Case Title: DAVID M. BURKE, d/b/a DAVE'S DRUG V. STATE OF WYOMING, ex rel., DEPARTMENT OF HEALTH, OFFICE OF HEALTH CARE FINANCING, EQUALITY CARE

Citation: 

Docket Number: S-09-0022

State: wyoming

Court: Wyoming Supreme Court

Date: 2009-11-10T00:00:00Z

Document:
DAVID M. BURKE, d/b/a DAVE'S DRUG V. STATE OF WYOMING, ex rel., DEPARTMENT OF HEALTH, OFFICE OF HEALTH CARE FINANCING, EQUALITY CARE2009 WY 138219 P.3d 122Case Number: S-09-0022Decided: 11/10/2009NOTICE:  This opinion is subject to formal revision before publication in Pacific Reporter Third.  Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of typographical or other formal errors so correction may be made before final publication in the permanent volume.
OCTOBER 
TERM, A.D. 2009

 
 

DAVID 
M. BURKE, d/b/a DAVE'S 
DRUG,Appellant(Defendant),v.STATE OF WYOMING, ex 
rel., DEPARTMENT OF HEALTH, OFFICE OF HEALTH CARE FINANCING, EQUALITY 
CARE,Appellee(Plaintiff).

 
 

Appeal 
from the District Court of Laramie County

The 
Honorable Michael K. Davis, Judge

 
 
Representing 
Appellant:

Frank 
J. Jones, Wheatland, Wyoming.

 
 
Representing 
Appellee:

Bruce 
A. Salzburg, Wyoming Attorney General; Robin Sessions Cooley, Deputy Attorney 
General; Douglas J. Moench, Senior Assistant Attorney General; Michael T. 
Kahler, Assistant Attorney General; Shaun Wilkerson, Assistant Attorney 
General.  Argument by Mr. 
Kahler.

 
 
Before 
VOIGT, C.J., and GOLDEN, HILL, KITE, and BURKE, JJ.

 
 
KITE, 
Justice.

 
 
[¶1]      After a Wyoming 
Department of Health (Department) audit showed that David M. Burke, d/b/a Dave's 
Drug, (Mr. Burke) had been reimbursed for services provided to Medicaid 
recipients in excess of the amount to which he was entitled, the Department 
sought reimbursement from him.  Mr. 
Burke filed a request for an administrative hearing, but later withdrew the 
request, and the Department dismissed the administrative 
action.

 
 
[¶2]  The Department then filed an action in 
district court to recover the excess payments.  On the Department's motion, the district 
court entered summary judgment against Mr. Burke, finding that he was barred 
from disputing the claim because he failed to exhaust his administrative 
remedies.  The district court 
entered judgment against him for $164,432.24 plus costs and interest.  On appeal to this Court, Mr. Burke 
claims essentially that the district court improperly and unfairly denied him 
his day in court.  We affirm.       

 
 
ISSUES

 
 
[¶3]      Mr. Burke states 
the issues for this Court's consideration as follows:

 
 
            
1.         
Is Defendant/Appellant barred from defending this action and having his 
"day in court" by the doctrine of res 
judicata?

 
 
            
2.         
Did the trial court apply an improper interpretation when attempting to 
construe the Wyoming Medicaid Rules thereby creating an error of 
law?

 
 
            
3.         
Are the Wyoming Medicaid Rules ambiguous? 

 
 
            
4.         
Are the Wyoming Medicaid Rules inconsistent?

 
 
            
5.         
Is the Appellant entitled to complete discovery before there is an entry 
of Summary Judgment?

 
 
Although 
rephrased, the Department presents essentially the same 
issues.

 
 
FACTS

 
 
[¶4]  The Department operates the Wyoming 
Medicaid program, which provides medical care to low income individuals and 
families pursuant to Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq., and the Wyoming Medical 
Assistance and Services Act, Wyo. Stat. Ann. § 42-4-101 et seq. (LexisNexis 2007), otherwise 
known as the Medicaid Program.  
Under the program, medical care providers who provide medically necessary 
services to Medicaid recipients in Wyoming are reimbursed by the federal and 
state government.  To receive 
reimbursement, providers must sign a provider agreement with the State's 
Medicaid program.  

