are already in compliance with the regulation. Furthermore, SCOTUS did not vacate the rule, only remanded it, therefore MATS will stay in effect while the D.C. Circuit reconsiders the case.

Furthermore, initial discussions make it seem unlikely that this case will have a broader effect on other EPA regulations. Some legal commentators contend that Justice Scalia seemed to cabin his analysis within the confines of the MATS program. As evidence of this, Justice Scalia took several pages drawing distinctions between the National Ambient Air Quality Standard, EPA’s largest Clean Air regulatory regime, and MATS making it unlikely that the rationale from this ruling can easily be applied more broadly throughout the Clean Air Act. Time will tell if these preliminary analyses correct.

Read the full opinion.

House Judiciary Committee Passes Fairness in Class Action Litigation Act

Further reform to class actions may be on the horizon after the House of Representatives Judiciary Committee passed the Fairness in Class-Action Litigation Act (FICALA) of 2015 on June 24. The legislation was introduced by House Judiciary Committee Chair Bob Goodlatte (R-VA) and Civil Justice Subcommittee Chair Trent Franks (R-AZ). FICALA seeks to limit which potential plaintiffs can opt into a class action lawsuit based on the severity of the potential plaintiff’s injuries compared to the injury of the party. In a press release the Judiciary Committee stated, “uninjured or non-comparably injured parties can still join class actions, but must do so separately from parties that experienced more extensive injury.” The legislation is short and to the point:

§1716. Limitation on certification of class

(a) In General.—No Federal court shall certify any proposed class unless the party seeking to maintain a class action affirmatively demonstrates through admissible evidentiary proof that each proposed class member suffered an injury of the same type and extent as the injury of the named class representative or representatives.

(b) Definition.—In this section, the term ‘injury’ means the alleged impact of the defendant’s actions on the plaintiff’s body or property.

(c) Clerical Amendment.—The table of sections at the beginning of chapter 114 of title 28, United States Code, is amended by adding at the end the following new item:

In its present form this bill would only affect class actions with economic or monetary losses, not civil rights cases. Proponents of the bill, such as the U.S. Chamber of Commerce, argue the reform is necessary to prevent lawyers from “gaming the system” to inflate their legal fees. Opponents argue that the bill could effectively end class actions by forcing individuals to have identical injuries in order to join class action lawsuits.

The Wisconsin Civil Justice Council will keep you updated as the bill moves forward.

Asbestos Cases Account for 75% of Madison County, IL Cases

Madison County, a small county in southwestern Illinois that has long been a prime venue for plaintiffs’ lawyers, may be the asbestos litigation capitol of the world. A new report by the Madison-St. Clair Record shows that 74.6% of cases filed in Madison County circuit court are asbestos cases.

The Illinois Trial Lawyers Association chalked the numbers up to historically large concentrations of industry and population. However the Record’s analysis challenged the Association’s claim and showed that industry in Madison County has drastically dropped over the past thirty years and that the county’s population only represents 2% of Illinois’ populace.

Madison County became a go-to destination for filing class action lawsuits around the turn of the 21st century. By 2002 it ranked third nationwide in the number of class actions filed per year behind only Cook County, IL, and Los Angeles County, CA. Lawyers frequently file more mesothelioma cases in Madison County than any other county in the nation. This stems in large part due to “rampant forum shopping” which has been detailed by a U.S. Chamber of Commerce report due to Madison County judges (and the Illinois Appellate Court) largely ignoring the forum non conveniens doctrine. According to the report many cases have little, if any, connection to the county and a minimal connection to the state of Illinois (The Record’s analysis shows that 98% of plaintiffs in these cases do not reside in Illinois).

Tort reform has been slow to come to Illinois. While the Class Action Fairness Act may be responsible for a temporary reduction of class action cases filed in Madison County, the numbers have since rebounded. Recently the Illinois senate judiciary committee voted down Governor Bruce Rauner’s tort reform bill. He has since stated that he intends to continue negotiations on tort reform as part of the state budget process. The budget process is currently stalled.

