Case Title: Althea M. Keup v. Wisconsin Department of Health & Family Services

Citation: 2004 WI 16

Docket Number: 2002AP000456

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2004-03-04T00:00:00Z

Document:
2004 WI 16 
 
 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
02-0456 
COMPLETE TITLE: 
 
 
Althea M. Keup,  
          Plaintiff-Petitioner-Appellant, 
     v. 
Wisconsin Department of Health & Family  
Services,  
          Respondent-Respondent, 
Helene Nelson, in her official capacity  
as Secretary of the Department of Health  
and Family Services,  
          Defendant-Respondent. 
 
 
ON CERTIFICATION FROM THE COURT OF APPEALS 
 
 
OPINION FILED: 
March 4, 2004   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
October 13, 2003 
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Ozaukee   
 
JUDGE: 
Thomas R. Wolfgram   
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
ABRAHAMSON, C.J., dissents (opinion filed). 
BRADLEY, J., joins dissent.   
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the plaintiff-petitioner-appellant there were briefs by 
Carol J. Wessels and SeniorLAW Legal Action of Wisconsin, Inc., 
Milwaukee, and oral argument by Carol J. Wessels. 
 
For the respondent-respondent and the defendant-respondent 
the cause was argued by Bruce A. Olsen, assistant attorney 
general, with whom on the brief was Peggy A. Lautenschlager, 
attorney general. 
 
An amicus curiae brief was filed by Mitchell Hagopian, 
Madison, on behalf of Wisconsin Coalition for Advocacy, Legal 
Aid Society of Milwaukee, Elder Law Center of the Coalition of 
Wisconsin Aging Groups, Employment Resources, Inc., and ABC for 
Health. 
 
2004 WI 16 
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  02-0456  
(L.C. No. 
00 CV 322) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Althea M. Keup,  
 
          Plaintiff-Petitioner-Appellant, 
 
     v. 
 
Wisconsin Department of Health & Family  
Services,  
 
          Respondent-Respondent, 
 
Helene Nelson, in her official capacity  
as Secretary of the Department of Health  
and Family Services,  
 
          Defendant-Respondent. 
 
FILED 
 
MAR 4, 2004 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
APPEAL from an order of the Circuit Court for Ozaukee 
County, Tom R. Wolfgram, Judge.  Affirmed.   
 
¶1 
N. PATRICK CROOKS, J.   This case is before us on 
certification from the court of appeals pursuant to Wis. Stat. § 
No. 
02-0456   
 
2 
 
(Rule) 809.61 (1999-2000).1  Althea M. Keup (Keup) appeals from 
an order of the circuit court, which denied Keup's motion for 
summary judgment, and granted the Department of Health & Family 
Services' (DHFS) motion for summary judgment.  Keup filed a 
request for a fair hearing with the Division of Hearings and 
Appeals (Division) to recoup the full amount paid by her as a 
private pay patient at the nursing home facilities of a medical 
assistance provider.  The Division concluded that it did not 
have jurisdiction to hear Keup's claim and dismissed her fair 
hearing request. 
¶2 
Keup then filed an action in Ozaukee County Circuit 
Court, seeking review of the Division's order dismissing her 
fair hearing request, and also pleading an independent claim 
under 42 U.S.C. § 1983 (1999).2  The circuit court granted DHFS' 
motion for summary judgment.  Keup appealed from the circuit 
court's grant of summary judgment, and, as noted,  the court of 
appeals then certified this case to us. 
¶3 
First, we address the certified question of whether, 
after 
the 
State 
has 
retroactively 
compensated 
a 
medical 
assistance provider for nursing home services provided to a 
                                                 
1 Wisconsin Stat. § (Rule) 809.61 provides in relevant part:  
"(Bypass by certification of court of appeals or upon motion of 
supreme court).  The supreme court may take jurisdiction of an 
appeal or other proceeding in the court of appeals upon 
certification by the court of appeals or upon the supreme 
court's own motion." 
2 Unless otherwise indicated, all references to United 
States Code are to the 1999 edition. 
No. 
02-0456   
 
3 
 
private pay patient and the provider has reimbursed the patient 
in the amount of the medical assistance, the patient has a 
federally protected right to reimbursement from the provider for 
the amount originally paid by the patient in excess of the 
medical assistance reimbursement.  Second, we address the 
certified question of whether the Division has jurisdiction, 
under Wis. Stat. § 49.45(5)(a) (1999-2000),3 to grant a private 
pay patient's request for full reimbursement from a medical 
assistance provider. 
¶4 
We conclude that the circuit court properly granted 
DHFS' motion for summary judgment.  We hold that a private pay 
patient 
does 
not 
have 
a 
federally 
protected 
right 
to 
reimbursement from the provider for the amount originally paid 
by 
the 
patient 
in 
excess 
of 
the 
medical 
assistance 
reimbursement.  At the time of admittance, Keup was neither a 
medical assistance applicant nor a recipient.  Pursuant to 42 
U.S.C. § 1396r(c)(4)(B)(i) and 42 C.F.R. § 483.12(c)(2) (1999),4 
medical assistance providers may charge private pay patients any 
rate they deem appropriate, provided that the patient has notice 
as 
to 
the 
amount 
of 
the 
charge. 
 
We 
conclude 
that 
Wis. Stat. § 49.49(3m), Wis. Admin. Code § HFS 104.01(11) (Apr. 
1999),5 and the Medical Assistance Provider Handbook, Section VI, 
                                                 
3 Unless otherwise indicated, all references to Wisconsin 
Statutes are to the 1999-2000 edition. 
4 Unless otherwise indicated, all references to the Code of 
Federal Regulations are to the 1999 edition. 
5 Unless 
otherwise 
indicated, 
all 
references 
to 
the 
Wisconsin Administrative Code are to the April 1999 edition. 
No. 
02-0456   
 
4 
 
page A6-002 (Handbook) appropriately require medical assistance 
providers to refund only the amount paid by the medical 
assistance program on behalf of retroactively eligible persons.6  
We further hold that the Division did not have jurisdiction to 
hear this claim, as none of the statutory bases for jurisdiction 
under 
Wis. Stat. § 49.45(5)(a) 
or 
Wis. 
Admin. 
Code 
§ HFS 
104.01(5)(a)1 were satisfied. 
I 
 
¶5 
In late September 1999, Keup moved into Mequon Care 
Center (Mequon), a nursing home facility.  Mequon is a medical 
assistance service provider for the Medical Assistance Program, 
a federal health insurance program administered by the states.  
                                                 
6 While the dissent cites some cases that appear to lend 
support to the proposition that Medicare coverage is retroactive 
for only three months before the month in which the application 
is filed, none of the cases explicitly state that the days that 
are in the month in which the application is filed, but that are 
before the actual date of the filing, are not also a part of 
this retroactive period.  The court of appeals' case cited in 
paragraph 60 of the dissent, St. Paul Ramsey Medical Center v. 
DHSS, 186 Wis. 2d 37, 519 N.W.2d 681 (Ct. App. 1994), never 
expressly limited the retroactive period so as not to count the 
pre-application days of the application month.  We use the terms 
retroactive and retroactivity consistent with a layperson's 
understanding of such terms.  Retroactive refers to the time 
period prior to the determination that Keup was eligible to be a 
recipient of medical assistance benefits.  The focus of the 
cases cited by the dissent was on the earliest possible day that 
coverage would apply, not on whether the pre-application days of 
the application month were part of the retroactive period.  The 
dissent fails to address the first certified question, but 
rather leads us into areas not necessary for resolution of this 
case.  The issue we must address is whether private pay patients 
have a federally protected right to reimbursement for the amount 
paid in excess of the medical assistance reimbursement. 
No. 
02-0456   
 
5 
 
Upon admittance, Mequon accepted Keup as a private pay patient.  
Keup prepaid the October 1999 charge at the private monthly rate 
of $4540.38.   
¶6 
On October 21, 1999, after she had already moved into 
Mequon, Keup applied for medical assistance benefits.  On 
October 29, 1999, Keup was approved for benefits retroactive to 
October 1, 1999.  DHFS, the Wisconsin agency responsible for 
administering the medical assistance program, paid Mequon for 
Keup's care in October in the amount of $3471.52 at the then 
prevailing rate of $106.26 per day.  In accordance with State 
policy, Mequon then refunded the same to Keup.  Thus, Keup's 
total out-of-pocket expenses were $1068.86. 
¶7 
Believing she was entitled to a refund of the full 
amount she had paid, Keup filed a request for a fair hearing 
with the Division pursuant to Wis. Stat. § 49.45(5).7  A hearing 
was held before a Division examiner.  At the hearing, Keup 
                                                 
7 Wisconsin Stat. § 49.45(5) provides in relevant part:   
 
(5)  Appeal.  (a)  Any person whose application 
for medical assistance is denied or is not acted upon 
promptly or who believes that the payments made in the 
person's behalf have not been properly determined or 
that his or her eligibility has not been properly 
determined may file an appeal with the department 
pursuant to par. (b).  Review is unavailable if the 
decision or failure to act arose more than 45 days 
before submission of the petition for a hearing. 
 