    

[¶5]  Mr. Burke is a pharmacist licensed in 
Wyoming.  At the time this action 
arose, he owned three pharmacies in Wyoming, Dave's Drugs, located in Wheatland, 
Guernsey Drug, and Dave's Drug Lusk.  
He signed two provider agreements with the Department, the first on 
August 13, 1993, and the second on August 19, 1998.  The Department reimbursed him for the 
services he provided to Medicaid recipients.  

 
 
[¶6]  In 2004, the Department requested an 
audit of Mr. Burke's medical records for the period from January 1, 1998, 
through January 31, 2003.  The audit 
showed that the Department's payments to Mr. Burke exceeded the amounts to which 
he was entitled by $172,337.36.  By 
letter dated August 3, 2004, the Department notified Mr. Burke of the excess 
payment and advised him that it had terminated his provider enrollment, he 
should not submit any further claims for services provided, and it had the right 
to seek recovery of the excess payments.  
The Department also advised Mr. Burke that he could seek reconsideration 
within 20 days of the Department's decision to terminate his provider 
agreement.   

 

[¶7]  Mr. Burke requested reconsideration of 
the Department's decision.  The 
Department reviewed its decision and notified Mr. Burke that the decision to 
terminate his provider agreement was final.  The Department advised Mr. Burke that he 
was entitled to an administrative hearing pursuant to the Wyoming Medicaid 
Rules, Chapter 3, Section 14(f).  
Mr. Burke requested a hearing on the Department's decision to terminate 
his agreement.  

 
 
[¶8] 
Simultaneously with the administrative proceedings, federal authorities were 
conducting a criminal investigation of Mr. Burke's Medicaid activities. The 
administrative matter sat on the Office of Administrative Hearings (OAH) docket 
for many months and then, in February of 2006, Mr. Burke and the Department 
filed a joint stipulation stating that the matter was not ripe for adjudication 
and should be returned to the Department until such time as the federal 
investigation was completed.  No 
further action occurred with respect to Mr. Burke's request for a hearing on the 
termination of his provider agreement.  

 
 
[¶9]  On December 13, 2006, the Department 
sent a certified letter to Mr. Burke requesting reimbursement of the excess 
payments within 30 days.  The 
Department advised Mr. Burke that he had 20 days to seek reconsideration of the 
decision pursuant to Wyoming Medicaid Rules, Chapter 39, Section 14(a) and the 
failure to request reconsideration would preclude any further appeal.  The Department further advised Mr. Burke 
that it would seek alternative means to recover the excess payment amount if 
payment was not made within 30 days.   

 
 
[¶10]  On February 23, 2007, Mr. Burke filed a 
request for administrative hearing.  
The Department referred his request to the OAH which set the matter for a 
pre-hearing conference.  On May 22, 
2007, however, Mr. Burke withdrew his request for a hearing.  The OAH entered an order recommending 
the action be dismissed and the hearing vacated.  During this same time frame, the State 
received notification that the criminal investigation had been completed and no 
criminal charges would be brought against Mr. Burke.  On September 25, 2007, in accordance 
with the OAH recommendation, the Department dismissed the administrative 
action.         

 
 

[¶11]  In April of 2008, the Department filed a 
complaint in district court seeking judgment against Mr. Burke in the amount of 
the excess payments plus the costs of filing and serving the complaint.  Mr. Burke filed an answer denying the 
claims and asserting that he owed the Department nothing.  He also filed a counterclaim in which he 
alleged that the Department owed him $17,000 in unpaid claims and had wrongfully 
terminated his provider agreements causing a loss of business in an amount in 
excess of $200,000 per annum.  The 
Department filed motions to dismiss the counterclaims and for summary judgment 
on its claim.  It also filed an 
amended complaint reducing the amount it sought to recover to $164,432.24.1  The district court entered an order 
allowing the Department to file an amended complaint and, after a hearing, 
entered an order granting summary judgment in favor of the Department.2  Mr. Burke timely appealed the 
order.    

