Title: Papa v. Wisconsin Department of Health Services

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2020 WI 66 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2016AP2082 & 2017AP634 
 
 
 
COMPLETE TITLE: 
Kathleen Papa and Professional Homecare 
Providers, Inc., 
          Plaintiffs-Respondents-Petitioners, 
     v. 
Wisconsin Department of Health Services, 
          Defendant-Appellant. 
 
 
 
 
 
REVIEW OF DECISION OF THE COURT OF APPEALS 
Reported at 388 Wis. 2d 474,934 N.W.2d 568 
(2019 – unpublished) 
 
 
OPINION FILED: 
July 9, 2020   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
March 18, 2020   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Waukesha   
 
JUDGE: 
Kathryn W. Foster   
 
 
 
JUSTICES: 
 
ZIEGLER, J., delivered the majority opinion of the Court, in 
which ROGGENSACK, C.J., and ANN WALSH BRADLEY and DALLET, JJ., 
joined, and in which REBECCA GRASSL BRADLEY and KELLY, JJ., 
joined except for ¶¶46-48; KELLY, J., filed an opinion 
concurring in part and dissenting in part, in which REBECCA 
GRASSL BRADLEY, J., joined. 
NOT PARTICIPATING: 
HAGEDORN, J. did not participate.   
 
 
 
ATTORNEYS: 
 
For the plaintiffs-respondents-petitioners, there were briefs 
filed by Diane M. Welsh, Aaron G. Dumas, and Pines Bach LLP, 
Madison. There was an oral argument by Diane M. Welsh. 
 
For the defendant-appellant, there was a brief filed by Steven 
C. Kilpatrick, assistant attorney general; with whom on the brief 
was Joshua L. Kaul, attorney general. There was an oral argument 
by Steven C. Kilpatrick. 
 
 
2 
 
An amicus curiae brief was filed on behalf of Wisconsin 
Hospital Association, Inc., Wisconsin Medical Society, Inc, 
Wisconsin Dental Association, Inc, Pharmacy Society of Wisconsin, 
Inc., Wisconsin Health Care Association, Inc., Wisconsin Personal 
Services Association, Inc., and Leading Age Wisconsin, Inc. by 
Sarah E. Coyne, Matthew Splitek, James Goldschmidt, and Quarles & 
Brady LLP, Madison.   
 
 
 
 
2020 WI 66 
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
Nos.  2016AP2082 & 2017AP634 
(L.C. No. 
2015CV2403) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Kathleen Papa and Professional Homecare 
Providers, Inc., 
 
          Plaintiffs-Respondents-Petitioners, 
 
     v. 
 
Wisconsin Department of Health Services, 
 
          Defendant-Appellant. 
 
FILED 
 
JUL 9, 2020 
 
Sheila T. Reiff 
Clerk of Supreme Court 
 
 
 
 
ZIEGLER, J., delivered the majority opinion of the Court, in which 
ROGGENSACK, C.J., and ANN WALSH BRADLEY and DALLET, JJ., joined, 
and in which REBECCA GRASSL BRADLEY and KELLY, JJ., joined except 
for ¶¶46-48; KELLY, J., filed an opinion concurring in part and 
dissenting in part, in which REBECCA GRASSL BRADLEY, J., joined. 
 
HAGEDORN, J., did not participate. 
 
 
REVIEW of a decision of the Court of Appeals.  Reversed in 
part, affirmed in part, and remanded.   
 
¶1 
ANNETTE KINGSLAND ZIEGLER, J.   This is a review of an 
unpublished decision of the court of appeals in two consolidated 
cases, Papa v. Wisconsin Department of Health Services, Nos. 
2016AP2082 & 2017AP634, unpublished slip op. (July 31, 2019), 
Nos. 2016AP2082 & 2017AP634   
 
2 
 
reversing the Waukesha County circuit court's1 orders granting 
summary judgment, declaratory relief, and injunctive relief in 
favor of plaintiffs, Kathleen Papa and Professional Homecare 
Providers, Inc. (hereinafter "PHP"), and granting supplemental 
relief and costs and attorney fees.  The court of appeals reversed 
and remanded with orders to enter judgment in favor of the 
defendant, Wisconsin Department of Health Services (hereinafter 
"DHS"). 
¶2 
This case requires this court to determine the scope of 
DHS's authority to recoup payments made to Medicaid service 
providers.  PHP challenges DHS's recoupment policy, as it has been 
enforced against PHP nurses to recover payments made for services 
they provided to Medicaid patients.  PHP argues that, after DHS 
has already paid nurses for covered and provided Medicaid services, 
its practice is to then audit nurses' records and seek to recover 
the payments if DHS finds any documentation shortcomings.  
According to PHP, DHS does not contest whether the nurse actually 
provided a Medicaid patient with the covered service for which the 
nurse was paid.  Nor does it claim that the payment was 
inappropriate or inaccurate.  Rather, it recoups payments nurses 
earned and received for their work because, after the fact, it 
claims the nurse's supporting records are not perfect.  The issue 
in this case is whether DHS has the authority to enforce this 
recoupment policy.  The short answer is no, it does not. 
                                                 
1 The Honorable Kathryn W. Foster presided.  
Nos. 2016AP2082 & 2017AP634   
 
3 
 
¶3 
We conclude that PHP's challenge to DHS's recoupment 
policy is ripe for judicial determination.  We conclude that, under 
Wis. Stat. § 49.45(3)(f)1.-2. (2017-18),2 DHS may recoup Medicaid 
payments from service providers only in cases where DHS cannot 
verify one of the following: (1) the actual provision of covered 
services; (2) that the reimbursement claim is appropriate for the 
service provided; and (3) that the reimbursement claim is accurate 
for the service provided.  We further conclude that DHS's 
recoupment policy exceeds its recoupment authority.  Finally, we 
conclude that the circuit court's order for supplemental relief 
did not expand the scope of its original order, but that its order 
for costs and fees was erroneous.  Accordingly, we reverse in part, 
affirm in part, and remand. 
 
I.  FACTUAL BACKGROUND 
¶4 
The Medicaid Program provides free or low-cost health 
care for low-income people, families, and children, pregnant 
women, the elderly, and people with disabilities.  "'Medicaid is 
a cooperative federal-state program through which the Federal 
Government provides financial assistance to States so that they 
may furnish medical care to needy individuals.'"  Newcap, Inc. v. 
DHS, 2018 WI App 40, ¶4, 383 Wis. 2d 515, 916 N.W.2d 173 (quoting 
Wilder v. Virginia Hosp. Ass'n, 496 U.S. 498, 502 (1990)).  
"[S]tates voluntarily opt into the federal scheme and thereby bind 
themselves to abide by the rules and regulations imposed by the 
                                                 
2 All subsequent references to the Wisconsin Statutes are to 
the 2017-18 version unless otherwise indicated. 
Nos. 2016AP2082 & 2017AP634   
 
