Unlawful Medicaid Recoupment Policy

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WI Court of Appeals – District II

Case Name: Kathleen Papa, et al. v. Wisconsin Department of Health Services

Case No.: 2016AP2082; 2017AP634

Officials: Reilly, P.J., Gundrum and Hagedorn, JJ.

Focus: Unlawful Medicaid Recoupment Policy

This action is an attempt by medical providers to curb what is alleged to be an unlawful Medicaid recoupment policy by the Wisconsin Department of Health Services (DHS). Ordinarily, these challenges would come through administrative proceedings arising from fact-specific recoupment efforts. But here, Kathleen Papa and Professional Homecare Providers, Inc. (PHP) sought declaratory and injunctive relief against DHS recoupment practices more generally by challenging Topic #66—a provision in the DHS-published Medicaid Provider Handbook. PHP asserts that Topic #66 is an unpromulgated administrative rule, and an unlawful one at that. More specifically, PHP argues that Topic #66 imposes documentation requirements on Medicaid providers that go beyond those authorized and allowed by law. PHP points to 2011 Wisconsin Act 21, which only allows administrative agencies to implement or enforce requirements when a statute or administrative rule explicitly requires or permits that requirement. The circuit court agreed and issued a broad injunction against enforcement of Topic #66; it also set new parameters to govern all DHS recoupment efforts.

The parties agree (as do we) that DHS may only recoup payments when it has explicit authority to do so, either through statute or administrative rule. But PHP’s broader attack on DHS recoupment policies fails because this case is premised on the claim that Topic #66 is an administrative rule; we conclude it is not. And since PHP has not challenged an administrative rule, judgment must be entered in favor of DHS.

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.