WISCONSIN SUPREME COURT CALENDAR

AND CASE SYNOPSES

DECEMBER, 2011

 

The cases listed below will be heard in the Wisconsin Supreme Court Hearing Room, 231 East, State Capitol.

 

This calendar includes cases that originated in the following counties:

 

Chippewa

Dane

Fond du Lac

Kenosha

Milwaukee

Rock

 

 

 

 

THURSDAY, DECEMBER 1, 2011

9:45 a.m.         09AP2549          -     Robert Johnson v. Cintas Corporation                         

10:45 a.m.       10AP1551-CR   -     State v. Douglas M. Williams                                        

1:30 p.m.         10AP208            -     Aurora Consolidated Health Care v. LIRC       

FRIDAY, DECEMBER 2, 2011

9:45 a.m.         10AP2398          -     Loran B. Zwiefelhofer, et al. v. Town of Cooks Valley             

10:45 a.m.       10AP2061          -     Fond du Lac County v. Helen E. F.                                          

1:30 p.m.         11AP987            -     Ted Nickel v. United States of America

TUESDAY, DECEMBER 6, 2011

9:45 a.m.         10AP232-AC      -     State v. Abbott Laboratories, et al.                   

                       

 

 

 

 

 

 

 

The Supreme Court calendar may change between the time you receive this synopsis and when the cases are heard.  It is suggested that you confirm the time and date of any case you are interested in by calling the Clerk of the Supreme Court at 608-266-1880. That office will also have the names of the attorneys who will be arguing the cases.

 

Radio and TV, and print media wanting to take photographs, must make media requests 72 hours in advance by calling Supreme Court Media Coordinator Rick Blum at 608-271-4321. Summaries provided are not complete analyses of the issues presented.

 

 

 

WISCONSIN SUPREME COURT

THURSDAY, DECEMBER 1, 2011

9:45 a.m.

 

This is a review of a decision of the Wisconsin Court of Appeals, District II (headquartered in Waukesha), which reversed a Kenosha County Circuit Court decision, Judge David M. Bastianelli, presiding.

 

2009AP2549                           Johnson v. Cintas Corp.

 

The issue raised in this case is whether a default judgment was void because the summons and complaint named the wrong corporate defendant, meaning personal jurisdiction was never obtained over the correct corporate entity.

Some background: Robert Johnson was an employee of Cintas Corporation No. 2.  He was injured when his vehicle, which was being driven by a friend, collided with another vehicle.  His injuries resulted in permanent disability.  The plaintiff was required to use his personal vehicle in the course of his employment, and he had auto liability insurance through Cintas No. 2.  He sought treatment coverage from Cintas No. 2 through its health insurance provider.  When Cintas No. 2 refused to pay any benefits, the plaintiff filed suit.

On April 19, 2007, the plaintiff served the registered agent for Cintas No. 2 with the summons and complaint naming the wrong corporate entity, Cintas Corporation, as the defendant.  Neither Cintas No. 2 nor Cintas Corporation answered the complaint.

On May 12, 2007, the plaintiff filed the original summons and complaint naming "Cintas Corporation" as the defendant.  The record reveals that Cintas No. 2, the plaintiff's employer, is an indirect, wholly-owned subsidiary of Cintas Corporation.  Cintas No. 2 is a foreign corporation registered with the State of Wisconsin.  Cintas Corporation is a foreign corporation not registered and not doing business in Wisconsin.

On June 15, 2007, the plaintiff moved for default judgment.  In response, Cintas Corporation filed an emergency motion to strike and dismiss for lack of personal jurisdiction saying the plaintiff incorrectly identified Cintas Corporation as his employer.

The circuit court entered a default judgment against Cintas No. 2 after the court orally allowed the plaintiff to amend the caption by substituting Cintas No. 2 for Cintas Corporation since Cintas No. 2 was never served with a summons and complaint naming it as a defendant. 

On July 20, 2007, attorneys for Cintas No. 2 filed an answer to the original and amended complaints, a motion to dismiss for lack of personal jurisdiction, and a motion to intervene on behalf of Cintas No. 2.  The circuit court declined to hear the motions on the grounds the court had already held a hearing, had granted an amendment to the pleadings, and had granted default judgment against Cintas No. 2.  The circuit court advised that Cintas No. 2 could file a motion for relief from judgment under § 806.07, Stats.  Cintas No. 2 did this and after briefing, the circuit court vacated the default judgment.