(b)  1.  Upon receipt of a timely petition under 
par. (a) the department shall give the applicant or 
recipient reasonable notice and opportunity for a fair 
hearing. 
No. 
02-0456   
 
6 
 
contested the validity of the policy regarding refunds reflected 
in Wis. Stat. § 49.49(3m),8 Wis. Admin. Code § HFS 104.01(11),9 
                                                 
 
8 Wisconsin Stat. § 49.49(3m) 
provides 
in 
relevant 
part:   
 
(3m)  Prohibited Provider Charges.  (a)  No 
provider may knowingly impose upon a recipient charges 
in addition to payments received for services under 
ss. 49.45 to 49.47 or knowingly impose direct charges 
upon a recipient in lieu of obtaining payment under 
ss. 
49.45 
to 
49.47 
except 
under 
the 
following 
conditions: 
1.  Benefits or services are not provided under 
s. 49.46(2) and the recipient is advised of this fact 
prior to receiving the service. 
2.  If an applicant is determined to be eligible 
retroactively under s. 49.46(1)(b) and a provider 
bills the applicant directly for services and benefits 
rendered during the retroactive period, the provider 
shall, 
upon 
notification 
of 
the 
applicant's 
retroactive 
eligibility, 
submit 
claims 
for 
reimbursement under s. 49.45 for covered services or 
benefits rendered during the retroactive period.  Upon 
receipt of payment, the provider shall reimburse the 
applicant or other person who has made prior payment 
to the provider.  No provider may be required to 
reimburse the applicant or other person in excess of 
the amount reimbursed under s. 49.45. 
3.  Benefits or services for which recipient 
copayment, coinsurance or deductible is required under 
s. 49.45(18), not to exceed maximum amounts allowable 
under 42 CFR 447.53 to 447.58. 
 
9 Wisconsin Admin. Code § HFS 104.01(11) provides in 
relevant part: 
 
(11)  RIGHT TO REQUEST RETURN OF PAYMENTS MADE 
FOR COVERED SERVICES DURING PERIOD OF RETROACTIVE 
ELIGIBILITY.  If a person has paid all or part of the 
No. 
02-0456   
 
7 
 
and the Handbook,10 alleging that the provisions conflicted with 
federal regulations.  Keup requested that DHFS be required to 
give her a full refund of the total amount she had paid.  The 
Division concluded that Keup's request did not invoke any of the 
instances under § 49.45(5)(a) sufficient to confer jurisdiction 
upon the Division.  The Division further concluded that it did 
not 
have 
jurisdiction 
under 
Wis. 
Admin. 
Code 
§ HFS 
104.01(5)(a)1,11 which grants jurisdiction "when [an applicant or 
recipient is] aggrieved by action or inaction of the agency or 
                                                                                                                                                             
cost of health care services received and then becomes 
a 
recipient 
of 
MA 
benefits 
with 
retroactive 
eligibility for those covered services for which the 
recipient 
has 
previously 
made payment, 
then the 
recipient has the right to notify the certified 
provider of the retroactive eligibility period.  At 
that time the certified provider shall submit claims 
to MA for covered services provided to the recipient 
during the retroactive period.  Upon the provider's 
receipt 
of 
the 
MA 
payment, 
the 
provider 
shall 
reimburse the recipient for the lesser of the amount 
received from MA or the amount paid by recipient or 
other person, minus any relevant copayment.  In no 
case 
may 
the 
department 
reimburse 
the 
recipient 
directly. 
 
10 The relevant portion of the Handbook states as follows:  
"When the provider receives WMAP payment, the provider must 
reimburse the recipient either the WMAP payment or the amount 
paid by the recipient or other person, minus any applicable 
copayment, whichever is less." 
11 Wisconsin Admin. Code § HFS 104.01(5)(a)(1) states in 
relevant part: "(5)  Appeals.  (a)  Fair hearing.  1.  
Applicants and recipients have the right to a fair hearing in 
accordance with procedures set out in ch. HSS 225 and this 
subsection when aggrieved by action or inaction of the agency or 
the department." 
No. 
02-0456   
 
8 
 
the department."  Pursuant to these findings, the Division 
dismissed Keup's fair hearing request. 
¶8 
Keup filed this action against DHFS and the Secretary 
of DHFS12 in Ozaukee County Circuit Court, seeking review of the 
Division's order dismissing her fair hearing request.  Keup also 
pled an independent claim under 42 U.S.C. § 1983, alleging that 
Wis. Stat. § 49.49(3m), Wis. Admin. Code § HFS 104.01(11), and 
the Handbook, which require medical assistance providers to 
refund only the amount paid by the medical assistance program on 
behalf of retroactively eligible persons, were contrary to 
federal statutes and regulations. 
¶9 
Both Keup and DHFS filed motions for summary judgment.  
The circuit court granted DHFS' motion for summary judgment with 
respect to both issues.  The circuit court, the Honorable Tom R. 
Wolfgram presiding, upheld the Division's ruling that it lacked 
jurisdiction to grant the relief Keup sought.  Regarding the 42 
U.S.C. 
§ 1983 
action, 
the 
court 
concluded 
that 
Wis. Stat. § 49.49(3m), Wis. Admin. Code § HFS 104.01(11), and 
the Handbook did not violate federal statutes and regulations. 
¶10 Keup appealed the circuit court's decision.  Keup 
alleged 
that 
the 
Secretary 
of 
DHFS 
implemented 
Wis. Stat. § 49.49(3m), Wis. Admin. Code § HFS 104.01(11), and 
the Handbook and, in administering these provisions, acted under 
                                                 
12 Several people have held the title of Secretary of DHFS 
since the beginning of this action.  For the sake of simplicity, 
we will use the term "Secretary" throughout this opinion to 
represent each Secretary of DHFS who has been sued in his or her 
official capacity during the course of this action. 
No. 
02-0456   
 
9 
 
color of state law, and deprived her of the rights set forth in 
federal statutes and regulations. 
¶11 As stated previously, the court of appeals certified 
two issues to this court.13  The first issue certified is 
whether, after the State has retroactively compensated a medical 
assistance provider for nursing home services provided to a 
private pay patient and the provider has reimbursed the patient 
in the amount of the medical assistance, the patient has a 
federally protected right to reimbursement from the provider for 
the amount originally paid by the patient in excess of the 
medical assistance reimbursement.  The second issue is whether 
the Division has jurisdiction, under Wis. Stat. § 49.45(5)(a), 
to grant a private pay patient's request for full reimbursement 
from a medical assistance service provider.   
 
II 
 
¶12 We now consider whether private pay patients have a 
federally protected right to reimbursement for the amount paid 
in excess of the medical assistance reimbursement.  This issue 
involves statutory interpretation, which is a question of law 
that this court reviews de novo.  Hutson v. State Pers. Comm'n, 
2003 WI 97, ¶31, 263 Wis. 2d 612, 665 N.W.2d 212.  Thus, we are 
not bound by an administrative agency's determination.  Id.  
                                                 
13 The court of appeals noted that if Keup were to prevail 
before this court, we would be confronted with another issue. 
Namely, we would have to decide whether Mequon should be given 
notice and an opportunity to participate in a Division hearing.  
We will not address this issue, as it is unnecessary to the 
holding reached in this case. 
No. 
02-0456   
 
10 
 
Nevertheless, we have generally used one of three standards of 
review, with varying degrees of deference, to review an agency's 
conclusions of law or statutory interpretation.  Id.  The three 
standards of deference this court typically applies to such 
agency decisions are great weight, due weight, or de novo.  Id. 
 
¶13 The highest level of deference accorded to an agency 
decision is great weight.  We give an agency decision great 
weight deference when the following four criteria are met:  
"'(1) the agency was charged by the legislature with 
the duty of administering the statute; (2) [] the 
interpretation of the agency is one of long-standing; 
(3) 
[] 
the 
agency 
employed 
its 
expertise 
or 
specialized knowledge in forming the interpretation; 
and (4) [] the agency's interpretation will provide 
uniformity and consistency in the application of the 
statute.'"   
UFE Inc. v. LIRC, 201 Wis. 2d 274, 284, 548 N.W.2d 57 (1996) 
(quoting Harnischfeger Corp. v. LIRC, 196 Wis. 2d 650, 660, 539 
N.W.2d 98 (1995)).   
¶14 Under 
the 
great 
weight 
standard, 
an 
agency's 
interpretation of a statute will be upheld provided that it is 
"reasonable and not contrary to the clear meaning of the 
statute, 
 . . . even 
if 
the 
court 
finds 
that 
another 
interpretation is more reasonable."  Hutson, 263 Wis. 2d 612, 
¶32; UFE, 201 Wis. 2d at 286-87.   
 
¶15 The intermediate level of deference is due weight.  
Due weight deference is appropriate when the agency has some 
experience in a particular area, but has not developed the 
expertise which necessarily places it in a better position than 
No. 
02-0456   
 
11 
 
a court to make a judgment regarding the interpretation of a 
statute.  UFE, 201 Wis. 2d at 286.  We give the agency deference 
because the legislature has charged the agency with a statute's 
enforcement, and not necessarily because of its knowledge or 
skill in an area.  Id.  Under the due weight standard, a 
reviewing 
court 
will 
not 
overturn 
a 
reasonable 
agency 
interpretation that comports with the statute's purpose unless 
there is a more reasonable interpretation available.  Id. at 
286-87.  
 