 
 
STANDARD 
OF REVIEW

 
 
[¶12]  Summary judgment is appropriate when there are 
no genuine issues of material fact and the moving party is entitled to judgment 
as a matter of law.  W.R.C.P. 
56.  A genuine issue of material 
fact exists when a disputed fact, if it were proven, would establish or refute 
an essential element of the cause of action or defense.  Omohundro v. Sullivan, 2009 WY 38, ¶ 7, 
202 P.3d 1077, 1081 (Wyo. 2009).  
Because summary judgment involves a purely legal determination, our 
review is de novo.  Id.  We review a district court's order 
granting summary judgment using the same materials and following the same 
standards as the district court.  Id.  We examine the record from the vantage 
point most favorable to the party opposing the motion, affording to that party 
the benefit of all favorable inferences that fairly may be drawn from the 
record.  State ex rel. Arnold v. Ommen, 2009 WY 
24, ¶ 13, 201 P.3d 1127, 1132 (Wyo. 2009).  
We may uphold the grant of summary judgment upon any proper legal ground 
supported by the record.  Bentley v. Director of Office of State Lands 
and Invs., 2007 WY 94, ¶ 54, 160 P.3d 1109, 1123 (Wyo. 
2007).

 
 
 
 
DISCUSSION

 
 
1.         
Application of Res Judicata

 
 
[¶13]  In granting summary judgment for the 
Department, the district court held that the doctrine of res judicata barred Mr. Burke from 
disputing the Department's claim.  
The district court concluded that Mr. Burke was required to exhaust 
available administrative remedies; he did not exhaust his administrative 
remedies because he withdrew his request for a hearing; he thereby waived his 
right to contest the claim; and the Department's determination that he had 
received excess payments became final and was not subject to challenge.  Mr. Burke claims the district court's 
determination was incorrect, and denied him the right to present evidence 
showing that the Department reimbursed him in the correct amount for his 
services.

 
 
[¶14]  The doctrine of res judicata bars the re-litigation of 
previously litigated claims or causes of action, as well as claims that could or 
should have been raised in the prior litigation.  R.C.R., Inc. v. Deline, 2008 WY 96, ¶ 
19, 190 P.3d 140, 153 (Wyo. 2008).  
In determining whether res 
judicata bars a claim, we consider whether:  (1) the parties are the same; (2) the 
subject matter is the same; (3) the issues are the same and relate to the 
subject matter; and (4) the capacities of the persons are identical in reference 
to both the subject matter and the issues between them.  Id.  Here, there is no dispute that the 
administrative proceeding and the district court action involved the same 
parties, subject matter and issues and the parties' capacities were the same in 
reference to both the subject matter and the issues between them.  There also is no dispute that Mr. Burke 
had the opportunity to raise the claim that the Medicaid reimbursement payments 
were not excessive during the administrative proceedings.

 
 
[¶15]  Mr. Burke contends, however, that res judicata should not have been 
applied to preclude him from presenting his defense in district court.  He asserts the Wyoming Medicaid Rules, 
and the manner in which the Department proceeded under them, so confused the 
proceedings that he was not given a fair opportunity to make his case at the 
administrative level and he should be afforded the opportunity to do so in 
court.  Mr. Burke argues that the 
first notice he received from the Department stated that the audit revealed an 
"overpayment" which the Department intended to recover through the "claims 
adjustment process" provided for in the Wyoming Medicaid Rules, Chapter 39, 
Section 13(d)(iii).  He contends 
that the rules governing recovery under the claims adjustment process expressly 
precluded him from requesting reconsideration or an administrative hearing.  Because he did not have the right to a 
hearing, he asserts, the doctrine of res 
judicata cannot be applied to bar him from presenting his defense to the 
Department's claim in court.