4 
 
federal government in return for federal funding."  Gister v. Am. 
Family Mut. Ins. Co., 2012 WI 86, ¶14, 342 Wis. 2d 496, 818 
N.W.2d 880.  The States administer Medicaid pursuant to federal 
requirements set forth in Title XIX of the Social Security Act.  
42 U.S.C. §§ 1396-1396w-5.  "The State of Wisconsin has joined the 
federal Medicaid system, and has consequently committed itself to 
following the federal law governing that system."  Gister, 342 
Wis. 2d 496, ¶14.  DHS administers Wisconsin's medical assistance 
program.  Wis. Stat. § 49.45(1). 
¶5 
DHS has Medicaid-related responsibilities, including 
those 
"relating 
to 
fiscal 
matters, 
the 
eligibility 
for 
benefits . . . and general supervision of the medical assistance 
program."  Wis. Stat. § 49.45(2)(a)1.  DHS is required to 
"reimburse providers for medically necessary and appropriate 
health care services . . . when provided to currently eligible 
medical assistance recipients."  Wis. Admin. Code § DHS 107.01(1) 
(May 2019).3  And, relevant to this case, federal law requires DHS 
to audit participating health care providers' records to ensure 
that all Medicaid payments are proper.  
See 
42 U.S.C. 
§ 1396a(a)(42)(A) ("[T]he records of any entity participating in 
the plan and providing services reimbursable on a cost-related 
basis will be audited as the Secretary determines to be necessary 
to insure that proper payments are made under the plan[.]"). 
                                                 
3 All subsequent references to Wis. Admin. Code DHS ch. 107 
are to the May 2019 register date unless otherwise indicated. 
Nos. 2016AP2082 & 2017AP634   
 
5 
 
¶6 
Under Wisconsin law, DHS may conduct audits "to verify 
the actual provision of services or items available under the 
medical assistance program and the appropriateness and accuracy of 
claims for reimbursement submitted by providers participating in 
the program."  Wis. Stat. § 49.45(3)(g)1.  The Office of the 
Inspector General ("OIG") conducts audits for DHS.  After an audit, 
DHS may recoup payments.  DHS "shall" "recover money improperly or 
erroneously paid or overpayments to a provider."  Wis. Stat. 
§ 49.45(2)(a)10.a.; Wis. Admin. Code § DHS 108.02(9)(a) (Jan. 
2019)4. 
¶7 
PHP is a non-profit professional organization for 
independent nurses.  Kathleen Papa and other PHP nurses are 
certified Medicaid service providers who work in independent 
practice and provide in-home care.  When PHP nurses provide care 
for Medicaid patients, the nurses are reimbursed by Wisconsin's 
medical assistance program. 
¶8 
On December 14, 2015, PHP filed a complaint for 
declaratory and injunctive relief, challenging DHS's recoupment 
policy.  PHP alleged that DHS sought: 
recoupment of monies paid to independent nurses for 
Medicaid-covered services the nurses actually provided, 
merely because post-payments audits have found that the 
services or documentation fail to meet any single one of 
numerous, evolving requirements set forth in federal and 
state law, updates issued by DHS, the online Medicaid 
Handbook, as well as other standards deemed relevant by 
individual auditors in DHS's [OIG].   
                                                 
4 All subsequent references to Wis. Admin. Code DHS ch. 108 
are to the January 2019 register date unless otherwise indicated. 
Nos. 2016AP2082 & 2017AP634   
 
6 
 
Essentially, PHP alleged that it is DHS's practice to seek 
recoupment of payments already paid to nurses for covered services 
they 
actually 
provided, 
absent 
any 
assertion 
that 
the 
reimbursement claims for those services were either inappropriate 
or inaccurate, simply because a post-payment audit found that the 
nurse's records were not perfect.  As a shorthand, we will refer 
to this alleged recoupment policy as DHS's "Perfection Policy." 
¶9 
PHP alleged that DHS's Perfection Policy was: (1) an 
unpromulgated rule under Wis. Stat. § 227.10; (2) "inconsistent 
with Chapter 49 of the Wisconsin [Statutes] and chapters DHS 107 
and 108 of the Administrative Code"; and (3) an unconstitutional 
taking.  PHP attached to the complaint a copy of Topic #66 from 
DHS's Medicaid Provider Handbook.5  Topic #66 states:  
For a covered service to meet program requirements, the 
service must be provided by a qualified Medicaid-
enrolled provider to an enrolled member.  In addition, 
the 
service 
must 
meet 
all 
applicable 
program 
requirements, including, but not limited to, medical 
necessity, PA (prior authorization), claims submission, 
prescription, and documentation requirements.  
PHP alleged that DHS's "statement of general policy" on recoupment 
exceeds its statutory authority.   
                                                 
5 The "[p]rovider handbook" is "a publication developed by 
[DHS] for the use of providers which outlines program policies and 
includes instructions on claim filing and other aspects of 
participation in" the medical assistance program.  Wis. Admin. 
Code § DHS 101.03(141) (May 2019); see also Wis. Admin Code § DHS 
108.02(4) ("[DHS] shall publish provider handbooks, bulletins and 
periodic updates to inform providers of changes in state or federal 
law, policy, reimbursement rates and formulas, departmental 
interpretation, and procedural directives such as billing and 
prior authorization procedures, specific reimbursement changes and 
items of general information."). 
Nos. 2016AP2082 & 2017AP634   
 
7 
 
¶10 On March 18, 2016, PHP moved for summary judgment.  In 
support of its motion, PHP submitted affidavits from several nurses 
describing the Perfection Policy.  Kathleen Papa and Shanda M. 
Hubertus, the past and current presidents of PHP, each stated:  
During audits of PHP members, I have observed that OIG 
has sought to recover Medicaid funds based on a finding 
of alleged minor noncompliance with a Medicaid Provider 
Update, a Handbook provision, an Administrative Code 
provision, or other standard or policy.  
Nurses H.U., M.S., J.G., and G.R. stated that they each had been 
the subject of an OIG audit.  OIG sought to recoup approximately 
$58,000, $15,000, $48,000, and $36,000 from each of them, 
respectively.  The nurses alleged that the recoupments were "for 
care that OIG did not dispute was provided to a Medicaid patient, 
following OIG's prior authorization for the services."  OIG did 
not contest that the nurses actually provided authorized services 
for which they were paid.  Rather, OIG's recoupment efforts were 
based on "noncorrelation between the medication record, the record 
of treatment and the nurse's clinical notes."  Nurse D.Z.-G. stated 
that OIG had sought to recoup about $58,000 from her because she 
"did not submit claims for reimbursement to the minor patients' 
parents' employer-based health plans despite the fact that it had 
previously been established that the employer-based health plans 
would not cover the private duty nursing services."6 
¶11 Finally, counsel for PHP submitted an affidavit.  He 
attached to it a DHS brief filed in another case, in which OIG 
                                                 
6 DHS submitted an affidavit contesting Nurse D.Z.-G.'s 
allegations as "inaccurate" and "misleading." 
Nos. 2016AP2082 & 2017AP634   
 
8 
 
sought to recoup money paid to a PHP nurse "merely because she did 
not counter-sign the Prior Authorization/Care Plan Attachment."  
In that case, DHS concluded its brief by asserting:  
A Medicaid provider may only be reimbursed for 
covered services if she meets all of the program 
requirements in the law, administrative rules, and 
applicable Medicaid Handbook provisions. . . . [Nurse 
N.M.] failed to countersign [the patient's] Care Plan 
before she provided the ordered nursing services.   
The Administrative Law Judge should find that the 
State of Wisconsin Department of Health Services is 
authorized to recoup $7,358.51 from [Nurse N.M.] for 
payment she received from the Medicaid program for non-
covered services . . . .  
Counsel for PHP also attached a final decision in another case 
where DHS successfully recouped $8,944.85 from Nurse S.M. for 
failure to counter-sign her patients' care plans or maintain 
documentation of required registered nurse supervision. 
 