¶16 The lowest level of deference a reviewing court 
applies to an agency's decision is de novo review.  Under de 
novo review, the agency's decision in a matter is given 
absolutely no weight.  Hutson, 263 Wis. 2d 612, ¶34.  A 
reviewing court considers an agency decision de novo when "the 
issue before the agency is clearly one of first impression, or 
when an agency's position on an issue has been so inconsistent 
so as to provide no real guidance."  UFE, 201 Wis. 2d at 285 
(citations omitted).  De novo review is appropriate in this case 
because the issue in this case, whether a private pay patient 
has a federally protected right to reimbursement from the 
provider for the amount originally paid by the patient in excess 
of the medical assistance reimbursement, is one of first 
impression. 
 
¶17 When interpreting a statute, this court first looks to 
the plain meaning of the statute itself.  VanCleve v. City of 
Marinette, 2003 WI 2, ¶17, 258 Wis. 2d 80, 655 N.W.2d 113.  When 
the statutory language is clear and unambiguous, we may not look 
No. 
02-0456   
 
12 
 
beyond the plain words of the statute in question to ascertain 
its meaning.  Id.  To determine if a statute is ambiguous, we 
look to the statutory language itself.  Bruno v. Milwaukee 
County, 2003 WI 28, ¶20, 260 Wis. 2d 633, 660 N.W.2d 656.  
Statutory language is given its usual and common meaning, while 
technical or specialized terms are interpreted according to 
their unique meanings.  Id.  If the statute is unambiguous, we 
must give effect to the words within the statute according to 
their common meanings.  DNR v. Wis. Power & Light Co., 108 
Wis. 2d 403, 407, 321 N.W.2d 286 (1982).  As a general rule, we 
do not review extrinsic sources, unless there is ambiguity.  If 
the statutory language is ambiguous, however, we then may use 
the scope, history, context, and subject matter of the statute 
in order to ascertain legislative intent.  State v. Delaney, 
2003 WI 9, ¶14, 259 Wis. 2d 77, 658 N.W.2d 416.  Statutory 
language is ambiguous if reasonable persons could disagree 
regarding its meaning.  Id.      
¶18 Keup asserts that DHFS' policies violate federal 
statutes and regulations, which are federally protected rights, 
thus violating 42 U.S.C. § 1983.  According to Keup, DHFS 
violated 
42 
U.S.C. 
§ 1396a(a)(10)(B),14 
the 
"uniformity" 
                                                 
14 42 U.S.C. § 1396a(a)(10)(B) provides in relevant part: 
(a) Contents 
 
A State plan for medical assistance must—— 
 
(10) provide—— 
No. 
02-0456   
 
13 
 
provision, by providing full medical assistance benefits to 
some, but not all, retroactively eligible recipients.  Keup 
further asserts that DHFS violated 42 U.S.C. § 1396a(a)(34),15 
the "retroactivity" provision, by failing to provide her with 
retroactive medical assistance.  Finally, Keup argues that DHFS 
                                                                                                                                                             
  
(B) that the medical assistance made available to 
any individual described in subparagraph (A)— 
 
(i) shall not be less in amount, duration, or 
scope than the medical assistance made available to 
any other such individual, and 
 
(ii) shall not be less in amount, duration, or 
scope than the medical assistance made available to 
individuals not described in subparagraph (A). 
 
15 42 U.S.C. § 1396a(a)(34) provides in relevant part: 
 
A State plan for medical assistance must—— 
 
(34) provide that in the case of any individual 
who has been determined to be eligible for medical 
assistance under the plan, such assistance will be 
made available to him for care and services included 
under the plan and furnished in or after the third 
month before the month in which he made application 
(or application was made on his behalf in the case of 
a deceased individual) for such assistance if such 
individual was (or upon application would have been) 
eligible for such assistance at the time such care and 
services were furnished. 
 
No. 
02-0456   
 
14 
 
violated 42 C.F.R. § 447.15,16 the "payment in full" provision, 
as Mequon did not accept DHFS' payment as payment in full and, 
instead, retained the difference between DHFS' payment and the 
amount paid by Keup upon her admission to Mequon. Keup states 
that 
§ 1396a(a)(10)(B), 
§ 1396a(a)(34), 
and 
§ 447.15 
are 
enforceable under § 1983, as they comport with the standards set 
forth by the United States Supreme Court's case law.   
 
¶19 DHFS asserts that 42 U.S.C. § 1396a(a)(10)(B), 42 
U.S.C. § 1396a(a)(34), and 42 C.F.R. § 447.15 do not create 
federally enforceable rights to be free from out-of-pocket 
expenses when a private pay patient contracts with a medical 
assistance 
service 
provider. 
 
DHFS 
argues 
that 
§ 1396a(a)(10)(B), 
§ 1396a(a)(34), 
and 
§ 447.15 
do 
not 
unambiguously impose binding obligations on the State to 
reimburse private pay patients who were found retroactively 
eligible for medical assistance benefits when the amount paid by 
the patient is greater than the State's medical assistance 
benefit amount. 
 
¶20 It is necessary for our analysis to discuss when an 
action appropriately exists under 42 U.S.C. § 1983.  A claim may 
exist under § 1983 when either a constitutional provision or a 
statutory provision of federal law is violated.  Maine v. 
                                                 
16 42 C.F.R. § 447.15 provides in relevant part:  "A State 
plan 
must 
provide 
that 
the 
Medicaid 
agency 
must 
limit 
participation in the Medicaid program to providers who accept, 
as payment in full, the amounts paid by the agency plus any 
deductible, coinsurance or copayment required by the plan to be 
paid by the individual."   
No. 
02-0456   
 
15 
 
Thiboutot, 448 U.S. 1, 4, (1980).  However, there are two 
exceptions to this general rule.  First, § 1983 may not be used 
to remedy a statutory violation, if the statute in question does 
not create an enforceable right under § 1983.  Wright v. Roanoke 
Redevelopment & Hous. Auth., 479 U.S. 418, 423, (1987).  Second, 
§ 1983 may not be used to remedy a statutory violation if 
Congress has foreclosed enforcement of the statute in question 
under § 1983 itself.  Id.  Thus, if a state deprives a person of 
a right secured by a federal statute, § 1983 may be used to 
remedy the statutory violation unless the state can show by an 
express provision, or present specific evidence from the statute 
itself, that Congress intended to preclude private enforcement 
of the right.  Id.  
 
¶21 Yet, even if a person demonstrates that a federal 
statute creates an individual right, there exists only a 
rebuttable presumption that the right is enforceable under 42 
U.S.C. § 1983.  Blessing v. Freestone, 520 U.S. 329, 341, 
(1997).  In order to support a claim under § 1983, a plaintiff 
must demonstrate that the statute unambiguously confers a right 
to such action.  Gonzaga Univ. v. Doe, 536 U.S. 273, 283, 
(2002).   
¶22 In Blessing, the United States Supreme Court listed 
three criteria that must be met in order to conclude that a 
statutory provision gives rise to a federal right.  Blessing, 
520 U.S. at 340.  First, Congress must have intended that the 
provision in question benefit the plaintiff.  Id.  Second, the 
plaintiff must demonstrate that the right allegedly protected by 
No. 
02-0456   
 
16 
 
the statute is not so vague and amorphous that its enforcement 
would strain judicial competence.  Id. at 340-41.  Third, the 
statutory 
provision 
must 
unambiguously 
impose 
a 
binding 
obligation on the states.  Id. at 341.  More specifically, the 
provision giving rise to the right must be couched in mandatory, 
rather than precatory,17 terms.  Id.  If the text of a statute is 
precatory, it cannot be read to bind the states to any 
obligation.  Congress' power legitimately to legislate under the 
spending power is contingent upon the states' knowing and 
voluntary acceptance of the terms set by Congress. Pennhurst 
State Sch. & Hosp. v. Halderman, 451 U.S. 1, 17, (1981).  If a 
state is unaware of the conditions imposed by Congress, or if 
the conditions are not easily discernible, the state cannot be 
said 
knowingly to 
accept 
Congress' 
terms. 
 