The plaintiff filed a motion for reconsideration saying that based on information obtained during discovery, Cintas No. 2 had previously filed actions in Wisconsin using the name Cintas Corporation.  After more briefing, the circuit court granted the motion for reconsideration and held that because Cintas No. 2 effectively held itself out to the public and the plaintiff as Cintas Corporation, the default judgment was reinstated.  A subsequent hearing on damages was held.  Judgment was held in favor of the plaintiff for $272,371.89.  Cintas No. 2 appealed, and the Court of Appeals reversed and remanded.

The issue before the Supreme Court is whether a default judgment entered against Cintas Corporation No. 2 was void because the summons and complaint named Cintas Corporation.

Johnson asserts that naming Cintas Corporation rather than Cintas No. 2 in the summons and complaint was merely a technical, rather than a fundamental, defect that did not deprive the circuit court of jurisdiction.

Cintas No. 2 says that the defect in the summons and complaint was a fundamental defect that deprived the circuit court of personal jurisdiction over Cintas No. 2.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WISCONSIN SUPREME COURT

THURSDAY, DECEMBER 1, 2011

10:45 a.m.

 

This is a certification from the Wisconsin Court of Appeals, District IV, headquartered in Madison. The Court of Appeals may certify cases that it believes cannot be resolved by applying current Wisconsin law. The Wisconsin Supreme Court, as the state’s preeminent law-developing court, often accepts such certifications from the Court of Appeals. This case originated in Rock County Circuit Court, Judge James P. Daley, presiding.

2010AP1551-CR                    State v. Williams

 

In this certification, the Supreme Court examines whether court commissioners have the power under the current version of the Wisconsin Constitution to issue search warrants. A decision could have wide-ranging implications on the powers of court commissioners throughout the state.

In asking the Supreme Court to take the case, the District IV Court of Appeals said that although Wis. Stat. § 757.69(1)(b)  appears to grant search warrant powers to court commissioners, the appellant in this case, Douglas Meier Williams, argues that the legislature may not confer that power by statute because the Wisconsin Constitution does not authorize the legislature to grant judicial powers to court commissioners.

The Court of Appeals said: “We certify this issue because its resolution appears to carry with it enormous statewide implications for litigants and the judiciary. Although this case involves the specific power to issue search warrants, it is apparent that Williams’ argument calls into question several other powers authorized by Wis. Stat. § 757.69(1). In the criminal arena alone, this includes conducting initial appearances and preliminary hearings…”

Some background, On Nov. 11, 2008, a Beloit police officer filed an affidavit and application for a search warrant of Williams’ residence.  A Rock County circuit court commissioner issued the search warrant as requested.  The police searched Williams’ residence that same evening and discovered marijuana plants, marijuana paraphernalia, and items used for growing marijuana.

The state charged Williams with one count of manufacturing THC, one count of maintaining a drug trafficking place, and one count of being a dealer in possession of a controlled substance without a tax stamp.  Williams filed a motion to suppress the evidence discovered during the search on the ground that the statute authorizing circuit court commissioners to issue search warrants, Wis. Stat. § 757.69, was an unconstitutional delegation of judicial authority, and therefore the search warrant in his case had been a nullity.  The circuit court denied the motion, and Williams ultimately pled no contest to the one count of manufacturing THC.  Williams appealed.

Williams contends that issuing a search warrant “is a judicial power that requires the determination of probable cause.” He primarily cites the Supreme Court’s decision in Shadwick v. Tampa, 407 U.S. 345, 350 (1972), for this proposition.

Williams also points to the fact prior to 1977, there was a separate constitutional provision, Art. VII, § 23, that expressly authorized the appointment of court commissioners and vested in them “such judicial powers as shall be prescribed by law.”  He argues that the deletion of this provision by the 1977 amendments removed the authority of circuit court commissioners to exercise judicial power.

The state argues that the issuance of a search warrant is not the exercise of judicial power and therefore the authority to do so need not be conferred by the constitution.  It also points to the Supreme Court’s decision in Shadwick, which held that it was not a violation of the Fourth Amendment for a municipal court clerk to issue an arrest warrant pursuant to a Florida statute.  407 U.S. at 352.