II.  PROCEDURAL POSTURE 
¶12 The circuit court granted PHP's motion for summary 
judgment.  On September 27, 2016, the circuit court determined the 
case was ripe for judicial determination and granted declaratory 
relief.  It declared:  
[DHS's] authority under Wis. Stat. §§ 49.45(3)(f) and 
49.45(2)(a)10[.] to recover payments from Medicaid 
providers is limited to claims for which either (1) [DHS] 
is unable to verify from a provider's records that a 
service was actually provided; or (2) an amount claimed 
was inaccurate or inappropriate for the service that was 
provided[.] 
The circuit court further declared that DHS's recoupment policy 
"imposes a 'Perfection Rule' which exceeds [DHS's] authority," and 
Nos. 2016AP2082 & 2017AP634   
 
9 
 
that this policy, including Topic #66, is "a rule not properly 
promulgated under Wis. Stat. § 227.10(1)."7  The circuit court also 
"grant[ed] a temporary injunction enjoining [DHS] from applying or 
enforcing the Perfection Rule."8 
¶13 On October 20, 2016, DHS filed a notice of appeal.  Then, 
on January 12, 2017, PHP filed a motion for supplemental relief or 
for contempt of court.  PHP asserted that DHS was violating the 
circuit court's declaratory judgment and injunction.  The circuit 
court granted PHP's motion for supplemental relief.  Pursuant to 
Wis. Stat. §§ 806.04(8) and 808.07(2)(a)3., the circuit court 
ordered:  
1. 
[DHS] shall not issue a notice of intent to 
recover Medicaid payments to, or otherwise recoup funds 
from, a Medicaid provider if the provider's records 
verify that the services were provided and the provider 
was paid an appropriate amount for such services, 
notwithstanding that an audit identified other errors or 
noncompliance with [DHS] policies or rules;  
2. 
[DHS] shall not further any agency action, 
including 
an 
administrative 
proceeding, 
currently 
underway in which [DHS] seeks to recoup Medicaid 
payments from a Medicaid provider, if the provider's 
records verify that the services were provided and the 
provider was paid an appropriate amount for such 
services, notwithstanding that an audit identified other 
errors or noncompliance with [DHS] policies or rules; 
and  
                                                 
7 The circuit court referred to a "Perfection Rule."  Because 
we make no determination whether the DHS's recoupment practice 
constitutes a rule, we refer to it as a "Perfection Policy."  
8 The circuit court also concluded that there was no 
unconstitutional taking.  PHP did not pursue the takings claim on 
appeal, so we do not review that conclusion. 
Nos. 2016AP2082 & 2017AP634   
 
10 
 
3. 
[DHS] shall pay the Plaintiffs' costs and 
attorneys' fees incurred for prosecuting this Motion.  
In a separate order, the circuit court ordered DHS to pay PHP's 
"costs and attorneys' fees in the amount of $25,284.50." 
¶14 DHS filed an amended notice of appeal and a motion to 
consolidate its appeals of the circuit court's original and 
supplemental orders.  The court of appeals granted the motion to 
consolidate.9 
 
Then, 
on 
July 
31, 
2019, 
the 
court 
of 
appeals 
reversed 
the circuit court orders in a split decision.  Papa, unpublished 
slip op., ¶19. 
¶15 The majority focused its analysis exclusively on Topic 
#66.  It declined to review a broader recoupment policy because it 
construed PHP's complaint as alleging only that Topic #66 was an 
unpromulgated rule.  Id., ¶12.  The majority concluded that Topic 
#66 "does not have the force of law and therefore does not 
constitute an administrative rule."  Id., ¶17.  It further stated, 
"This conclusion leaves PHP without a basis for its requested 
relief pursuant to Wis. Stat. § 227.40(1)."  Id., ¶19.  The dissent 
agreed with the majority's conclusion that Topic #66 is not an 
administrative rule.  Id., ¶20 (Reilly, P.J., dissenting).  But, 
for the dissent, whether Topic #66 is a rule did not dispose of 
the case.  The dissent concluded, "The simple fact is that the 
circuit court found that DHS was enforcing standards, thresholds, 
and requirements found in Topic #66 as a mechanism to take [PHP's] 
                                                 
9 DHS also filed a motion to stay the circuit court's orders 
pending appeal, but the circuit court denied the motion. 
Nos. 2016AP2082 & 2017AP634   
 
11 
 
property without the legal right to do so.  See Wis. Stat. 
§ 227.10(2m)."  Id., ¶21 (Reilly, P.J., dissenting). 
¶16 We granted PHP's petition for review. 
 
III. STANDARD OF REVIEW 
¶17 We review the court of appeals' decision reversing the 
circuit court's order granting PHP's motion for summary judgment.  
"'We review summary judgment rulings independently, applying the 
well-established standards set forth in Wis. Stat. § 802.08.'"  
Benson v. City of Madison, 2017 WI 65, ¶19, 376 Wis. 2d 35, 897 
N.W.2d 16 (quoting Marks v. Houston Cas. Co., 2016 WI 53, ¶35, 369 
Wis. 2d 547, 881 N.W.2d 309).  Summary judgment is appropriate 
when there is no genuine issue of material fact and the moving 
party is entitled to judgment as a matter of law.  Wis. Stat. 
§ 802.08(2). 
¶18 DHS argues that this case is not justiciable because it 
is not ripe.  Ripeness is a question of law which we review de 
novo.  Olson v. Town of Cottage Grove, 2008 WI 51, ¶38, 309 
Wis. 2d 365, 749 N.W.2d 211. 
¶19 This case requires us to determine the scope of DHS's 
authority to recoup payments made to Medicaid service providers.  
"The question of the scope of an agency's authority requires the 
interpretation of relevant statutes [and regulations], which 
presents a question of law, which we review de novo."  Lake Beulah 
Mgmt. Dist. v. DNR, 2011 WI 54, ¶23, 335 Wis. 2d 47, 799 N.W.2d 73 
(citing Anderson v. DNR, 2011 WI 19, ¶25, 332 Wis. 2d 41, 796 
N.W.2d 1).  We do not defer to agency interpretations.  Wis. Stat. 
Nos. 2016AP2082 & 2017AP634   
 
12 
 
§ 227.57(11) ("Upon review of an agency action or decision, the 
court shall accord no deference to the agency's interpretation of 
law."); see also Tetra Tech EC, Inc. v. DOR, 2018 WI 75, ¶108, 382 
Wis. 2d 496, 
914 
N.W.2d 21. 
 
Statutory 
and 
regulatory 
interpretation begin and end with the language of the relevant 
statutes and regulations if their meaning is plain.  State ex rel. 
Kalal v. Circuit Court for Dane Cty., 2004 WI 58, ¶45, 271 
Wis. 2d 633, 681 N.W.2d 110. 
¶20 We also review the court of appeals' reversal of the 
circuit court's supplemental order and order for costs and attorney 
fees.  Whether a circuit court may order a state agency to pay 
costs and attorney fees is a question of law we review de novo.  
DOT v. Wisconsin Personnel Comm'n, 176 Wis. 2d 731, 735, 500 
N.W.2d 664 (1993). 
 
