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Statutory of Interpretation – Medical Assistance Program Payments

WI Court of Appeals – District III

Case Name: Newcap, Inc. Department of Health Services

Case No.: 2017AP1432

Officials: Stark, P.J., Hruz and Seidl, JJ

Focus: Statutory of Interpretation – Medical Assistance Program Payments

This appeal involves efforts made by the Wisconsin Department of Health Services (DHS) to recoup payments it made to Newcap, Inc., a family planning clinic. DHS claims it had legal authority to recoup the amounts in question, pursuant to WIS. STAT. § 49.45(3)(f) (2015-16), because Newcap failed to “maintain records as required by [DHS] for verification of provider claims for reimbursement.” See § 49.45(3)(f)1. In response, Newcap contends it was not actually required to maintain the specific records at issue in this case. Alternatively, Newcap argues its failure to maintain those records provided no basis for recoupment because other records—which were in Newcap’s possession either at the time of DHS’s audit or at the time of the subsequent hearing—showed that Newcap actually provided the services for which it was paid by DHS.

We conclude WIS. STAT. § 49.45(3)(f) gives DHS authority to recoup payments made to a Medicaid provider when that provider has failed to maintain the records required by DHS, regardless of whether the provider possesses other records that show the provider actually rendered the services in question. We further conclude the provider has an obligation to make the required records available to DHS at the time of DHS’s audit, and records subsequently submitted during an administrative hearing are insufficient to defeat DHS’s recoupment claim.

Nevertheless, we affirm the circuit court’s order, which reversed DHS’s decision requiring Newcap to repay DHS $185,074.80. DHS concluded it was entitled to recover that amount based on two deficiencies in Newcap’s recordkeeping: (1) Newcap’s failure to retain invoices documenting its purchase of prescription drugs that it subsequently dispensed to Medicaid patients; and (2) Newcap’s failure to include correct National Drug Codes (NDCs) on reimbursement claims it submitted to Medicaid. We conclude Newcap was not required to retain the invoices in question, and its failure to do so therefore did not give DHS authority to recoup payments under WIS. STAT. § 49.45(3)(f). We further conclude DHS lacked legal authority to recoup payments based on Newcap’s submission of claims with missing or invalid NDCs. We therefore affirm.

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at or contact them at 262-737-8825.

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