The state argues that because Wis. Const. Art. I, § 11 is interpreted to provide the same guarantees as the Fourth Amendment, it is also permissible under the state constitution for some officer other than a judge to issue warrants.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WISCONSIN SUPREME COURT

THURSDAY, DECEMBER 1, 2011

1:30 p.m.

 

This is a review of a decision of the Wisconsin Court of Appeals, District I (headquartered in Milwaukee), which upheld a Milwaukee County Circuit Court decision, Judge Maxine A. White, presiding.

 

2010AP208                 Aurora Consolidated Health Care v. LIRC

 

This worker’s compensation case examines whether Wis. Stat. §§ 102.17(1)(g) and (d)1 require the state Labor and Industry Review Commission (LIRC) to allow an opportunity for cross-examination or rebuttal of an independent medical examiner under the circumstances presented in this case.

Some background: The dispute arose in February 2001 when Jeffrey Schaefer, employed as a courier by Aurora, slipped on ice and fell onto concrete while making a delivery.  Although Schaefer experienced lower back pain and bilateral leg pain, he finished his shift.  On March 5, 2001, Schaefer went to Dr. James Cain, complaining of the injuries sustained in the fall. 

An MRI showed Schaefer had an L5-S1 recurrent disc herniation. Following surgery, Schaefer had recurrent pain and was referred to Dr. Ali Sadeghi for pain management, who provided treatment in the form of steroid injections, as well as trigger point injections and oral medications to control lower back and bilateral leg pain.

Subsequently, unrelated to his work injury, Schaefer developed right hip pain in 2005.  In 2006, Schaefer underwent a total right hip replacement with positive results.  Schaefer does not seek worker’s compensation for difficulties related to his hip problem.

Sadeghi completed a form with Schaefer’s work restrictions and, in a post-hearing submission, explicitly stated the limitations stemmed from Schaefer’s work-related back injury and not from his subsequent hip problem. Aurora conceded liability for the 2001 fall and paid temporary total disability benefits, temporary partial disability benefits, and some associated medical expenses.

In March 2006, Schaefer filed a worker’s compensation claim for the 2001 fall, seeking additional compensation. Based on Cain’s and Sadeghi’s medical opinions, the administrative law judge (ALJ) concluded Schaefer was permanently and totally disabled and had sustained a permanent total loss of earning capacity, based on the vocational expert reports.

Aurora sought review.  It argued the ALJ should have disregarded Sadeghi’s opinion because his opinion was “untruthful” and contained restrictions not merely for Schaefer’s 2001 fall, but also for his unrelated hip problem.  LIRC remanded with directions to the ALJ to appoint an independent medical examiner to assess only Schaefer’s disabilities related to the 2001 fall.

After an independent expert’s review, both parties submitted a third set of reports from respective vocational experts, which found one of the expert’s answers relevant to their loss of earning capacity analysis. 

As a result, Aurora requested LIRC remand to the Department of Workforce Development (a third time) to allow Aurora to cross‑examine Ebert about his answers to the ALJ’s three questions.  Alternatively, Aurora asked that three additional questions be submitted LIRC denied both requests.  It affirmed the Department’s decision finding Schaefer totally and permanently disabled and that Schaefer sustained a permanent total loss of earning capacity.

Aurora argued on appeal that §§ 102.17(1)(g) and 102.17(1)(d)1. require LIRC to provide an opportunity for Aurora to cross-examine Dr. Jerome Ebert as the independent medical examiner appointed by the Department.  The Court of Appeals concluded § 102.17(1)(g) provides only that Aurora be permitted an opportunity to “rebut” the independent medical examiner’s “report,” and § 102.17(1)(d)1 only requires Aurora be allowed to cross-examine experts “presented by a party.”

The Court of Appeals said it need not determine what level of deference to apply because, under any level, it would conclude LIRC acted within its statutory authority when it denied Aurora’s request to cross-examine the independent medical examiner.  Applying a plain language analysis, the Court of Appeals said “the right to rebut a report is not the same as the right to cross-examine the independent medical examiner who drafted the report.”