IV.  ANALYSIS 
A.  The Issues Presented 
¶21 PHP argues that the Perfection Policy is unlawful under 
Wis. Stat. § 227.40(1) for two reasons.  PHP first argues that 
DHS's Perfection Policy is an unpromulgated administrative rule.  
Alternatively, PHP argues the Perfection Policy is an invalid 
guidance document.  PHP also argues that the Perfection Policy, 
whether a rule, a guidance document, or neither, is unlawful 
because it exceeds DHS's statutory recoupment authority under Wis. 
Stat. § 49.45(3)(f).  See Wis. Stat. § 227.10(2m).  Finally, PHP 
argues that the circuit court's supplemental order and order for 
costs and attorney fees were proper. 
Nos. 2016AP2082 & 2017AP634   
 
13 
 
¶22 DHS has several counter-arguments.  It argues that this 
case is a review of Topic #66 specifically, and not a broader 
Perfection Policy.  Regarding Topic #66, DHS argues that it is not 
a rule.  It also argues that, even if Topic #66 is a guidance 
document, PHP's guidance document claim is not properly before 
this court.  Regarding the Perfection Policy, DHS denies its 
existence.  It also argues that PHP's claim is not ripe and that 
the alleged Perfection Policy is not a rule or guidance document.  
Next, DHS argues that neither Topic #66 nor the Perfection Policy 
exceeds DHS's recoupment authority.  Finally, DHS argues that the 
circuit court's supplemental order was improper because it 
expanded the scope of the original order while DHS's appeal was 
pending.  And it argues that sovereign immunity bars the circuit 
court's order for costs and attorney fees.  
¶23 Accordingly, the parties present this court with a 
variety of issues.  But we narrow them to three.10  To do so, we 
clarify (1) the scope of the challenge (Topic #66 or the Perfection 
Policy), and (2) the proper inquiry (rule, guidance document, or 
excess of recoupment authority). 
¶24 First, we must determine whether PHP's complaint 
challenged Topic #66 only or, more broadly, the Perfection Policy.  
Both the court of appeals and DHS view this case as a challenge to 
                                                 
10 "Typically, an appellate court should decide cases on the 
narrowest possible grounds.  State v. Blalock, 150 Wis. 2d 688, 
703, 442 N.W.2d 514 (Ct. App. 1989).  Issues that are not 
dispositive need not be addressed.  Gross v. Hoffman, 227 Wis. 296, 
300, 277 N.W. 663 (1938)."  Maryland Arms Ltd. P'ship v. Connell, 
2010 WI 64, ¶48, 326 Wis. 2d 300, 786 N.W.2d 15. 
Nos. 2016AP2082 & 2017AP634   
 
14 
 
Topic #66 exclusively.  Papa, unpublished slip op., ¶¶17, 19.  But 
the complaint and the circuit court's original order both make 
clear that this case presents a review of DHS's Perfection Policy, 
not just Topic #66. 
¶25 PHP's complaint alleged that DHS "has a 'statement of 
general policy' that [it] may recoup payment from Medicaid 
providers for covered services that have been provided, and for 
which Medicaid has reimbursed, if a post-payment audit finds that 
the services fail to meet all applicable program requirements."  
Topic #66 was attached to the complaint.  But the complaint itself 
consistently refers not to Topic #66, but to a "statement of 
general policy."  PHP's Claim Two alleges it is DHS's policy "that 
any compliance imperfection causes the services to be 'non-
covered' and therefore an 'overpayment.'"   PHP alleges that this 
policy "has no basis in regulation or statute" and "is in excess 
of DHS's authority."  Accordingly, the complaint alleges that DHS's 
recoupment policy requires perfection and exceeds DHS's actual 
recoupment authority.  The complaint is not limited to Topic #66. 
¶26 Furthermore, the circuit court determined that Topic #66 
is just an example of DHS's recoupment policy.  It concluded that 
DHS's "recoupment policy" requires perfection.   And it described 
the "recoupment policy" as "including the standard as set forth in 
the Medicaid Provider Handbook at Topic #66."  (Emphasis added.)  
Thus, this case is not limited to a narrow review of Topic #66 
only.  This case presents a broader challenge to DHS's Perfection 
Policy, of which Topic #66 is just an example. 
Nos. 2016AP2082 & 2017AP634   
 
15 
 
¶27 Second, we clarify what the proper inquiry is——whether 
the Perfection Policy is an unpromulgated rule, is a guidance 
document, or exceeds DHS's recoupment authority.  The proper 
inquiry is whether the Perfection Policy exceeds DHS's recoupment 
authority.  We need not decide whether the Perfection Policy is a 
rule or a guidance document.11  It makes no difference in this 
case.  Regardless, Claim Two of the complaint clearly alleged that 
the Perfection Policy is in excess of DHS's recoupment authority.  
DHS may not adopt a Perfection Policy if that policy is in excess 
of its recoupment authority.  See Wis. Stat. § 227.10(2m).  
Accordingly, the scope of DHS's recoupment authority is the crux 
of this case. 
¶28 Thus narrowed, the issues we review in this case are: 
whether PHP's Perfection Policy claim is ripe; whether the 
Perfection Policy is in excess of DHS's recoupment authority; and 
whether the supplemental order and order for costs and attorney 
fees were proper. 
B.  Ripeness 
¶29 DHS argues that PHP's challenge to the Perfection Policy 
is not justiciable because it is not ripe.  "A court must be 
                                                 
11 DHS disputes whether PHP's guidance document claim is 
properly before this court because PHP's complaint did not plead 
a guidance document claim.  Nor could it have.  The legislature 
amended Wis. Stat. § 227.40(1) to permit such a claim during the 
pendency of this appeal.  See 2017 Wis. Act 369, § 65.  PHP argues 
that it pled a § 227.40(1) claim and that the amendment should 
therefore apply retroactively to this case.  But we need not decide 
whether that amendment would apply retroactively to this case 
because we need not decide whether the Perfection Policy is a 
guidance document. 
Nos. 2016AP2082 & 2017AP634   
 
16 
 
presented with a justiciable controversy before it may exercise 
its jurisdiction over a claim for declaratory judgment."  Olson, 
309 Wis. 2d 365, ¶28.  A controversy is justiciable when: (1) a 
"right is asserted against [a defendant] who has an interest in 
contesting it"; (2) the controversy is "between persons whose 
interests are adverse"; (3) the plaintiff has a "legally 
protectable interest" in the controversy; and (4) the controversy 
is "ripe for judicial determination."  Id., ¶29 (citing Loy v. 
Bunderson, 107 Wis. 2d 400, 410, 320 N.W.2d 175 (1982)).  "'If all 
four factors are satisfied, the controversy is "justiciable," and 
it is proper for a court to entertain an action for declaratory 
judgment.'"  Id. (quoting Miller Brands-Milwaukee, Inc. v. Case, 
162 Wis. 2d 684, 694, 470 N.W.2d 290 (1991)). 
¶30 Ripeness is the only factor at issue here.  The purpose 
of ripeness is "'to avoid courts entangling themselves in abstract 
disagreements.'"  Olson, 309 Wis. 2d 365, ¶43 (quoting Miller 
Brands-Milwaukee, 162 Wis. 2d at 694).  Courts resolve concrete 
cases, not abstract or hypothetical cases.  That being said, "the 
ripeness required in declaratory judgment actions is different 
from the ripeness required in other actions" because declaratory 
judgments are prospective remedies.  Id.  A plaintiff need not 
prove an injury has already occurred.  Id.  Rather, the facts must 
be "sufficiently developed to allow a conclusive adjudication."  
Id. (citing Milwaukee Dist. Council 48 v. Milwaukee Cty., 2001 WI 
65, ¶41, 244 Wis. 2d 333, 627 N.W.2d 866).  "The facts on which 
the court is asked to make a judgment should not be contingent or 
uncertain, but not all adjudicatory facts must be resolved as a 
Nos. 2016AP2082 & 2017AP634   
 