Supreme Court Set to Revisit Class Action Standards

The U.S. Supreme Court recently granted certiorari to Tyson Foods, Inc. v. Bouaphakeo, a case which has the potential to shake up the class action bar.

The case revolves around a dispute raised by Tyson pork-processing workers from an Iowa plant who alleged they were underpaid for time spent putting on and taking off protective gear and walking to and from workstations. The scope of the class was created using statistical information about how much time the average Tyson worker took to don the gear and get to their work station. No individualized analysis of class members was undergone. The class was awarded a $5.8 million judgment at trial and the 8th Circuit Court of Appeals upheld the judgment. In challenging the judgment, Tyson contends the workers’ class should not have been certified because there were significant differences in the types of protective gear and equipment used by different workers. They argue these differences are significant enough to violate Federal Rule of Civil Procedure (FRCP) 23(a)(2), “there are questions of law or fact common to the class.” Under FRCP 23(b)(3), these questions must “predominate over any questions affecting only individual members.” Tyson further argues that class certification was inappropriate because hundreds of uninjured members (who would wrongfully be entitled to receive benefits) are in the class. The outcome of this case could be as groundbreaking as the Court’s 2011 decision in Wal-Mart Stores v. Dukes.

This case is representative of a series of litigation which has been winding its way through the federal courts. These cases all concern the same general question – whether or not a class can be certified by use of statistics when there are individualized differences among the members and the membership includes many individuals who are uninjured. The Supreme Court has yet to act on similar certiorari petitions, in Wal-Mart Stores v. Braun and Dow Chemical v. Industrial Polymers Inc.

New Legislation on Motor Vehicle Liability

2015 Wisconsin Assembly Bill 92 (AB 92) increases monetary fines, creates a new criminal penalty, and limits the types of damages that are recoverable in lawsuits that derive from car crashes for those who do not have automotive liability insurance.

In March, Representatives Sanfelippo, Spiros, Weatherston, Tom Larson, Kapenga, and Jim Ott introduced AB 92 and the bill was referred to the Assembly Judiciary Committee. On May 11th a substitute amendment was offered by Representatives Horlacher, Jarchow, Jacque, Kulp, and Sanfelippo.

Under current law, all motorists who drive on state highways are required to have automotive liability insurance (with a few exceptions). If the driver is stopped by the police and they do not have insurance for their vehicle, then they can be fined up to $500. Current law also requires that a driver have proof of insurance on their person or in their vehicle. A driver can be fined $10 for not having proof of insurance.

The original bill greatly increased the monetary fines for driving without insurance. For a first offense a driver would have been fined $1,000 – $5,000. For a subsequent offense within three years of the first one, a driver would be fined $2,500 – $7,500. If an uninsured driver injured someone, they would be fined $5,000 – $7,500, but if the driver knew they were uninsured then they would be fined at least $10,000 and be subject to a class I felony.

The original bill also changed financial responsibility rules. Under current law if a court files a judgment against a driver for more than $500 of damage to another’s property caused by operating their motor vehicle, then the driver’s license is suspended unless they prove “financial responsibility.” To prove financial responsibility the driver needs to show the Department of Transportation that they have adequate liability insurance or deposit $60,000 with the Department of Transportation, which the Department will keep until the judgment is paid. Under the original bill, drivers who are convicted of operating a motor vehicle without insurance must prove “financial responsibility” with the DOT for five years after the conviction or have their license suspended.

The largest change from current law in the original bill was that it prohibited uninsured drivers from recovering non-economic damages against an insured driver when involved in a car accident regardless of which driver was at fault.

The substitute amendment reduced the proposed increases in monetary fees. Under the amendment, a first offense of driving without liability insurance would be a $500-$750 fine; Causing bodily harm while driving without liability insurance would be a $1,000-$1,500 fine; And causing death while driving without liability insurance would be at least a $2,500 fine and a class H felony.