 
 
[¶16]  Mr. Burke's assertion that he first 
received notice of the over or excess payments in the December 13, 2006, letter 
is not correct.  In fact, he first 
had notice in August of 2004 when the 
Department notified him that the audit revealed that his payments for drug 
purchases were less than the Medicaid reimbursement payments he received and the 
Department had the right to seek to recover the excess payments.  Although the actions that followed 
initially focused on the termination of Mr. Burke's provider agreement rather 
than recovery of excess payments, Mr. Burke did have notice in 2004 of the 
excess payment claim and the Department's right to seek recovery.  

 
 
[¶17] 
Mr. Burke is correct that thereafter, in its December 13, 2006, letter, the 
Department referred to the amount due as an "overpayment," rather than "excess 
payments," and advised him that it would be recovering the amount through the 
"claims adjustment process."  He 
asserts that this terminology was confusing because the claims adjustment 
process precluded him from requesting reconsideration or an administrative 
hearing.  He cites Chapter 39, 
Sections 13(b)(ii) and 14(e)(i) of the Wyoming Medicaid Rules, which state, just 
as he contends, that a provider may not request reconsideration or an 
administrative hearing regarding a claims adjustment.

 
 
[¶18]  The difficulty with Mr. Burke's claimed 
confusion is that in its December 13, 2006, letter the Department cited as the 
applicable provision Chapter 39, Section 13(d)(iii) of the Wyoming Medicaid 
Rules, which states as follows:

 
 

(d)          
Recovery 
of excess payments.  If the 
[Department] determines to recover excess payments pursuant to this Chapter, it 
shall follow the procedures specified in this subsection. 

 
 

(i)    
Notice 
of excess payments.  After 
determining that a provider has received excess payments, the Department shall 
send written notice to the provider stating the amount of the excess payments, 
the basis for the determination of excess payments, and, except in the case of a 
claims adjustment or a technical denial, the provider's rights to request 
reconsideration of that determination pursuant to Section 
14.

 
 

(ii)  
 Reimbursement of excess payments.  Except as otherwise specified by the 
Wyoming Medicaid Rules, a provider must reimburse the Department for excess 
payments within 30 days after the provider receives written notice from the 
Department of the excess payments, even if the provider has requested 
reconsideration or an administrative hearing regarding the determination of 
excess payments.

 
 
      (iii) Methods of 
recovery of excess payments.  If a 
provider does not timely reimburse the Department, the Department may recover 
the excess payments, even if the provider has requested reconsideration, an 
administrative hearing, or sought judicial relief regarding the determination of 
excess payments, by:

 
 

(A)     
Withholding 
all or part of Medicaid payments until the excess payments are 
recovered;

 
 

(B)     
Initiating 
a civil lawsuit against the provider;

 
 

(C)     
Any 
other method of collecting a debt or obligation permitted by law. 

 
 
[¶19]  The letter further advised Mr. Burke as 
follows:

 
 
You 
may request reconsideration of the . . . decision to recover excess payments 
pursuant to Wyoming Medicaid Rules, Chapter 39, Section 14(a) that 
states:

 
 
"Request 
for reconsideration.  A provider may 
request that the Department reconsider a decision to recover excess 
payments.  Such requests must be 
mailed to the Department by certified mail; return receipt requested within 
twenty days of the date the provider receives notice pursuant to Section 
12.  The request must state with 
specificity the reason for the request.  
Failure to provide such a statement shall result in the dismissal of the 
request with prejudice."

 
 
Include 
any additional supporting documentation along with your request for 
reconsideration.  Failure to request 
reconsideration precludes any further appeal of the [Department's] 
decision.  You may also request a contested case 
hearing once the Department issues its reconsideration decision to 
you.