Id.  
Thus, 
congressional encouragement of state programs and the imposition 
of binding obligations on the states are two entirely different 
matters.  Id. at 27. 
¶23 Keup asserts that each federal provision in question 
satisfies the Blessing criteria.  Keup argues that 42 U.S.C. 
§ 1396a(a)(10)(B) was clearly intended to benefit persons such 
as her, as medical assistance eligible individuals are the 
intended beneficiaries of this provision.  Keup further states 
that the right protected by § 1396a(a)(10)(B) is not so vague or 
                                                 
17 In referencing "precatory" terms, we refer to words 
"requesting, recommending, or expressing a desire for action, 
but usu(ally) in a nonbinding way."  Black's Law Dictionary 1195 
(7th ed. 1999). 
No. 
02-0456   
 
17 
 
amorphous, 
so 
as 
to 
strain 
judicial 
competence 
in 
its 
enforcement, as the provision suggests that all individuals who 
are eligible to receive medical assistance benefits must receive 
the same benefits.  Keup reasons that § 1396a(a)(10)(B) is 
mandatory upon the State because of the use of the words "must" 
within 
42 
U.S.C. 
§ 1396a(a) 
and 
"shall" 
within 
§ 1396a(a)(10)(B). 
¶24 Regarding 42 U.S.C. § 1396a(a)(34), Keup asserts that 
she is clearly an intended beneficiary, as Congress stated that 
medical assistance eligible individuals are the beneficiaries of 
the requirement that states must retroactively provide medical 
assistance benefits.  Keup states that § 1396a(a)(34) is neither 
vague nor ambiguous.  Because § 1396a(a)(34) contains the word 
"must," Keup argues that the language of the provision is 
clearly mandatory upon the State of Wisconsin. 
¶25 Finally, Keup asserts that medical assistance eligible 
individuals 
are 
the 
intended 
beneficiaries 
of 
42 
C.F.R. 
§ 447.15, as they are benefited by not incurring out-of-pocket 
expenses.  Keup states that § 447.15's language is neither vague 
nor ambiguous.  Keup further alleges that § 447.15 is mandatory 
upon the states, as it contains the word "must" twice. 
¶26 DHFS argues that 42 U.S.C. § 1396a(a)(10)(B), 42 
U.S.C. § 1396a(a)(34), and 42 C.F.R. § 447.15 fail the third 
Blessing prong, as those sections do not unambiguously impose a 
binding obligation on the State of Wisconsin to reimburse the 
private pay patient the amount originally paid by the patient in 
excess of the medical assistance reimbursement.   
No. 
02-0456   
 
18 
 
¶27 We conclude that 42 U.S.C. § 1396a(a)(10)(B), 42 
U.S.C. 
§ 1396a(a)(34), 
and 
42 
C.F.R. 
§ 447.15 
do 
not 
unambiguously impose binding obligations on the State, as 
required by Blessing, to reimburse private pay patients who were 
found retroactively eligible for medical assistance benefits for 
the out-of-pocket expenses they incurred before they were 
eligible for medical assistance.  Looking to the plain language 
of the statutes in question, we conclude that the relevant 
statutory language is clear and unambiguous and, as a result, 
must be given its plain meaning.   
¶28 Keup received the same amount of medical assistance 
benefits for the month of October as a private pay patient who 
applies for benefits subsequent to his or her admission and is 
declared retroactively eligible for benefits.  Based on the 
plain language of 42 U.S.C. § 1396a(a)(10)(B), we cannot say 
that private pay patients are entitled to a refund of their 
entire payment in order for their benefits to be deemed 
compliant with the "uniformity" provision.  Further, 42 U.S.C. 
§ 1396a(a)(34) cannot reasonably be read to require the states 
to retroactively reimburse private pay patients the entire 
amount paid by them before they applied for and began receiving 
benefits. 
 
Keup 
received 
medical 
assistance 
benefits 
retroactively for the same amount as every other medical 
assistance recipient residing at Mequon for the month of 
October.  Finally, 42 C.F.R. § 447.15 cannot be reasonably 
construed as unambiguously requiring that medical assistance 
providers reimburse a private pay patient the difference between 
No. 
02-0456   
 
19 
 
the medical assistance benefits and the patient's original 
amount paid to the medical assistance provider.   
¶29 We conclude that none of the statutes in question can 
be said to contain mandatory language that binds the states.  To 
the contrary, it does not appear that Congress ever intended for 
private pay patients to be reimbursed for out-of-pocket amounts 
incurred prior to their application, and subsequent eligibility, 
for medical assistance.  Congress did not unambiguously impose 
an obligation on the states to reimburse private pay patients 
for such amounts.  It is further evident that, given the 
position DHFS has taken in the claim, it was also unaware of any 
allegedly binding obligation imposed upon it by Congress.  Given 
the plain language of the statutes in question and their failure 
to impose any such unambiguous obligations, we must conclude 
that 
Congress 
did 
not 
intend to 
bind the 
states 
under 
§ 1396a(a)(10)(B), § 1396a(a)(34), and § 447.15.  
¶30 Moreover, other federal statutory provisions permit 
Mequon to retain the amount of Keup's October 1999 payment that 
exceeded DHFS' reimbursement.  At the time she was admitted to 
Mequon, Keup was neither an applicant nor a recipient of medical 
assistance benefits.  The applicant/recipient distinction is 
reflected in 42 C.F.R. § 400.203.18  Under § 400.203, Keup was 
                                                 
18 42 C.F.R. § 400.203 provides in relevant part:    
 
As used in connection with the Medicaid program, 
unless the context indicates otherwise—— 
 
Applicant 
means 
an 
individual 
whose 
written 
application for Medicaid has been submitted to the 
No. 
02-0456   
 
20 
 
not an applicant at the time of her admission to Mequon, as she 
did not have an application pending for medical assistance.  
Moreover, Keup was not a recipient of medical assistance 
benefits at the time of her admittance, as she had not yet been 
determined eligible for medical assistance benefits.  Thus, it 
is clear that Keup entered Mequon as a private pay patient. 
¶31 Under 
42 
U.S.C. 
§ 1396r(c)(4)(B)(i),19 
Mequon may 
charge private pay patients a rate of its choosing, provided 
that such patients have adequate notice of the applicable rate.  
                                                                                                                                                             
agency determining Medicaid eligibility, but has not 
received final action.  This includes an individual 
(who need not be alive at the time of application) 
whose 
application 
is 
submitted 
through 
a 
representative or a person acting responsibly for the 
individual. 
  
Recipient 
means 
an 
individual who 
has 
been 
determined eligible for Medicaid. 
 
19 42 U.S.C. § 1396r(c)(4)(b)(i) provides in relevant 
part:   
(c) Requirements relating to residents' rights 
(4) Equal access to quality care 
(B) Construction 
(i) Nothing prohibiting any charges for non-medicaid 
patients 
 
Subparagraph (A) 
shall not 
be construed as 
prohibiting a nursing facility from charging any 
amount for services furnished, consistent with the 
notice in paragraph (1)(B) describing such charges.  
No. 
02-0456   
 
21 
 
Further, under 42 C.F.R. § 483.12(c)(2),20 medical assistance 
service providers may specifically charge private pay patients 
any amount they deem appropriate, provided that the patient is 
given notice of the charges.  Because Keup was a private pay 
patient at the time of her admittance to Mequon, both she and 
Mequon had the freedom to contract regarding the charge for 
Mequon's services for October 1999.  The record indicates that 
Keup did have notice of Mequon's monthly rate, since her 
prepayment of the October 1999 charges seems to demonstrate 
rather clearly her awareness of Mequon's rate for its services. 
¶32 We hold that a private pay patient does not have a 
federally protected right to reimbursement from a medical 
assistance provider for the amount originally paid by the 
patient in excess of the medical assistance reimbursement.  
Persons who are neither medical assistance applicants nor 
recipients under 42 C.F.R § 400.203 at the time of their 
admission to a medical assistance provider are private pay 
patients.  As we have discussed, pursuant to 42 U.S.C. 
§ 1396r(c)(4)(B)(i) 
and 
42 
C.F.R. 
§ 483.12(c)(2), 
medical 
assistance providers may charge private pay patients any rate 
they deem appropriate, provided that the patient has notice as 
to the amount of the charge.  Here, Keup and Mequon entered into 
a contract setting the charges for Keup's stay during October 
                                                 
20 42 C.F.R. § 483.12(c)(2) provides in relevant part:  "(c) 
Equal access to quality care.  (2) The facility may charge any 
amount 
for 
services 
furnished 
to 
non-Medicaid 
residents 
consistent with the notice requirement in § 483.10(b)(5)(i) and 
(b)(6) describing the charges." 
No. 
02-0456   
 
22 
 
1999.  We further hold, based on the same approach to contract, 
that Wis. Stat. § 49.49(3m), Wis. Admin. Code § HFS 104.01(11), 
and the 
Handbook 
appropriately require 
medical 
assistance 
providers, such as Mequon, to refund only the amount paid by the 
medical assistance program on behalf of retroactively eligible 
persons.  
III 
 
¶33 We 
next 
consider 
whether 
the 
Division 
has 
jurisdiction, under Wis. Stat. § 49.45(5)(a), to grant a private 
pay patient's request for full reimbursement from a medical 
assistance provider.    As noted in section II, an agency's 
decision is generally entitled to some deference when the agency 
has special knowledge or skill in interpreting a statute.      
However, an agency's decision regarding the scope of its own 
power is not binding on reviewing courts.  Wis. Envtl. Decade v. 
Pub. Serv. Comm'n, 81 Wis. 2d 344, 351, 260 N.W.2d 712 (1978); 
Big Foot Country Club v. Wis. Dept. of Revenue, 70 Wis. 2d 871, 
875, 235 N.W.2d 696 (1975); Bd. of Regents v. Wis. Pers. Comm'n, 
103 Wis. 2d 545, 551, 309 N.W.2d 366 (Ct. App. 1981).  Thus, we 
owe no deference to the agency's decision here, which defines 
the scope of its own power.  Amsoil v. LIRC, 173 Wis. 2d 154, 
165, 496 N.W.2d 150 (Ct. App. 1992).  We, therefore, review the 
issue de novo.  
 