17 
 
prerequisite to a declaratory judgment."  Id. (citing Miller 
Brands-Milwaukee, 162 Wis. 2d at 694-95). 
¶31 We conclude that PHP's challenge to DHS's recoupment 
policy is ripe for determination, and therefore justiciable.  There 
is nothing hypothetical, abstract, contingent, or uncertain about 
the experiences of PHP's nurses described in their affidavits.  
Nor is there anything hypothetical or abstract about the brief and 
final decision attached to PHP's counsel's affidavit.  The record 
here 
is 
"sufficiently 
developed 
to 
allow 
a 
conclusive 
adjudication."  Olson, 309 Wis. 2d 365, ¶43.  The record supports 
a conclusion that DHS is actively enforcing a Perfection Policy 
against nurses to recoup payments for services that they actually 
provided to Medicaid patients.  Accordingly, we proceed to the 
merits. 
C.  Recoupment Authority 
¶32 The crux of this case is the scope of DHS's recoupment 
authority.  "No agency may implement or enforce any standard, 
requirement, 
or 
threshold, . . . unless 
that 
standard, 
requirement, or threshold is explicitly required or explicitly 
permitted by statute or by a [promulgated] rule . . . ."  Wis. 
Stat. § 227.10(2m).  Thus, DHS may not implement or enforce the 
Perfection Policy unless it is explicitly required or permitted to 
Nos. 2016AP2082 & 2017AP634   
 
18 
 
do so by statute or a previously promulgated rule.12  Id.  We look 
to the statutes and promulgated DHS rules to determine the scope 
of DHS's explicit recoupment authority.  We begin with the relevant 
statutes. 
¶33  Wisconsin Stat. § 49.45(2) sets forth a series of DHS 
obligations in its administration of the medical assistance 
program.  Under § 49.45(2)(a)10.a., DHS "shall,"  
[a]fter reasonable notice and opportunity for hearing, 
recover money improperly or erroneously paid or 
overpayments to a provider by offsetting or adjusting 
amounts owed the provider under the program, crediting 
against a provider's future claims for reimbursement for 
other services or items furnished by the provider under 
the program, or requiring the provider to make direct 
payment to [DHS] or its fiscal intermediary.   
Accordingly, DHS has the authority, indeed the obligation, to 
recoup improper or erroneous Medicaid payments and overpayments.  
That grant of authority raises two questions: What makes a payment 
improper, erroneous, or an overpayment?; and, how does DHS so 
determine?  We find the answers a little further down in the same 
statute. 
                                                 
12 While the parties dispute whether the Perfection Policy is 
a rule, they agree that it was not promulgated as such.  
Accordingly, the Perfection Policy cannot be and is not a source 
of its own authority.  See Wis. Stat. § 227.10(2m) ("No agency may 
implement or enforce any standard, requirement, or threshold, 
including as a term or condition of any license issued by the 
agency, unless that standard, requirement, or threshold is 
explicitly required or explicitly permitted by statute or by a 
rule 
that 
has 
been 
promulgated 
in 
accordance 
with 
this 
subchapter . . . .") (Emphasis added.) 
Nos. 2016AP2082 & 2017AP634   
 
19 
 
¶34 Under Wis. Stat. § 49.45(3)(f)1., DHS may audit 
providers' records to ensure that Medicaid payments are not 
improper, erroneous, or overpayments:  
Providers of services under this section shall maintain 
records as required by [DHS] for verification of 
provider claims for reimbursement.  [DHS] may audit such 
records to verify actual provision of services and the 
appropriateness and accuracy of claims.  
§ 49.45(3)(f)1.  Under the plain language of subd. 1., DHS may 
require service providers to maintain records, and may audit those 
records to ensure that services are actually provided and claims 
for reimbursement for those services are appropriate and accurate. 
¶35 Under Wis. Stat. § 49.45(3)(f)2., the result of a 
subd. 1. audit determines DHS's authority to recoup payments:   
[DHS] may deny any provider claim for reimbursement 
which cannot be verified under subd. 1. or may recover 
the value of any payment made to a provider which cannot 
be so verified.  The measure of recovery will be the 
full value of any claim if it is determined upon audit 
that actual provision of the service cannot be verified 
from the provider's records or that the service provided 
was not included in s. 49.46(2) or 49.471(11).  In cases 
of 
mathematical 
inaccuracies 
in 
computations 
or 
statements of claims, the measure of recovery will be 
limited to the amount of the error.   
§ 49.45(3)(f)2. 
¶36 The plain language makes clear that DHS's audit and 
recoupment authority focus on the "actual provision" of covered 
services, "the appropriateness" of claims, and the "accuracy of 
claims."  Wis. Stat. § 49.45(3)(f)1.-2.  DHS may require service 
providers to "maintain records."  § 49.45(3)(f)1.  It "may audit 
such records to verify actual provision of services and the 
Nos. 2016AP2082 & 2017AP634   
 
20 
 
appropriateness and accuracy of claims."  Id.  And it "may recover 
the value of any payment made to a provider which cannot be so 
verified."  § 49.45(3)(f)2. (emphasis added).  The "so verified" 
language, viewed in context, refers back to subd. (3)(f)1.  
Accordingly, the legislature explicitly granted DHS authority to 
recoup payment for Medicaid services only when an audit of a 
service provider's records cannot verify the "actual provision of 
services,"  "the appropriateness" of claims, and the "accuracy of 
claims."13  § 49.45(3)(f)1.-2.; Wis. Stat. § 227.10(2m).   
¶37 The plain language of Wis. Stat. § 49.45(3)(f)1.-2. does 
not explicitly require or permit DHS to enforce a Perfection 
Policy.  We turn next to DHS promulgated rules. 
¶38 DHS may "[p]romulgate rules to implement" its recoupment 
authority.  Wis. Stat. § 49.45(2)(a)10.c.  And it has.  Under Wis. 
Admin. Code § DHS 106.02(9)(g) (Jan. 2014):14  
[DHS] may refuse to pay claims and may recover previous 
payments made on claims where the provider fails or 
refuses to prepare and maintain records or permit 
authorized [DHS] personnel to have access to records 
required . . . .   
Under this section, DHS may recoup Medicaid payments if the service 
provider does not "prepare and maintain" records or refuses DHS 
access to them.  This provision is consistent with Wis. Stat. 
§ 49.45(3)(f)2., which permits DHS to recoup payments if the actual 
                                                 
13 DHS has other audit and recoupment authority relating to 
hospitals and contractors under Wis. Stat. § 49.45(3)(f)2m. and 
3., but those subdivisions are not at issue in this case. 
14 All subsequent references to Wis. Admin. Code DHS ch. 106 
are to the January 2014 register date unless otherwise indicated. 
Nos. 2016AP2082 & 2017AP634   
 