The financial responsibility language was retained from the original bill.

The substitute amendment does not mention limiting the types of damages that an uninsured driver can recover in a lawsuit concerning an accident with an insured driver.

Patience Roggensack to stay Chief Justice – For Now

U.S. District Court Judge James Peterson ruled that Patience Roggensack could remain chief justice while Justice Abrahamson’s, the former chief justice, lawsuit unfolds. Justice Abrahamson sued shortly after Wisconsin voters chose to amend the state constitution to allow the state supreme court justices to determine who amongst them would serve as chief justice. Prior to the referendum the longest serving justice on the court took on the role of chief justice. Abrahamson became chief justice in 1996 and contends that she should retain the role until the end of her elected term. In a hearing deciding the issue, Judge Peterson said he did not see the irreparable harm of Chief Justice Roggensack administering the court system while this case is decided.

On April 29, the Government Accountability Board certified the constitutional amendment results, and later that day the court voted to have Patience Roggensack become chief justice. Justices Gableman, Ziegler, Prosser voted for Roggensack, and Justices Abrahamson, Bradley, and Crooks did not participate. Roggensack cast the deciding vote for herself.

Justice Abrahamson filed a lawsuit on April 8, a day after voters approved the amendment. In her complaint, Justice Abrahamson is seeking declaratory judgment from the court to determine when the new constitutional amendment will come into effect. She argues that the amendment is prospective only and therefore does not apply until the end of her elected term in 2019. Alternatively she argues that a retroactive application of the amendment would change the terms of her office which would violate the Due Process and Equal Protection clauses of the 14th Amendment of the U.S. Constitution. Abrahamson argues that she has a property interest in her office and it is being taken without due process of law. She further argues that retroactive application of the amendment violates the Equal Protection Clause because no other elected official elected to a full term and still able to hold office would be “prematurely ousted from office on that basis.”

Judge Peterson has determined that the case can be decided without a trial. He will hand down his decision after July 1, the deadline for the last brief.

U.S. Supreme Court will not take up John Doe Case – Decision pending in Wisconsin Supreme Court

As it relates to the current state of Wisconsin politics, the words “John Doe” have been omnipresent for what seems like Governor Walker’s entire tenure in office. The probe may be close to a conclusion as another challenge to the probe has been eliminated.

In the spring of 2014 Eric O’Keefe, Executive Director of Wisconsin Club for Growth, sued prosecutors in charge of the John Doe probe to hold them personally liable for violating his, and the Club for Growth’s, civil rights. U.S. District Court Judge Rudolph Randa ruled in favor of O’Keefe. The prosecutors appealed to the 7th Circuit Court of Appeals. The 7th Circuit reversed Judge Randa’s opinion, stating that the issues it raised should be decided by the state judiciary and dismissed the case. O’Keefe appealed to the U.S. Supreme Court in order to get the case reinstated and permanently block the probe. The Supreme Court denied certiorari last week, in effect rejecting O’Keefe’s appeal. The Supreme Court’s rejection ends O’Keefe’s case. However three cases concerning the probe are currently before the Wisconsin Supreme Court.

The state supreme court accepted three cases concerning the John Doe probe in mid-December 2014. Two cases were legal challenges from targets of the probe and a third was an action to reinstate the probe brought by special prosecutor Francis Schmitz. The court took up these cases after Judge Gregory Peterson determined the activities being investigated in the probe were not illegal. Schmitz appealed to the District Four Court of Appeals, based in Madison, arguing that Judge Peterson misinterpreted the campaign finance laws in question. The Court of Appeals rejected Judge Peterson’s ruling and the targets of the probe appealed to the state supreme court. The court decided not to hear oral arguments and rely solely on briefs when deciding the case. A decision is expected to be released this summer.