¶34 Keup asserts that she was entitled to a fair hearing 
because the amount and sufficiency of her October 1999 medical 
assistance benefits are in dispute.  Keup states that her 
medical assistance benefits were clearly insufficient, since the 
No. 
02-0456   
 
23 
 
difference between what she paid Mequon and what she was 
reimbursed by medical assistance totaled $1068.86.  Keup 
suggests that, because the medical assistance payment she did 
receive from the State failed to make her whole, DHFS failed to 
act promptly with respect to her application, thus satisfying 
the jurisdictional basis under Wis. Stat. § 49.45(5)(a). 
 
¶35 Keup further contends that the Division "acted," as 
contemplated by Wis. Admin. Code § HFS 104.01(5)(a)1, when it 
created its statutes and policies, which violate federal law.  
Keup alleges that DHFS "failed to act" when it did not provide 
her with medical assistance sufficient to cover her out-of-
pocket expenses. 
 
¶36 DHFS asserts that the Division correctly decided that 
it did not have jurisdiction to hear Keup's claim under 
Wis. Stat. § 49.45(5)(a) or Wis. Admin. Code § HFS 104.01.  With 
respect to § 49.45(5)(a), DHFS states that there is not a 
jurisdictional basis for the Division to hold a fair hearing, as 
Keup's claim does not fall under any of the four options listed 
in the statute.  According to DHFS, Keup was not denied medical 
assistance benefits, her application was acted on promptly, she 
was reimbursed the correct amount for her October 1999 expenses, 
and her eligibility for medical assistance benefits was not 
improperly determined.  DHFS contends that Keup's assertion that 
she received insufficient benefits is unfounded, as she received 
the same amount of medical assistance benefits provided to every 
other Mequon resident.   
No. 
02-0456   
 
24 
 
¶37 DHFS further agrees with the Division's decision that 
jurisdiction does not lie under Wis. Admin. Code. § HFS 
104.01(5)(a)1.  DHFS asserts that the legislature created 
Wis. Stat. § 49.49(3m)(a)2, 
and 
that 
DHFS' 
policies 
merely 
reflect the legislative policy behind the statute.  DHFS further 
asserts that it is Mequon, not DHFS, who retained the out-of-
pocket expenses Keup incurred.  Thus, DHFS argues, it is 
Mequon's actions that have affected Keup.  
¶38 Under 
Wis. Stat. § 49.45(5)(a), 
the 
Division 
has 
jurisdiction in only the following four circumstances:  (1) 
denial of medical assistance benefits; (2) medical assistance 
application not acted on promptly; (3) medical assistance 
payments that were made were not determined properly; or (4) 
medical assistance eligibility that was not determined properly.  
¶39 We conclude that the Division correctly decided that 
it did not have jurisdiction to hear Keup's claim under 
Wis. Stat. § 49.45(5)(a), because none of the statutory bases 
for jurisdiction were met.  Keup was not denied medical 
assistance benefits, as she was approved to receive medical 
assistance benefits in late October retroactive to October 1, 
1999.  Because Keup both applied for and was approved for 
medical assistance benefits in October, she may not claim that 
her medical assistance application was not acted on promptly.  
Further, Keup's claim cannot be categorized as one in which her 
medical assistance payments were not determined properly.  Keup 
received the amount of medical assistance benefits to which she 
was entitled, as she received the prevailing medical assistance 
No. 
02-0456   
 
25 
 
rate of $106.26 per day. Simply because Keup incurred out-of-
pocket expenses as a private pay patient does not mean that the 
retroactive benefits provided to her are insufficient.  Finally, 
Keup's claim does not really involve the issue of whether her 
medical assistance eligibility was determined properly, since 
DHFS did determine that Keup was eligible to receive medical 
assistance benefits.     
¶40 We further conclude that the Division did not have 
jurisdiction to hear Keup's claim under Wis. Admin. Code § HFS 
104.01(5)(a)1.  Pursuant to § 104.01(5)(a)1, the Division has 
jurisdiction "when [an applicant or recipient is] aggrieved by 
action or inaction of the agency or the department."  We agree 
with the Division's assertion that Keup was not injured by DHFS' 
action or inaction.  DHFS did not violate federal statutes or 
regulations 
by 
failing 
to 
reimburse 
Keup's 
out-of-pocket 
expenses.  As discussed in Section II of this opinion, Keup does 
not have a federally protected right to such reimbursement, and 
the state statutory provisions dealing with medical assistance 
benefits provide for the appropriate reimbursement amount.  Keup 
contracted with Mequon, not DHFS, to enter the nursing facility, 
and Mequon retained that portion of Keup's payment that was not 
reimbursed by the State.  Thus, DHFS cannot be required to 
reimburse Keup.  In fact, § 104.01(11) prohibits DHFS from 
directly reimbursing medical assistance recipients.  As Mequon, 
not DHFS, retained Keup's $1068.86, and Mequon is not an agency 
or department, the Division did not have jurisdiction to hear 
No. 
02-0456   
 
26 
 
Keup's claim under § 104.01(5)(a)1, since she was not "aggrieved 
by action or inaction of the agency or the department."  
IV 
 
¶41 We conclude that the circuit court was correct when it 
granted DHFS' motion for summary judgment.  We hold that a 
private pay patient does not have a federally protected right to 
reimbursement from the provider for the amount originally paid 
by 
the 
patient 
in 
excess 
of 
the 
medical 
assistance 
reimbursement.  At the time of admittance, Keup was neither a 
medical assistance applicant nor a recipient, but was a private 
pay patient.  Pursuant to 42 U.S.C. § 1396r(c)(4)(B)(i) and 42 
C.F.R. § 483.12(c)(2), medical assistance providers may charge 
private pay patients any rate such provider deems appropriate, 
provided that the patient has notice of the amount of the 
charge.  The record reflects that Keup did have such notice.  We 
conclude that Wis. Stat. § 49.49(3m), Wis. Admin. Code § HFS 
104.01(11), and the Handbook appropriately require medical 
assistance providers to refund only the amount paid by the 
medical assistance program on behalf of retroactively eligible 
persons.  We further hold that the Division did not have 
jurisdiction to hear Keup's claim, as none of the statutory 
bases for jurisdiction under Wis. Stat. § 49.45(5)(a) or Wis. 
Admin. Code § HFS 104.01(5)(a)1 were met. 
By the Court.—The order of the Circuit Court for Ozaukee 
County is affirmed.  
 
 
No.  02-0456.ssa 
 
1 
 
 
¶42 SHIRLEY S. ABRAHAMSON, C.J. (dissenting).  Medicaid is 
a program that was enacted in 1965 as a cooperative program 
between the states and the federal government to provide medical 
assistance to indigent individuals.  "While state participation 
in the Medicaid program is purely voluntary, a state that 
participates must comply with the Medicaid laws and implementing 
regulations."21  
¶43 The majority opinion concludes that Congress never 
"intended for private pay patients to be reimbursed for out-of-
pocket 
amounts 
incurred 
prior 
to 
their 
application, 
and 
subsequent eligibility, for medical assistance."22  The majority 
reaches the wrong result because it takes the wrong path.  It 
takes the wrong path because it attempts to answer the certified 
question. 
¶44 Put simply, the court of appeals erred in stating the 
certified question.  Its certified question assumes that the 
State retroactively compensated a medical assistance provider.23  
Whether the compensation was retroactive is the very question 
presented in the present case.   
¶45 The court of appeals and the majority opinion use the 
ordinary dictionary definition of "retroactive."  But the period 
of retroactivity is defined by law.  The law is clear that the 
                                                 
21 Carroll v. DeBuono, 998 F. Supp. 190, 193 (N.D.N.Y. 
1998). 
22 Majority op., ¶29. 
23 Majority op., ¶3. 
No.  02-0456.ssa 
 
2 
 
period of retroactivity begins before the month in which an 
applicant applies for benefits.  None of the federal or state 
statutes or case law implicated in this case states or suggests 
that the month of application, here October 1999, is part of the 
period of retroactivity.   
¶46 The facts are undisputed.  Ms. Keup was a private pay 
patient in late September 1999 and prepaid her expenses for the 
month of October at the private pay patient rates.  She applied 
for benefits on October 21, 1999.  On October 29, 1999, Ms. Keup 
was approved eligible for benefits from October 1, 1999, and the 
Department of Health and Family Services (DHFS) paid the 
provider at the fixed medical assistance rate for Ms. Keup's 
care in October.  The provider refunded the sum received from 
DHFS to Ms. Keup, but did not refund the full amount she had 
prepaid for the month of October.   
¶47 The court of appeals and the majority opinion presume 
that any coverage provided by DHFS prior to October 21, 1999, 
the date of application, is "retroactive."  The majority makes 
this presumption because it uses the common, layperson's 
definition of "retroactive" instead of using the definition of 
"retroactive" set forth in the applicable federal and state 
laws.24  Because I conclude that the majority opinion ignores the 
relevant 
federal 
and 
state 
laws 
defining 
the 
period 
of 
eligibility for retroactive benefits and because I conclude, 
contrary to the majority opinion, that Ms. Keup is not 
requesting a refund of moneys paid during her three-month period 
                                                 