21 
 
provision of services cannot be verified.  Put simply, DHS cannot 
verify the actual provision of services without a record of those 
services.  We note that § DHS 106.02(9)(g) does not state that 
mere record imperfections of any kind may be grounds for 
recoupment.  Rather, it states that the complete failure or refusal 
"to prepare and maintain records or permit authorized [DHS] 
personnel to have access to records" at all constitutes grounds 
for recoupment.  § DHS 106.02(9)(g).  The difference between 
imperfect records and no records at all is a significant one.  
Thus, § DHS 106.02(9)(g) does not explicitly require or permit DHS 
to enforce its Perfection Policy either.  
¶39 Moving to another promulgated rule, Wis. Admin. Code 
§ DHS 108.02(9)(a) describes recoupment methods: 
If [DHS] finds that a provider has received an 
overpayment, including but not limited to erroneous, 
excess, duplicative and improper payments regardless of 
cause, under the program, [DHS] may recover the amount 
of the overpayment by any of the following methods, at 
its discretion[.]  
The recoupment methods include: (1) offsetting or adjusting other 
amounts owed the provider; (2) offsetting or crediting amounts 
owed for subsequent services; or (3) requiring the provider to pay 
the amount of overpayment.  § DHS 108.02(9)(a)1.-3.  This section 
describes the methods of recoupment, but does not provide any new 
information about the explicitly required or permitted grounds for 
DHS recoupment. 
¶40 Based 
on 
the 
plain 
language 
of 
Wis. 
Stat. 
§ 49.45(3)(f)1.-2. and Wis. Admin. Code § DHS 106.02(9)(g), DHS 
has explicit authority to recoup Medicaid payments only if DHS 
Nos. 2016AP2082 & 2017AP634   
 
22 
 
cannot verify (1) the actual provision of covered services, (2) 
that the reimbursement claim is appropriate for the service 
provided, and (3) that the reimbursement claim is accurate for the 
service provided. 
¶41 What remains is to compare this explicit grant of 
recoupment authority to DHS's Perfection Policy.  Nowhere does 
Wis. Stat. § 49.45(3)(f)1.-2. say that the documents DHS requires 
must be perfect.  Nowhere does § 49.45(3)(f)1.-2. or any DHS rule 
say that DHS may recoup payments from service providers based on 
any particular documentation shortcomings or imperfections.  No 
statute 
or 
rule 
states 
that 
a 
particular 
documentation 
imperfection renders a claim inappropriate or inaccurate under 
§ 49.45(3)(f)1.-2.  Nor has DHS made any effort to link the 
Perfection Policy to an inability to verify that a covered service 
was actually provided, that the claim for the service was 
appropriate, or that the claim for the service was accurate.  
Absent any explicit authority to recoup payments based on the 
Perfection Policy, and absent any evidence that the Perfection 
Policy is linked to verification of covered services, claim 
appropriateness, or claim accuracy, we are left with a clear 
conclusion.  There is no legal basis for the Perfection Policy. 
Nos. 2016AP2082 & 2017AP634   
 
23 
 
¶42 We conclude that DHS's Perfection Policy has no basis 
under Wis. Stat. § 49.45(3)(f)1.-2.15  No statute or promulgated 
rule explicitly requires or permits recoupment based on mere 
imperfection.  Wis. Stat. § 227.10(2m).  Rather, DHS may recoup 
Medicaid payments from providers only if it cannot verify the 
actual provision of covered services, the appropriateness of the 
claim for the services, and the accuracy of the claim for the 
services. 
 
§ 49.45(3)(f)1.-2.; 
Wis. 
Admin. 
Code 
§ DHS 
106.02(9)(g).  Thus, so long as DHS can verify that a covered 
service was actually provided, the claim was appropriate, and the 
claim was accurate, DHS cannot recoup payments based on a record 
imperfection.  A record imperfection alone is not an independent 
basis for recouping payments.  The Perfection Policy therefore 
                                                 
15 DHS attempts to daisy-chain a plethora of state and federal 
statutes and codes to support the requirements set forth in Topic 
#66.  DHS argues that Topic #66 "simply recites Medicaid law" under 
these provisions.  See 42 U.S.C. §§ 1396a, 1396a(a)(19), (27), 
(30)(A), & (37); 42 C.F.R. §§ 430.0, 431.960(c), 440.230, 440.80, 
447.45(d)(1) & (f), 455.18, 455.410, 455.412, 456.1-6; Wis. Stat. 
§ 49.46(2)(b)6.g.; and Wis. Admin. Code §§ DHS 106.02(1)-(5), 
106.03(2)(b), 
107.02(2)(a), 
(e), 
(f) 
& 
(h), 
107.03(9), 
107.12(1)(c), (2)(a) & (4)(d).  DHS's arguments regarding these 
provisions are underdeveloped.  It does not engage in detailed 
statutory or regulatory interpretation.  Nor does it point to a 
particular provision which would justify the Perfection Policy as 
a whole or the specific examples of it discussed in the affidavits 
filed in this case.  DHS is, of course, bound by federal and state 
law.  But we cannot develop DHS's arguments for it.  See Clean 
Wis., Inc. v. Pub. Serv. Comm'n of Wis., 2005 WI 93, ¶180 n.40, 
282 Wis. 2d 250, 700 N.W.2d 768 ("We will not address undeveloped 
arguments.").  Rather, we note that we review the Perfection 
Policy, not just Topic #66, and that DHS has not directed us to 
any provision which explicitly establishes additional grounds for 
recoupment beyond those set forth in Wis. Stat. § 49.45(3)(f)1.-
2. 
Nos. 2016AP2082 & 2017AP634   
 
24 
 
exceeds DHS's recoupment authority.  Wis. Stat. §§ 227.10(2m), 
49.45(3)(f)1.-2.; § DHS 106.02(9)(g). 
¶43 We note that the court of appeals recently came to a 
similar conclusion in Newcap, Inc.  In that case, DHS argued that 
it had authority to recoup payment for services actually provided 
because Newcap "fail[ed] to retain invoices documenting its 
purchase of prescription drugs that it subsequently dispensed to 
Medicaid patients" and "fail[ed] to include correct National Drug 
Codes (NDCs)," a unique product code, "on reimbursement claims."  
Newcap, Inc., 383 Wis. 2d 515, ¶3.  DHS did not link either of its 
arguments to an inability to verify the actual provision of covered 
services, the appropriateness of the reimbursement claim, or the 
accuracy of the reimbursement claim.  The court of appeals rejected 
both arguments.  It concluded that DHS "was not entitled to 
recoupment" in that case because there was no statute or rule 
explicitly stating that the failure to maintain prescription 
invoices or include the correct NDC was an independent basis for 
recoupment.  Id., ¶45. 
D.  Supplemental Order And Order For Costs And Fees 
¶44 When the court of appeals reversed the circuit court's 
original order in this case on the merits, it also automatically 
vacated the circuit court's supplemental order and order for costs 
and fees.  Since we reverse the court of appeals on the merits, we 
must separately determine whether to reinstate the circuit court's 
other orders.  DHS argues that the circuit court's supplemental 
order was improper because it expanded the circuit court's 
injunction while this appeal was pending before the court of 
Nos. 2016AP2082 & 2017AP634   
 
