Medicaid Fair Hearing-Notice and Hearing Rights

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WI Court of Appeals – District III

Case Name: Tamra Schott v. Wisconsin Department of Health and Human Services

Case No.: 2024AP001835

Officials: Stark, P.J.

Focus: Medicaid Fair Hearing-Notice and Hearing Rights

Schott, a Medicaid recipient, had been discharged by North Central Health Care, the sole CCS provider in her county, for failing to complete a treatment plan within the required timeframe.

An administrative law judge dismissed Schott’s request for a fair hearing, concluding she first had to pursue a local review through a DHS bureau. The circuit court reversed, holding that federal and state Medicaid law entitled Schott to a fair hearing and awarding attorney fees against DHS.

The Court of Appeals found that the discharge decision constituted “state action” because DHS had delegated administration of CCS services to the provider under DHS regulations, and the discharge was carried out pursuant to DHS-created rules rather than independent medical judgment. The court further concluded that Schott’s discharge effectively terminated or reduced her Medicaid-covered services because no alternative CCS provider existed in the county.

Accordingly, federal Medicaid law and due process protections required DHS to provide notice and an opportunity for a fair hearing before terminating services. The court also upheld the award of attorney fees, finding DHS lacked substantial justification for denying those rights.

Affirmed.

Decided 05/05/26

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