24 Majority op., ¶4 n.6. 
No.  02-0456.ssa 
 
3 
 
of eligibility for retroactive benefits (that is, July, August, 
and September), but rather is requesting a refund of moneys she 
paid 
during October 1999, 
the month 
in 
which 
she 
made 
application and in which she was eligible for benefits, I 
dissent.  I further conclude that DHFS has jurisdiction to 
provide Ms. Keup a fair hearing and that the issue should be 
remanded to the Division of Hearings and Appeals and DHFS for a 
hearing. 
I 
¶48 A number of statutes and administrative rules, both 
state and federal, come into play in this case.  I conclude, as 
did the amicus brief of the Wisconsin Coalition for Advocacy, 
Legal Aid Society of Milwaukee, Elder Center of the Coalition of 
Wisconsin Aging Groups, Employment Resources, Inc., and ABC for 
Health, that this case can be resolved by a proper application 
of Wis. Stat. § 49.49(3m).   
¶49 Section § 49.49(3m)(a) sets forth the general rule 
that "[n]o provider may knowingly impose upon a recipient 
charges in addition to payments received for services . . . ."  
The prohibition recognizes that recipients of Medicaid are poor 
and cannot pay significant out-of-pocket health care costs.   
¶50 Nevertheless, the legislature has provided exceptions 
to the general rule set forth in Wis. Stat. § 49.49(3m)(a).  The 
exception claimed to be applicable to the present case, 
§ 49.49(3m)(a)(2), 
provides 
that 
"[i]f 
an 
applicant 
is 
No.  02-0456.ssa 
 
4 
 
determined to be eligible retroactively under s. 49.46(1)(b)25 
and a provider bills the applicant directly for services and 
benefits rendered during the retroactive period," then the 
provider must obtain reimbursement under § 49.45 for the 
retroactive period and pay over those funds to the applicant; 
"[n]o provider may be required to reimburse the applicant or 
other person in excess of the amount reimbursed under s. 49.45."  
¶51 In other words, under Wis. Stat. § 49.49(3m)(a)2 a 
health care provider is allowed to keep the difference, if any, 
between funds a recipient of medical assistance paid to a 
provider during the period of eligibility for retroactive 
benefits 
and 
the 
fixed 
reimbursement 
amount 
of 
medical 
assistance provided through the Medicaid program.   
¶52 Wisconsin Admin. Code § HFS 106.04(3) similarly states 
that 
a 
provider 
shall 
reimburse 
a 
recipient 
of 
medical 
assistance the lesser of the amount received from medical 
assistance or the amount paid by the recipient for the 
"retroactive 
eligibility 
period."26 
 
This 
Wisconsin 
                                                 
25 Section 49.46(1)(b) provides as follows: "Any person 
shall be considered a recipient of aid for 3 months prior to the 
month of application if the proper agency determines eligibility 
existed during such prior month."  
26 Wisconsin 
Admin. 
Code 
§ HFS 
106.04(3) 
provides 
in 
relevant part: 
A 
provider 
shall 
accept 
payments 
made 
by 
the 
department in accordance with sub. (1) as payment in 
full for services provided a recipient.  A provider 
may not attempt to impose a charge for an individual 
procedure or for overhead which is included in the 
reimbursement 
for 
services provided nor 
may the 
provider attempt to impose an unauthorized charge or 
receive payment from a recipient, relative or other 
No.  02-0456.ssa 
 
5 
 
administrative rule, like the Wisconsin statute, does not 
require a provider to reimburse the recipient of medical 
assistance the full amount the recipient paid the provider 
during the "retroactive eligibility period."  Wisconsin Admin. 
Code § HFS 106.04(3) is an almost verbatim restatement of 
Wis. Stat. § 49.49(3m). 
¶53 To determine how much the provider in the present case 
must reimburse Ms. Keup, the recipient of medical assistance for 
the month of October 1999, I must determine whether October 1999 
falls within or outside of Ms. Keup's period of eligibility for 
retroactive benefits.   
¶54 At the federal level, 42 U.S.C. § 1396a(a)(34) and 42 
C.F.R. 435.914(a) determine the retroactive eligibility period.  
Section 1396a(a)(34) governs the retroactive eligibility of an 
                                                                                                                                                             
person for services provided, or impose direct charges 
upon a recipient in lieu of obtaining payment under 
the program, except under any of the following 
conditions: 
. . . . 
(b) 
An 
applicant 
is 
determined 
to 
be 
eligible 
retroactively under s. 49.46(1)(b), Stats., and a 
provider 
has 
billed 
the 
applicant 
directly 
for 
services during the retroactive period, in which case 
the 
provider 
shall, 
upon 
notification 
of 
the 
recipient's retroactive eligibility, submit claims 
under this section for covered services provided 
during the retroactive period.  Upon receipt of 
payment from the program for the services, the 
provider shall reimburse in full the recipient or 
other person who has made prior payment to the 
provider.  A provider shall not be required to 
reimburse the recipient or other person in excess of 
the amount reimbursed by the program . . . . 
No.  02-0456.ssa 
 
6 
 
individual to receive benefits for services and distinguishes 
between the month of application and the three months prior to 
the month of application.  This provision defines the period of 
eligibility for retroactive benefits as beginning with "the 
third month before the month in which [the individual] made 
application for such assistance . . . ."27  The federal law thus 
calculates the three-month period of eligibility for retroactive 
benefits from the month of application rather than from the date 
on which the recipient applied for medical assistance or was 
declared eligible for medical assistance.  
¶55 The language of § 1396a(a)(34) is clarified by the 
implementing federal code regulation, 42 C.F.R. § 435.914, which 
governs the effective date of eligibility for Medicaid in the 
states.  Section 435.914(a) requires that state Medicaid 
agencies "make eligibility for Medicaid effective no later than 
the third month before the month of application" for individuals 
who received services during this three-month period.28 
                                                 
27 In full, 42 U.S.C. § 1396a(a)(34) provides that: 
[A state plan for medical assistance must] provide 
that in the case of any individual who has been 
determined to be eligible for medical assistance under 
the plan, such assistance will be made available to 
him for care and services included under the plan and 
furnished in or after the third month before the month 
in which he made application (or application was made 
on his behalf in the case of a deceased individual) 
for such assistance if such individual was (or upon 
application 
would 
have 
been) 
eligible 
for 
such 
assistance at the time such care and services were 
furnished. 
28 42 C.F.R. § 435.914 provides in full as follows: 
No.  02-0456.ssa 
 
7 
 
¶56 Case law confirms that the month of application is not 
within 
the 
definition 
of 
the 
period 
of 
eligibility 
for 
retroactive benefits.29  In Blanco v. Anderson, 39 F.3d 969, 972 
(9th Cir. 1994), the Ninth Circuit Court of Appeals addressed 
the operation of 42 U.S.C. § 1396a(a)(34).  The Ninth Circuit 
clarified that § 1396a(a)(34) did not include the month of 
application as part of the three-month period of eligibility for 
retroactive benefits.  It explained the calculation of the 
period of eligibility for retroactive benefits as follows: 
Medicaid coverage is retroactive for three months 
before the month in which the application is filed.  
                                                                                                                                                             
(a) The agency must make eligibility for Medicaid 
effective no later than the third month before the 
month of application if the individual—— 
 
(1) Received Medicaid services, at any time 
during that period, of a type covered under the plan; 
and 
 
(2) Would have been eligible for Medicaid at the 
time he received the services if he had applied (or 
someone had applied for him), regardless of whether 
the individual is alive when application for Medicaid 
is made. 
(b) The agency may make eligibility for Medicaid 
effective on the first day of a month if an individual 
was eligible at any time during that month. 
(c) The State plan must specify the date on which 
eligibility will be made effective. 
29 In addition to the case law, a memorandum of the 
Department of Health & Human Services, Centers for Medicare & 
Medicaid 
Services, 
dated 
January 
8, 
2004, 
available 
at 
http://www.cms.hhs.gov/medicaid/survey-cert/sc0417.pdf (supplied 
by Ms. Keup and on file with the clerk of the Wisconsin Supreme 
Court, Madison, Wis.), supports the reasoning and conclusion of 
this dissent.  See Wis. Stat. § 902.03(2) (judicial notice of 
federal regulations and orders). 
No.  02-0456.ssa 
 
8 
 
If a person sought to apply for Medicaid on Friday, 
July 29, 1994, but found the office closed and so 
applied on Monday, August 1, she would have Medicaid 
coverage only for May, June and July and would have 
lost the coverage that she would have had for April if 
she had been able to apply on July 29.30 
¶57 Similarly, the argument that the three-month period of 
eligibility for retroactive benefits is measured from the day of 
the application was explicitly rejected in Kempson v. North 
Carolina Department of Human Resources, 397 S.E.2d 314 (N.C. Ct. 
App. 1990).  In that case, the North Carolina Court of Appeals 
concluded that a December 22, 1988, "application would provide 
retroactive coverage back three full months before the month 
of . . . application."31  The North Carolina Court of Appeals 
therefore declared that the patient was eligible for retroactive 
benefits beginning September 1, 1988.  The North Carolina Court 
of Appeals rejected the argument that the three-month period for 
retroactive 
benefits 
was 
measured 
from 
the 
day 
of 
the 
application.  The court characterized the period of coverage 
from December 1, 1988, on as prospective and from September 1, 
1988 to November 30, 1988, as retroactive.32  Other courts have 
                                                 