 
 
Your 
request for reconsideration . . . does not relieve you from reimbursing the 
Department the stated amount within thirty (30) days.  The Department may seek alternative 
means to recover excess payments after 30 days.

 
 
(emphasis 
added)  Regardless of the 
Department's references earlier in the letter to "overpayment" and recovery 
through the "claims adjustment process," the above paragraphs clearly informed 
Mr. Burke that the Department was seeking recovery of excess payments pursuant 
to Chapter 39 and that he had a right to request reconsideration of the decision 
to recover excess payments and, upon the Department's issuance of a final 
decision, a contested case hearing.   

 
 
[¶20]  Mr. Burke was entitled to an 
administrative hearing.  The 
Department advised him that he was so entitled.  Mr. Burke requested an administrative 
hearing and then, for reasons not apparent in the record, withdrew his 
request.  His contention that the 
district court improperly applied res 
judicata when the Medicaid rules did not allow him to request an 
administrative hearing is without merit.        

 
 

2.    
Wyoming 
Medicaid Rules

 
 
[¶21]  Mr. Burke contends the Medicaid Rules 
are ambiguous and inconsistent because while the overpayment and excess payment 
provisions allow a provider to request an administrative hearing, both 
provisions also allow the Department to initiate a civil action to recover the 
payments even when the provider has requested a hearing.  He asserts that the rules cannot be 
interpreted to require the exhaustion of administrative remedies before a civil 
action is filed when they clearly allow the Department to proceed in court 
before administrative remedies have been exhausted.  He queries:

 
 
            
How can we reconcile the position advanced by the Department that 
administrative remedies must be exhausted before any action can be pursued when 
the Medicaid rules specifically state otherwise?  How can we reconcile the fact the 
Department initiated a civil lawsuit against Burke for recovery of the payments 
without any concern being given on its part as to administrative 
remedies?

 
 
            
What could the result possibly have been if Burke had been involved in an 
administrative hearing at the time the Department filed this lawsuit and the 
hearing officer found there were no amounts due and at the same time the civil 
lawsuit ended in a judgment as that which was entered by the trial judge in this 
instance?       

 
 
[¶22]   The Department dismissed the 
administrative action on September 25, 2007.  The Department filed its civil action on 
April 22, 2008.  Therefore, the 
situation about which Mr. Burke expresses concern did not arise.  There was no administrative proceeding 
at the time the civil lawsuit was filed.  
Consequently, there was no possibility of an administrative ruling in his 
favor and a simultaneous district court judgment in the Department's 
favor.

 
 

3.    
Discovery

 
 
[¶23]  Mr. Burke contends summary judgment was 
improper because discovery was not completed and, if allowed to be completed, 
would demonstrate numerous questions of fact for trial concerning the accuracy 
of the audits.  The issue before the 
district court was whether the Department was entitled to judgment as a matter 
of law on its complaint for money damages against Mr. Burke in the amount of the 
excess payments.  Resolution of that 
issue required the district court to decide whether the Department's order 
dismissing the agency action was final.  
The district court determined that the order was final.  The district court further determined 
that the doctrine of res judicata 
applied to bar re-litigation of the claims raised in the administrative 
proceeding.  The discovery Mr. Burke 
seeks to pursue was not necessary to a determination of the issues before the 
district court.  We find no error in 
the district court's ruling.       

 
 
[¶24]  Affirmed.

 
 
FOOTNOTES

 
 

1Wyoming Medicaid Rules, 
Chapter 16, Section 12(c)(iv) (1998) required the audit results to be reduced by 
five percent.  After reducing the 
excess payment amount by five percent in accordance with the Rules, the 
Department determined the correct amount of the excess payment was $164,432.24, 
rather than the $172,337.36 referenced in its initial 
complaint.

 
 

2The district court 
converted the Department's motion to dismiss to a motion for summary judgment 
under W.R.C.P. 12(b)(6) and 56, and notified the parties that, in deciding the 
motion, it intended to consider information filed in support of and opposition 
to the summary judgment motion.