Aurora claims the Court of Appeals’ misinterpretation of § 102.17(1)(g) and (d)1. creates a conflict in the law and denies due process.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WISCONSIN SUPREME COURT

FRIDAY, DECEMBER 2, 2011

9:45 a.m.

 

This is a certification from the Wisconsin Court of Appeals, District III, headquartered in Wausau. The Court of Appeals may certify cases that it believes cannot be resolved by applying current Wisconsin law. The Wisconsin Supreme Court, as the state’s preeminent law-developing court, often accepts such certifications from the Court of Appeals. This case originated in Chippewa County Circuit Court, Judge James M. Isaacson, presiding.

2010AP2398               Zwiefelhofer v. Town of Cooks Valley

 

In this certification, the Supreme Court examines the factors that distinguish a zoning ordinance from an ordinance enacted under a town’s general police powers. More specifically, the Court is asked whether the Town of Cooks Valley’s (the Town) non-metallic mining ordinance, which was approved by the town board but not the county board, is invalid as a disguised zoning ordinance that was not adopted in conformity with zoning procedures.

Some background: On July 14, 2008, the Town enacted an ordinance entitled “Chapter 19 Mining Ordinance” (Chapter 19).  The Town adopted a revised Chapter 19 in December 2008.  The Town did not follow the procedure set forth in Wis. Stat. § 60.62 for adoption of zoning ordinances when it enacted either the original version or the revised version, and Chapter 19 was not approved by the Chippewa County Board of Supervisors. 

 Four plaintiffs (collectively Zwiefelhofer) challenged the ordinance, which requires an application for a non-metallic mining permit.

The circuit court invalidated the ordinance, concluding it is actually a zoning regulation that was not approved by the Chippewa County Board as required by Wis. Stat. § 60.62(3). The circuit court accepted Zwiefelhofer’s argument that the regulations imposed by the ordinance can only be imposed by a zoning ordinance because they constitute a substantial interference with land use. See Arden H. Rathkopf, et. al. 1 Rathkopf’s, The Law of Zoning and Planning § 1:10 (West 2005).

The circuit court relied substantially on a test created by the Court of Appeals in Gordie Boucher Lincoln-Mercury Madison, Inc. v. City of Madison Plan Commission, 178 Wis. 2d 74, 503 N.W.2d 265 (Ct. App. 1993), which was later overruled by this court in Wood v. City of Madison, 2003 WI 24, ¶33, 260 Wis. 2d 71, 659 N.W.2d 31.

The Town has taken the position that Chapter 19 is not a zoning ordinance and therefore did not need to be approved by the county board.

The preamble to the ordinance recites its purpose as “to promote the health, safety, prosperity, aesthetics and general welfare of the people and communities within the town.” It states its general intent “to regulate the location, construction, installation, alteration, design, operation and use of all nonmetallic mines so as to protect the health of residents and transients … [and] further the appropriate use and conservation of land and water resources.”

The Town argues that zoning involves advanced determination of where future types of structures and their associated activities may be located, as opposed to regulatory ordinances requiring licenses that apply across a broad geographical area and are invoked only on a case-by-case basis when someone proposes to undertake that activity.

However, the Court or Appeals listed provisions within the ordinance it said have characteristics of land-use regulations.

Zwiefelhofer contends the primary distinguishing characteristic of a zoning ordinance is that it regulates where activities can take place, see David L. Ulrich Inc. v. Saukville, 7 Wis. 2d 173, 177, 96 N.W.2d 612 (1959), and this ordinance only regulates the areas where nonmetallic mines are located. The Town argues that its ordinance does not create any zones or districts, but applies to any location in the township. It views the ordinance as one regulating an activity anywhere in the township, not a location, district or zone. Citing Hobart v. Collier, 3 Wis. 2d 182, 185-86, 87 N.W.2d 868 (1958), Zwiefelhofer contends that the absence of multiple zones is one indicator of a zoning ordinance, but is not a controlling factor.

The Court of Appeals says that review by this court is necessary to create a test for distinguishing between zoning ordinances and general ordinances, such as licensing ordinances.  The Court of Appeals states that it created such a test in Gordie Boucher, but because that decision was later overruled by this court, it may no longer be cited as precedent.  Blum v. 1st Auto & Cas. Ins. Co., 2010 WI 78, ¶56, 326 Wis. 2d 729, 786 N.W.2d 78.  Thus, it asserts that there is currently no clear precedent that distinguishes zoning ordinances from licensing ordinances.