25 
 
appeals.  See Madison Teachers, Inc. v. Walker, 2013 WI 91, ¶¶2, 
18-21, 351 Wis. 2d 237, 839 N.W.2d 388 (per curiam) (vacating a 
circuit court's contempt order because the order issued while an 
appeal was pending and "expanded the scope" of the circuit court's 
original declaratory judgment); Wis. Stat. § 808.075(3). 
¶45 But the circuit court's supplemental order did not 
expand the scope of its original order.  Rather, it clarified the 
original order.  The circuit court's original order declared the 
Perfection Policy to be in excess of DHS's recoupment authority 
under Wis. Stat. §§ 49.45(2)(a)10. and (3)(f), and enjoined its 
enforcement.  Its supplemental order specified that the injunction 
prohibited DHS from "issu[ing] a notice of intent to recover 
Medicaid payments," "further[ing] any agency action" or "otherwise 
recoup[ing] funds," "if the provider's records verify that the 
services were provided and the provider was paid an appropriate 
amount for such services . . . ."  These specifications did not 
expand the scope of the original order.  They merely clarified it.  
Thus, the circuit court did not err when it issued its supplemental 
order, and we reinstate it. 
¶46 DHS also argues that the circuit court improperly 
awarded PHP costs and attorney fees.  DHS argues that the circuit 
court's order for costs and attorney fees ran afoul of sovereign 
immunity.  See Wis. Const. art. IV, § 27 ("The legislature shall 
direct by law in what manner and in what courts suits may be 
brought against the state."). 
¶47 Because the State has sovereign immunity, "[t]his court 
has frequently held that costs may not be taxed against the state 
Nos. 2016AP2082 & 2017AP634   
 
26 
 
or an administrative agency of the state unless expressly 
authorized by statute."  Martineau v. State Conservation Comm'n, 
54 Wis. 2d 76, 79, 194 N.W.2d 664 (1972) (collecting cases).  Thus, 
the circuit court could not order DHS to pay PHP's costs and 
attorney fees unless "expressly authorized" by statute. 
¶48 The circuit court cited two statutes as grounds for its 
supplemental order and order for costs and attorney fees, Wis. 
Stat. §§ 808.07(2)(a)3. and 806.04(8).  Neither expressly 
authorizes a court to order costs and attorney fees.  The former 
permits a circuit court to "[m]ake any order appropriate to 
preserve the existing state of affairs or the effectiveness of the 
judgment subsequently to be entered" while an appeal is pending.  
§ 808.07(2)(a)3.  And the latter permits a circuit court to grant 
"[f]urther relief based on a declaratory judgment" "whenever 
necessary or proper," but does not expressly include costs or 
attorney fees.  § 806.04(8).  The circuit court did not cite Wis. 
Stat. § 806.04(10) as authority for awarding costs and attorney 
fees.  Under Wis. Stat. § 806.04(10), "In any proceeding under 
this section the court may make such award of costs as may seem 
equitable and just."  While that subsection allows an award of 
costs generally, it does not expressly authorize an award of costs 
or attorney fees against the State.  Thus, the circuit court erred 
Nos. 2016AP2082 & 2017AP634   
 
27 
 
when it ordered DHS to pay PHP's costs and attorney fees.16  We 
affirm the decision of the court of appeals on this single issue, 
and the order for costs and attorney fees must be vacated.  
 
V.  CONCLUSION 
¶49 We conclude that PHP's challenge to DHS's recoupment 
policy is ripe for judicial determination.  We conclude that, under 
Wis. Stat. § 49.45(3)(f)1.-2., DHS may recoup Medicaid payments 
from service providers only in cases where DHS cannot verify one 
of the following: (1) the actual provision of covered services, 
(2) that the reimbursement claim is appropriate for the services 
provided; and (3) that the reimbursement claim is accurate for the 
services provided.  We further conclude that DHS's recoupment 
policy exceeds its recoupment authority.  Finally, we conclude 
that the circuit court's order for supplemental relief did not 
expand the scope of its original order, but that its order for 
costs and fees was erroneous.  Accordingly, we reverse in part, 
affirm in part, and remand. 
 
                                                 
16 PHP also argues that the circuit court properly ordered the 
costs and attorney fees as a sanction.  But the circuit court did 
not find DHS in contempt or order costs and fees as a sanction.  
Its order says nothing of the sort.  Indeed, at the hearing on 
this issue, the circuit court specifically declined to do so.  The 
circuit court stated, "I will not enter a finding of contempt today 
against [DHS] . . . ."  Absent a finding of contempt in the record, 
we will not review this argument. 
Nos. 2016AP2082 & 2017AP634   
 
2 
 
By the Court.—The decision of the court of appeals is reversed 
in part, affirmed in part, and the cause is remanded to the circuit 
court for further proceedings consistent with this opinion.  
¶50 BRIAN HAGEDORN, J., did not participate. 
 
Nos.  2016AP2082 & 2017AP634.dk 
 
1 
 
 
¶51 DANIEL KELLY, J.   (concurring in part, dissenting in 
part).  I join the majority except with respect to its denial of 
costs.  The Department of Human Services ("DHS") says it enjoys 
immunity from the imposition of costs pursuant to Article IV, 
Section 27 of the Wisconsin Constitution, which says "[t]he 
legislature shall direct by law in what manner and in what courts 
suits may be brought against the state."1  We've translated this 
into a ban on imposing costs against the state except when 
expressly authorized, but we've never been clear how this is 
connected to the constitutional command.  Instead, it appears we 
stitched the principle together out of the historical genesis of 
costs as an awardable litigation expense and some passing 
references to the United States' sovereign immunity.  Whether this 
pastiche fits together neatly is not something we need to resolve 
today; its historical development sufficiently demonstrates that 
the court may award costs against DHS pursuant to Wis. Stat. 
§ 806.04(10).2 
                                                 
1 The state's constitutional sovereign immunity applies to 
state agencies such as DHS.  See, e.g., Mayhugh v. State, 2015 
WI 77, ¶13, 364 Wis. 2d 208, 867 N.W.2d 754 ("Generally, for 
purposes of sovereign immunity, an action against a state agency 
or board is deemed an action against the state."); German v. DOT, 
2000 WI 62, ¶18, 235 Wis. 2d 576, 612 N.W.2d 50 ("The state's 
sovereign immunity from suit extends to the state's agencies and 
arms.") 
2 Although the circuit court's award of costs and attorney 
fees did not cite Wis. Stat. § 806.04(10), appellate courts "may 
affirm on grounds different than those relied on by the trial 
court."  Vanstone v. Town of Delafield, 191 Wis. 2d 586, 595, 530 
N.W.2d 16 (Ct. App. 1995). 
Nos.  2016AP2082 & 2017AP634.dk 
 
2 
 
I.  ORIGIN OF "EXPRESS AUTHORIZATION" 
¶52 A brief review of our cases addressing what it means for 
a statute to "expressly authorize" the award of costs against the 
state reveals this is more a matter of basic statutory construction 
than some type of heightened scrutiny called forth by the concept 
of sovereign immunity.  In one of our earliest cases involving 
costs against the state, Noyes v. State, 46 Wis. 250, 1 N.W. 1 
(1879), we resolved the issue without once mentioning sovereign 
immunity or our constitution.  Our attention was captured, instead, 
by the interplay between common law and statutory law: 
At the common law, costs were unknown. Costs are 
altogether the creature of statute.  Speaking of the 
statute of Glocester, 6 Edw. 1, Sir Edward Coke says:  
"Before this statute, at the common law, no man recovered 
any costs of sute, either in plea real, personal or mixt; 
by this it may be collected, that justice was good cheap 
of ancient times, for in King Alfred's time there were 
no writs of grace, but all writs remedialls granted 
freely."  2 Inst. 288.  And no known statute gave costs 
against the crown. 
Id. at 251-52.  So we concluded that, "[i]n this state, therefore, 
costs are regulated exclusively by statute."  Id. at 252.  We were 
so far from considering this a matter of sovereign immunity that 
we actually suggested that costs may be awarded against the state 
when it permits itself to be sued:  "As a rule, costs are given to 
the prevailing party in civil actions.  And the statutes giving 
them, might include the state, when it sues or permits itself to 
be sued in civil actions."  Id. 
¶53 We introduced sovereign immunity to the question of 
costs in Sandberg v. State, 113 Wis. 578, 589, 89 N.W. 504 (1902), 
in which we said that "[n]o court is authorized to render judgment 
Nos.  2016AP2082 & 2017AP634.dk 
 