30 Blanco v. Anderson, 39 F.3d 969, 972 (9th Cir. 1994) 
(citation omitted). 
31 Kempson v. N.C. Dep't of Human Resources, 397 S.E.2d 314, 
319 (N.C. Ct. App. 1990). 
32 Id. at 316. 
No.  02-0456.ssa 
 
9 
 
reached 
a 
similar 
conclusion 
with 
respect 
to 
42 
U.S.C. 
§ 1396a(a)(34).33 
¶58 Wisconsin has recognized and accepted the federal 
distinction between the month of application and the three prior 
months as the period of eligibility for retroactive benefits.  
The definition of the period of eligibility for retroactive 
benefits is set forth in Wis. Stat. § 49.46(1)(b), which mirrors 
its federal counterparts.  
¶59 Section 49.46(1)(b) provides that "[a]ny person shall 
be considered a recipient of aid for 3 months prior to the month 
of application if the proper agency determines eligibility 
existed during such prior month." (emphasis added).  Section 
49.46(1)(b), like its federal counterparts, establishes that the 
period of retroactive benefits refers to the three month period 
prior to the month of application for benefits.  Like the 
controlling federal statute, the month of application itself is 
                                                 
33 See, e.g., Blanchard v. Forrest, 71 F.3d 1163, 1166 (5th 
Cir. 1996) ("[A] state Medicaid plan must make available medical 
assistance for covered medical services furnished to the 
Medicaid recipient within the three months prior to the month in 
which the recipient applied for Medicaid ('the retroactive 
coverage period') if the recipient would have been eligible for 
Medicaid at the time the medical services were furnished."); 
Ahrendsen v. Iowa Dep't of Human Servs., 613 N.W.2d 674, 677 
(Iowa 2000) ("Lydia's September 1996 application for Medicaid 
benefits was approved effective June 1, 1996, which was three 
months prior to the month in which the application was 
submitted.  That was the maximum period for retroactive payment 
permitted by federal statute and state regulation."); Majurin v. 
Dep't of Social Servs., 417 N.W.2d 578, 580 (Mich. Ct. App. 
1988) ("[T]here can be no legitimate dispute that under the 
federal scheme the state provider (here defendant) must provide 
retroactive coverage only back through the third month prior to 
the month of initial application."). 
No.  02-0456.ssa 
 
10 
 
not 
part 
of 
the 
period 
of 
retroactive 
benefits 
under 
§ 49.46(1)(b).   
¶60 The court of appeals has previously addressed how 
§ 49.46(1)(b) should operate.  In St. Paul Ramsey Medical Center 
v. Wisconsin Department of Health and Social Services, 186 
Wis. 2d 37, 45, 519 N.W.2d 681 (Ct. App. 1994), the court of 
appeals concluded that a medical assistance application filed on 
May 5, 1992, would allow a full three months of retroactive 
benefits prior to the month of May.  The court of appeals 
concluded that the period of retroactive benefits ran from 
February 1, 1992 until April 30, 1992.  In other words, the 
first five days of May did not count as part of the period of 
eligibility for retroactive benefits as those days were part of 
the "month of application."   
¶61 In reaching its conclusion in the St. Paul case, the 
court of appeals apparently relied on DHSS's (now DHFS) own 
interpretation of § 49.46(1)(b).  In its brief to the court of 
appeals, DHSS argued that a person shall be considered a 
recipient of aid for three months prior to the month of 
application if the proper agency determines eligibility existed 
during such prior month.  The earliest possible date of medical 
assistance eligibility in St. Paul, as certified by the county 
agency, was February 1, 1992, three months prior to the May 5, 
1992, application.  If, in fact, as the State now seems to be 
arguing, the three-month period of eligibility for retroactive 
benefits runs from the date of application, the three-month 
No.  02-0456.ssa 
 
11 
 
period of retroactive eligibility in St. Paul would have run 
from February 4, 1992, not February 1, 1992.   
¶62 Thus, all authority, both federal and state, on the 
subject seems to point toward the same conclusion.34  The statute 
allowing a provider to refund to a recipient only the amount the 
provider receives does not apply to the month in which an 
application is made; this statute applies only to the three—
month period of eligibility for retroactive benefits prior to 
the month of application. 
¶63 According to the majority opinion, the pre-application 
days of the application month are part of the period of 
eligibility for retroactive benefits.35  Therefore, according to 
the majority opinion, the period of eligibility for retroactive 
benefits can be longer than three months.  Yet, the statutes 
limit the period of eligibility for retroactive benefits to 
three 
months. 
 
The 
majority 
opinion 
therefore 
seems 
to 
unlawfully extend the period of eligibility for retroactive 
benefits beyond what is authorized by statute.  In this respect, 
the reasoning of the other courts that have touched on this 
                                                 
34 Additional Wisconsin statutes also confirm the language 
of § 49.46(1)(b).  Wisconsin Stat. § 49.47(4)(d), pertaining to 
medical assistance for the medically indigent, echoes the 
language of § 49.46(1)(b) and provides that "[a]n individual is 
eligible for medical assistance under this section for 3 months 
prior to the month of application if the individual met the 
eligibility criteria under this section during those months."  
Likewise, § 49.47(6)(d) provides that "[n]o payment under this 
subsection may include care for services rendered earlier than 3 
months preceding the month of application." 
35 Majority op., ¶4 n.6. 
No.  02-0456.ssa 
 
12 
 
issue are more faithful to the words and intent of the statutes 
defining the period of eligibility for retroactive benefits. 
¶64 Ms. Keup was not found eligible for medical assistance 
for any months prior to the month of her application; she never 
requested reimbursement for expenditures during her period of 
eligibility 
for 
retroactive 
benefits 
under 
Wis. Stat. § 49.46(1)(b).  She requested reimbursement only for 
the payments she made during the month of her application, 
October 1999.  Under the federal and state statutes, October 
1999, the month of application, is not to be considered within 
the period of eligibility for retroactive benefits.  The general 
rule requiring a provider to accept the payments made by DHFS as 
payments in full applies to October 1999.  I therefore conclude 
that the provider must reimburse Ms. Keup for the entire payment 
she made in October 1999. 
¶65 Without discussion of Wis. Stat. § 49.46(1)(b), the 
majority opinion focuses on the federal distinction between 
applicants and recipients reflected in 42 C.F.R. § 400.203.36  It 
                                                 
36 In relevant part, 42 C.F.R. § 400.203 provides: 
Definitions specific to Medicaid.  
As used in connection with the Medicaid program, 
unless the context indicates otherwise—— 
"Applicant" 
means 
an 
individual 
whose 
written 
application for Medicaid has been submitted to the 
agency determining Medicaid eligibility, but has not 
received final action. This includes an individual 
(who need not be alive at the time of application) 
whose 
application 
is 
submitted 
through 
a 
representative or a person acting responsibly for the 
individual.  
No.  02-0456.ssa 
 
13 
 
argues that at the time Ms. Keup entered the care facility in 
October 1999, she was neither an applicant nor a recipient under 
federal law37 and that she must have been a private pay patient 
to whom the care facility was authorized to charge any amount it 
deemed appropriate provided that the patient was given notice of 
the charge.38  Without analysis, the majority opinion presumes 
(as did the court of appeals) that the medical assistance Ms. 
Keup received for the month of October 1999 was retroactive 
because she applied for the assistance on October 21, 1999, and 
was approved for and received coverage beginning October 1, 
1999.39  While the benefits Ms. Keup received for October 1-21 
may be characterized as "retroactive" in the layperson's sense 
of the word because they covered a period of time prior to the 
date of the application, they were not retroactive under the 
                                                                                                                                                             
. . . . 
"Recipient" 
means 
an 
individual 
who 
has 
been 
determined eligible for Medicaid. 
37 Majority op., ¶30. 
38 Majority op., ¶31. 
39 Majority op., ¶6.  Although Wis. Admin. Code § HFS 
104.01(11), which reiterates the exception that a provider does 
not have to fully reimburse a patient for payments made during 
the period of eligibility for retroactive benefits, need not 
conflict with § 49.49(3m) (or § HFS 106.04(3)), the majority 
opinion would seem to create such a conflict by interpreting the 
phrase 
"period 
of 
eligibility 
for 
retroactive 
benefits" 
differently under § HFS 104.01(11) and under § 49.49(3m).  If 
there were, in fact, a conflict, § 49.49(3m) and § 49.46(1)(b) 
would 
control 
because 
statutory 
enactments 
supercede 
administrative rules.  Seider v. O'Connell, 2000 WI 76, ¶73, 236 
Wis. 2d 211, 612 N.W.2d 659; Basic Prods. Corp. v. Wis. Dep't of 
Taxation, 19 Wis. 2d 183, 186, 120 N.W.2d 161 (1963). 
No.  02-0456.ssa 
 
14 
 
federal and state statutes and rules defining the period of 
eligibility for retroactive benefits as the three-month period 
prior to the month of application. 
¶66 Because her month of application was October 1999, Ms. 
Keup's eligibility for retroactive benefits ran from July 1, 
1999, until September 30, 1999.  Since Ms. Keup is only 
requesting total reimbursement for her nursing home prepayment 
for the month of October, she is not requesting reimbursement 
for payments made during her period of retroactive eligibility.40  
Ms. Keup is therefore, in my opinion, entitled to a refund for 
the additional payment she made during October 1999.  This 
interpretation corresponds with the technical use of the words 
governing the period of eligibility for retroactive benefits in 
the text of the federal and state statutes and rules. 
                                                 