A decision by the Supreme Court could help establish the test for determining whether a town ordinance constitutes a zoning ordinance that must be approved by the county board before it becomes valid under Wis. Stat. § 60.62(3).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WISCONSIN SUPREME COURT

FRIDAY, DECEMBER 2, 2011

10:45 a.m.

 

This is a review of a decision of the Wisconsin Court of Appeals, District II (headquartered in Waukesha), which reversed a Fond du Lac County Circuit Court decision, Judge Richard J. Nuss, presiding.

 

2010AP2061                           Fond du Lac Co. v. Helen E.F.

 

This case examines whether a person who has Alzheimer’s or similar dementia may also be found to have a mental illness for purposes of a ch. 51 involuntary commitment and whether certain medications constitute “treatment” under the statute.

A decision by the Supreme Court could have wide-ranging implications, as virtually every county in the state has filed proceedings under ch. 51, seeking the involuntary commitment of persons with dementia who exhibit attributes of mental illness in the form of a treatable mood or psychotic disorder. 

Some background: Helen E.F. has been in a nursing home for about six years. Her dementia has progressed to the point where she is very limited in her verbal communications. Her appearance at the commitment proceedings was waived since she would not be able to understand or participate meaningfully. 

Helen was taken to St. Agnes Hospital on April 12, 2010.  On April 15, 2010, a probable cause hearing was conducted on a prior ch. 51 petition.  After this hearing, the court commissioner concluded there was not sufficient probable cause to proceed, and the petition was converted to a ch. 55, Stats., protective placement action. 

A 30-day temporary guardianship was issued. The 30-day time period to proceed with the ch. 55 protective placement expired and a second ch. 51 petition was filed. Helen’s attorney argued that the filing of the new ch. 51 petition amounted to an impermissible attempt to circumvent the 30-day time limit. The county argued that the new ch. 51 petition was a separate petition and that Helen had not been detained continuously under the old order because after the 30-day time period expired for the ch. 55 protective placement and temporary guardianship, Helen was “wheeled off the unit, and then she was brought back on.” 

During the probable cause hearing on the ch. 51 petition, and the final commitment hearing, psychiatrists testified about Helen’s condition and that she posed a potential danger to herself and others.

The circuit court found that grounds for a ch. 51 commitment and an involuntary medication order had been proven by clear and convincing evidence. Helen appealed, and the Court of Appeals reversed and remanded. 

The Court of Appeals said the question presented was whether the evidence presented at trial was sufficient, as a matter of law, to sustain Helen’s ch. 51 involuntary commitment. 

The Court of Appeals said its consideration of the law, the parties’ arguments, the amicus briefs filed in the case and the task force report led it to conclude that Helen was not a proper subject for detainment or treatment under ch. 51 because Alzheimer’s disease is not a qualifying mental condition under that chapter.

The Court of Appeals said contrary to ch. 51, ch. 55 specifically includes people with degenerative brain disorders when defining the scope of who may receive protective services and for whom emergency and temporary protective placements may be made.

Fond du Lac County argues that the Court of Appeals’ decision will have a far reaching impact on nursing homes that provide care to dementia patients and may be subject to liability because the nursing facility must continue to house a patient who is striking out at staff or other residents, without access to available in-patient psychiatric treatment to address and alleviate the problem.

The county argues that the Court of Appeals’ decision is in conflict with its earlier decision in In the Matter of the Mental Condition of C.J., 120 Wis. 2d 355, 354 N.W.2d 219 (Ct. App. 1984).

Helen says if the county truly believes that Alzheimer’s patients could be better served by ch. 51 commitments, then the county's remedy is to ask the legislature to re-write the commitment statutes. Helen says plainly, Alzheimer’s disease is a degenerative brain disorder that causes irreversible decline.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WISCONSIN SUPREME COURT

FRIDAY, DECEMBER 2, 2011

1:30 p.m.

 

This is a review of a decision of the Wisconsin Court of Appeals, District IV (headquartered in Madison), which upheld a Dane County Circuit Court decision, Judge William D. Johnston, presiding.