SCOTUS Cases to Watch this Summer

King v. Burwell

This summer, the U.S. Supreme Court will decide on a case that could almost entirely dismantle President Obama’s most significant legislation of his presidency. In King v. Burwell, the high court could refuse subsidies for those on the federally-operated exchanges, making premiums unaffordable for those using the federal health care exchange and potentially resulting in enrollees fleeing the program for more affordable, privately-provided health insurance.

The lawsuit was brought forward when challengers argued the plain text of the Affordable Care Act limits federal subsidies to states who establish their own exchanges, which only includes 14 states and the District of Columbia; Wisconsin does not have its own exchange.

Oral arguments were held in early March, and high court watchers say the case could be decided in either direction. Chief Justice John Roberts is expected to be the swing vote, having written the decision that upheld the Affordable Care Act in 2012, however the Chief Justice was quiet during oral arguments.

Should the court decide in favor of the plaintiffs, the IRS will have to stop disbursements of subsidies in the 36 states using the federal exchange.

The court’s decision is expected to be released in late June.

Obergefell v. Hodges

The U.S. Supreme Court is poised to make what could be the final legal decision on same-sex marriage in the United States this June. In Obergefell v. Hodges, the court will decide whether state bans on same-sex marriage, specifically in Kentucky, Michigan, Ohio and Tennessee, are constitutional. Currently, same-sex marriage is legal in 37 states and the District of Columbia, including Wisconsin.

Court observers believe Justice Anthony Kennedy will cast the deciding vote in the case, as he wrote the majority opinion in Untied States v. Windsor, which called the federal ban on same-sex marriage unconstitutional in 2013.

The court’s decision is expected at the end of June.

Roggensack elected new Chief Justice

Within hours of state elections officials certifying the April 7th referendum results, four Wisconsin Supreme Court Justices elevated Justice Patience Roggensack into the role of chief justice. The vote was taken via email with four justices – Gableman, Prosser, Ziegler, and Roggensack – taking part and voting for Roggensack. The other three justices on the court – Abrahamson, Bradley, and Crooks – did not cast votes in the election.

Justice Abrahamson filed a lawsuit the morning after the referendum passed in which she argues that she should remain chief justice until the end of her term in the spring of 2019.  In a letter to the U.S. District Court, Abrahamson’s attorney argued that she still holds the position of chief justice. Also in the letter, Abrahamson contests the procedure used for electing the chief justice. She argues the court should have conferenced to decide on a procedure before electing the chief justice. However Roggensack’s attorney, who is also the attorney for every other justice on the court but Justice Bradley, contended that once the election results were ratified the justices had the ability to elect a new chief justice at any time.

Chief Justice Roggensack stated in an interview this week “there’s no doubt about it,” she’s the new chief justice. The state supreme court website lists Roggensack as chief justice, and features a welcome message from her. She also plans to meet with staff to discuss the transition.

Bradley has stated the election of a new chief justice was premature. She noted that the issue of whether the constitutional amendment is to be applied “retroactively” (before Abrahamson’s term is up) needs to be decided in federal court. Therefore the court does not yet know if a vacancy exists to fill.

However, Justice Gableman argues the vote was not premature. He has told the media that when the federal judge denied Abrahamson’s request for a temporary restraining order to stop the members of the court from electing a new chief justice, the judge stated that when and how to implement the amendment was a question of state law. Therefore since the judge did not restrain the court from enacting the amendment, the members of the court were able to elect a new chief justice at a time of their choosing.

Justice Prosser, who voted in favor for Roggensack, says he does not think the court should install the new chief justice until the beginning of the court’s next term in the fall.

Chief Justice Patience Roggensack stated in a press release that as chief justice she intends to repair the damage done to the reputation of the state supreme court and broaden the involvement that justices, and judges around the state, have in the administration of the court system. Chief Justice Roggensack also intends to donate the addition $8,000 of her salary to the Access to Justice Commission which arranges civil legal services for those individuals who are unable to afford them. She has not indicated when she believes her term will begin.