40 Ms. Keup was not, as the State and the majority opinion 
contend, a "private pay" patient in October 1999.  The State's 
reliance on 42 C.F.R. § 483.12(c)(2), which states that a 
"facility may charge any amount for services furnished to non-
Medicaid residents consistent with the notice requirement" is 
inapposite because for the month of October Ms. Keup was a 
Medicaid recipient. 
Furthermore, the majority opinion's assumption that the 
patient in this case was requesting retroactive eligibility is 
not reflected in the record.  Rather, a statement filed by the 
Ozaukee County Department of Social Services indicated that "Ms. 
Keup 
completed intake 
appointment 
for 
Medical 
Assistance-
Institutions Categorically Needy on October 21, 1999.  County 
worker processed case on October 29, 1999 for financial 
eligibility onset date of October 1, 1999." (Emphasis added.)  
The 
record 
does 
not 
suggest 
that 
the 
patient's 
medical 
assistance benefits were being applied retroactively, as the 
majority opinion intimates, but instead that she was eligible 
for medical assistance on October 1, 1999. 
No.  02-0456.ssa 
 
15 
 
¶67 The interpretation the majority opinion adopts not 
only disregards the text of the statutes and rules, but also 
fails to promote the overall goal of Wisconsin's participation 
in Medicaid: to provide health care to indigent individuals.  
For 
example, 
individuals 
seeking 
Medicaid 
eligibility 
as 
"disabled" rather than "aged" often face lengthy wait times of 
over 
three 
months 
between 
their 
application 
and 
the 
determination of their disability status.   
¶68 Under the majority opinion, the entire waiting period 
plus the three months of retroactive benefits prior to the month 
of application are subject to the partial reimbursement rule.  
For individuals who are not institutionalized, the amicus 
asserts that the amount of reimbursement is highly significant, 
affecting people's ability to meet ongoing food, clothing, and 
shelter expenses and increasing the costs of prescription 
medication.   
¶69 I believe that for people living below the poverty 
level the majority opinion causes additional hardships.  The 
majority opinion shifts the burden of spiraling health costs 
onto the people who can least afford it.  The legislature could 
not have intended this result.  
¶70 The 
majority opinion's interpretation 
is, 
in my 
opinion, bad law and bad policy.  I cannot join it. 
¶71 Having resolved that Ms. Keup is entitled to a refund 
for her October payment, the remaining question is whether the 
Division of Hearings and Appeals had jurisdiction to provide Ms. 
Keup with a fair hearing in this case. 
No.  02-0456.ssa 
 
16 
 
II 
¶72 The majority opinion, echoing the arguments of the 
DHFS, concludes that the division "did not have jurisdiction to 
hear Ms. Keup's claim under Wis. Stat. § 49.45(5)(a) because 
none of the statutory bases for jurisdiction were met."41  In 
doing so, the majority opinion takes a narrow and unrealistic 
view of DHFS's statutory authority. 
¶73 Wisconsin Stat. § 49.45(1) directs DHFS to administer 
the medical assistance program and imposes on the department 
broad duties including the duty to exercise responsibility 
relating to fiscal matters, eligibility for benefits and general 
supervision of the medical assistance program;42 the duty to 
determine the eligibility of persons for medical assistance;43 
and the duty to set forth conditions of participation and 
reimbursement in a contract with providers of services.44  
Section 49.45(5) allows a person who believes that the payments 
made on his or her behalf have not been properly determined or 
that his or her eligibility has not been properly determined may 
file an appeal with DHFS, and DHFS shall give the applicant or 
recipient an opportunity for a fair hearing. 
¶74 The Administrative Code sets forth grounds for a fair 
hearing.  Specifically, Wis. Admin. Code § HA 3.03(1) provides 
                                                 
41 Majority op., ¶39. 
42 Wis. Stat. § 49.45(2)(a)1. 
43 Wis. Stat. § 49.45(2)(a)3. 
44 Wis. Stat. § 49.45(2)(a)9. 
No.  02-0456.ssa 
 
17 
 
that "[a]ny person applying for or receiving Medicaid . . . may 
appeal any of the following administrative actions of the 
department or agency . . . (d) The determination of the amount, 
sufficiency, 
initial 
eligibility 
date 
of 
program 
benefits . . . ."   
¶75 Section HA 3.03(4) of the administrative code further 
provides that "[a]n applicant, recipient or former recipient may 
appeal any other adverse action or decision by an agency or 
department which affects their public assistance or social 
services benefits where a hearing is required by state or 
federal law or department policy." 
¶76 In addition, Wis. Admin. Code § HFS 104.01 provides in 
pertinent part that "[a]pplicants and recipients have the right 
to a fair hearing in accordance with procedures set out in ch. 
HSS 225 and this subsection when aggrieved by action or inaction 
of the agency or the department. . . ."45 
¶77 DHFS is imbued with broad powers and duties.  Read 
together, 
these 
provisions 
grant 
DHFS 
and 
the 
division 
jurisdiction to hear medical assistance cases arising from 
adverse inaction of the department that would affect benefit 
recipients.  I do not understand how DHFS can assert that the 
division lacks jurisdiction to hear a claim when DHFS is the 
responsible governmental entity charged with overseeing the 
administration of medical assistance benefits and ensuring that 
recipients are properly reimbursed, and when its policy is being 
                                                 
45 Wis. Admin. Code § HFS 104.01(5)(a)1. 
No.  02-0456.ssa 
 
18 
 
challenged.  I conclude that the division has jurisdiction for 
the following reasons. 
¶78 First, the division has jurisdiction because Ms. Keup 
claims she was aggrieved by the action and inaction of DHFS.  
DHFS claims that Ms. Keup was aggrieved by the legislature's 
enacting the statutes, not by it.  This argument ignores, 
however, that Ms. Keup's claim stems from DHFS's interpretation 
of the statutes.   
¶79 Second, 
contrary 
to 
the 
majority 
opinion's 
conclusion,46 Ms. Keup did claim that her medical assistance 
payments were not properly determined.  Ms. Keup claimed that 
under the applicable federal and state statutes and rules she 
did not receive the correct amount of reimbursement.  That Ms. 
Keup may be in error does not mean that the division does not 
have jurisdiction over her claim.  Having jurisdiction to 
determine the merits of a claim is different from determining 
the merits.  The division had jurisdiction to tell Ms. Keup that 
she was wrong.  When the division refused to provide her with a 
fair hearing to examine her claim, its action authorized (or 
might 
authorize) 
health 
care 
providers 
to 
violate 
Wis. Stat. § 49.49(3m)(a), which prohibits knowingly imposing 
charges upon a recipient in addition to payments received for 
services under §§ 49.45 to 49.47.   
¶80 Third, Ms. Keup can claim that her date of eligibility 
was improperly determined because medical assistance for the 
first part of October 1999 was treated as a retroactive payment, 
                                                 
46 Majority op., ¶39. 
No.  02-0456.ssa 
 
19 
 
to which the exception under § 49.49(3m)(a)2. applied, rather 
than as a payment for the month of application to an eligible 
patient for which no exception applied.  The provider claimed to 
be acting in accordance with DHFS policy and the law.  DHFS had 
an affirmative duty to ensure the proper administration of 
medical assistance benefits under both state and federal law, 
and it was obligated to provide Ms. Keup with a fair hearing, 
based on its own administrative rules, to determine the merits 
of her claim. 
¶81 Fourth, DHFS was required to provide Ms. Keup a fair 
hearing to prevent a violation of the directive under federal 
law that a "state plan must provide that the Medicaid agency 
must limit participation in the Medicaid program to providers 
who accept, as payment in full, the amounts paid by the agency 
plus any deductible, coinsurance or copayment required by the 
plan to be paid by the individual."47  Because Ms. Keup was (or 
claimed to be) a fully eligible Medicaid patient for the month 
of October 1999, the provider's refusal to accept the medical 
assistance as payment in full (as well as Ms. Keup's claim that 
DHFS agreed with the provider's position) places the provider 
(and DHFS) in violation of a federal regulation that DHFS is 
required to enforce.   
¶82 Fifth, the majority opinion's conclusion that the 
division has no jurisdiction because it cannot provide a remedy, 
namely that it cannot be required to reimburse Ms. Keup because 
Wis. Admin. Code § HFS 104.01(11) prohibits DHFS from directly 
                                                 
47 42 C.F.R. § 447.15. 
No.  02-0456.ssa 
 
20 
 
reimbursing medical assistance recipients, is not relevant to 
the issue of jurisdiction.  Ms. Keup is requesting that DHFS set 
forth a policy requiring a full refund of payments in cases like 
hers and that DHFS instruct the provider to refund her excess 
payment for the month of October 1999; she is not asking DHFS to 
pay her directly.  
¶83 For the reasons set forth, I dissent. 
¶84 I am authorized to state that Justice ANN WALSH 
BRADLEY joins this dissent. 
 
No.  02-0456.ssa 
 
 
 
1