3 
 
for costs against the sovereign state, in absence of statute giving 
express authority."  We based the part of the sentence addressing 
immunity, interestingly enough, not on our constitution but on 
what the United States Supreme Court said about the United States' 
immunity.  Id.  (collecting cases).  The "express" aspect of this 
principle arose out of "the rule that general statutes are not to 
be construed to include, to its hurt, the sovereign."  Id.  This 
rebuffed our suggestion in Noyes that a general cost statute 
applicable to all litigants might, without more, be applicable 
against the state. 
¶54 We said pretty much the same thing in Frederick v. State, 
198 Wis. 399, 400, 224 N.W. 110 (1929), where we ruled that costs 
against the state are not allowed absent consent "manifested by an 
act of its Legislature . . . ."  But the measure of how express 
that manifestation must be seems to have been looser than what the 
majority requires today.  In Mr. Frederick's suit to recover unpaid 
salary under Wis. Stat. ch. 285 (1927) (actions against the state), 
there was no statute specifically allowing the court to award costs 
against the state.  But Wis. Stat. § 285.04 (1927) required an 
audit of "the amount of damages and costs" paid in such an action.3  
The statute assumed, but did not say, that costs could be awarded.  
                                                 
3 "Judgment, how paid:  No execution shall issue against the 
state on any judgment, but whenever a final judgment against the 
state shall have been obtained in any such action the clerk shall 
make and furnish to the secretary of state a duly certified 
transcript of such judgment; and the secretary of state shall 
thereupon audit the amount of damages and costs therein awarded, 
and the same shall be paid out of the state treasury."  Wis. Stat. 
§ 285.04 (1927). 
Nos.  2016AP2082 & 2017AP634.dk 
 
4 
 
Nonetheless, we said "[t]his is sufficient to warrant the 
imposition of costs."  Frederick, 224 N.W. at 110. 
¶55 DHS calls our attention to DOT v. Wisconsin Pers. Comm'n, 
176 Wis. 2d 731, 500 N.W.2d 664 (1993), and says we should deny 
costs here for the same reason we did there.   But that case 
actually explains why costs should be awarded to Ms. Papa.  The 
Wisconsin Pers. Comm'n court considered whether attorney's fees 
could be awarded against the state for a discovery violation under 
the auspices of Wis. Stat. § 804.12(1)(c).  We held that, although 
the statute does allow for the award of fees, it does not 
explicitly refer to the state, and so there was no legislative 
consent.  Wisconsin Pers. Comm'n, 176 Wis. 2d at 737-38.  But we 
also pointed the way to the award of costs in that case when we 
noted that, unlike the discovery violation statute, "[t]he 
legislature has expressly authorized costs to be taxed against the 
state under other circumstances.  See [Wis. Stat. §§] 227.485 and 
814.245."  Wisconsin Pers. Comm'n, 176 Wis. 2d at 738.  Our 
reference to the first of the two cited statutes is particularly 
instructive here because it provides that the state is subject to 
costs in contested cases when an administrative agency's position 
does not prevail.  As I explain below, costs must be available in 
declaratory judgment actions just as they are in contested cases 
because one type of action is simply an analog of the other. 
 
II.  THE SYMMETRY OF DECLARATORY JUDGMENTS AND CONTESTED CASES 
¶56 In a declaratory judgment action, such as the one here, 
the natural alignment of parties is the reverse of what they would 
be had the action commenced as a contested case.  See, e.g., Lister 
Nos.  2016AP2082 & 2017AP634.dk 
 
5 
 
v. Bd. of Regents of Univ. Wis. Sys., 72 Wis. 2d 282, 307, 240 
N.W.2d 610 (1976) (explaining that a declaratory judgment action 
allows a party to bring an action to settle "controversies of a 
justiciable nature" before "a wrong has been threatened or 
committed" against that party so as to provide "a remedy which is 
primarily anticipatory or preventative in nature.").  Our statutes 
unquestionably allow costs in the latter, and the authorization is 
only marginally less express in the former.  Because the subject 
matter of both proceedings is essentially identical (albeit in 
different fora), with only the parties' positions being reversed, 
it would take an active imagination to surmise that the legislature 
provided consent to the imposition of costs in one type of case 
but not its functional analog. 
¶57 Ms. Papa was the plaintiff here only because she took 
the initiative to commence the proceedings.  If she had waited for 
DHS to commence a contested case for the payments at issue, she 
would have been the defendant.  In that setting, it is beyond 
question that costs against the state are potentially available if 
the administrative agency's position fails:  
In any contested case in which an individual, a small 
nonprofit corporation or a small business is the 
prevailing party and submits a motion for costs under 
this section, the hearing examiner shall award the 
prevailing party the costs incurred in connection with 
the contested case, unless the hearing examiner finds 
that the state agency which is the losing party was 
substantially justified in taking its position or that 
special circumstances exist that would make the award 
unjust. 
Wis. Stat. § 227.485(3). 
Nos.  2016AP2082 & 2017AP634.dk 
 
6 
 
¶58 In the same subchapter that provides for those costs, 
the legislature authorized those like Ms. Papa to bring a 
declaratory judgment action challenging an agency's rule instead 
of waiting for an agency to commence a contested case:  "Except as 
provided in sub. (2) [the terms of which are not material here], 
the exclusive means of judicial review of the validity of a rule 
or guidance document shall be an action for declaratory judgment 
as to the validity of the rule or guidance document brought in the 
circuit court . . . ."  Wis. Stat. § 227.40.  An "action for 
declaratory judgment" is a phrase of art and, presumably, the 
legislature's institutional memory runs far enough back to 
remember when it adopted the Uniform Declaratory Judgment Act in 
1927 (now codified at Wis. Stat. § 806.04).  Ch. 212, Laws of 1927.  
And in that statute, we find the mandate that "[i]n any proceeding 
under this section the court may make such award of costs as may 
seem equitable and just."  Wis. Stat. § 806.04(10). 
¶59 The legislature expressly chose to subject the state to 
a proceeding in which costs could be awarded.  The question is 
whether, in doing so, it manifested consent to the imposition of 
costs "as may seem equitable and just."  I think it did.  There is 
a basic symmetry between contested cases and declaratory judgment 
actions, in which the only differences are the venue and the 
parties' relative positions.  The subject matter is the same, and 
the overall purpose is the same.  There is no doubt about the 
availability of costs in a contested case, and Wis. Stat. 
§ 806.04(10) says they are available in declaratory judgment 
actions.  Given that context, the allowance of costs in the latter 
Nos.  2016AP2082 & 2017AP634.dk 
 
7 
 
is 
sufficient 
to 
satisfy 
the 
judicially-created 
"express 
authorization" standard.  For these reasons, I respectfully 
dissent from ¶¶46-48 of the court's opinion concluding that DHS 
has sovereign immunity as to the costs awarded in favor of the 
petitioners. 
¶60 I am authorized to state that Justice REBECCA GRASSL 
BRADLEY joins this concurrence/dissent. 
Nos.  2016AP2082 & 2017AP634.dk 
 
 
 
1