 

2011AP987                                         Nickel v. USA 

 

This case examines whether a U.S. Department of Justice attorney not licensed to practice law in Wisconsin must comply with a state Supreme Court “pro hac vice” rule requiring sponsorship by an attorney licensed in the state. Or, whether the Supremacy Clause of the U. S. Constitution and federal law preempt the state requirement.

Some background: The dispute over the qualifications for legal representation arises from a much larger and more complex case involving Ambac Assurance, a Wisconsin insurance company.

Ambac Assurance is a subsidiary of Ambac Financial Group, a holding company headquartered in New York that suffered large losses insuring risky mortgage debt.

After Ambac Assurance experienced financial difficulties, it, with the approval of the Wisconsin Insurance Commissioner, created a segregated account that is being rehabilitated by the Dane County Circuit Court.

Initially, Ambac Assurance’s most troubled policies (about 1,000 out of a total of 15,000) were allocated to the segregated account, with the healthier policies remaining in its general account. 

Ambac Financial Group received about $700 million in tentative federal income tax refunds from the Internal Revenue Service (IRS) and transferred those refunds to Ambac Assurance. Ambac Assurance was severally liable to repay the tentative refunds if they were erroneously obtained. 

In November 2010, Ambac Assurance purported to allocate its potential liability to repay the tentative refund to the segregated account. The corresponding $700 million of refunded money remained in the general account.  The allocation was accompanied by an ex parte injunction by the Dane County Circuit Court prohibiting the IRS from attempting to collect the $700 million from either Ambac’s segregated account or its general account, which was not in rehabilitation. On Jan. 24, 2011, the circuit court entered a final, appealable order approving Ambac’s plan of rehabilitation. The plan made the injunction against the IRS permanent. 

The United States filed a timely notice of appeal on March 9, 2011.  Other than a copy of a notice of removal to the U.S. District Court for the Western District of Wisconsin, the notice of appeal was the first document filed by the United States in the circuit court.

The United States’ notice of appeal was signed by Robert J. Kovacev, an attorney in the Tax Division of the U.S. Department of Justice, who was licensed to practice law in Washington, D.C. and California, but is not admitted to the Wisconsin Bar. 

On March 25, 2011, the Wisconsin Insurance Commissioner moved the Court of Appeals to dismiss the United States’ appeal, arguing that Wis. Stat. § 802.05(1) requires all filings in the Wisconsin state courts to be signed by an attorney admitted in Wisconsin. The Court of Appeals granted the Insurance Commissioner’s motion to dismiss. 

The Court of Appeals said one of the rules with which a notice of appeal must comply is the subscription requirement in § 802.05, which says that a paper “shall be signed by at least one attorney of record in the attorney’s individual name,” on behalf of a represented party and that Kovacev did not qualify or have a sponsoring attorney.

The United States argues that 28 U.S.C. § 517, which provides that Department of Justice attorneys “may be sent by the attorney general to any state or district in the United States to attend to the interests of the United States in a suit pending in a court ... of a state” preempts any state law or regulation that would otherwise preclude a Department of Justice attorney from appearing in state court.

The Court of Appeals said instead SCRs 10.03(4) and 23.02(2) explicitly permit non-resident attorneys to appear under the sponsorship of a Wisconsin attorney. 

The United States says the drastic consequence of the Court of Appeals’ holding, which is the dismissal of an appeal in a case where $700 million is at issue, raises a question of fundamental fairness because a plain reading of the exemptions would not alert a Justice Department attorney acting pursuant to a federal statute that he must seek pro hac vice admission before he can appear as attorney of record.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WISCONSIN SUPREME COURT

TUESDAY, DECEMBER 6, 2011

9:45 a.m.

 

This is a certification from the Wisconsin Court of Appeals, District IV (District II judges presiding). The Court of Appeals may certify cases that it believes cannot be resolved by applying current Wisconsin law. The Wisconsin Supreme Court, as the state’s preeminent law-developing court, often accepts such certifications from the Court of Appeals. This case originated in Winnebago County Circuit Court, Judge Richard G. Niess, presiding.

(The Court of Appeals, District IV is headquartered in Madison; District II is headquartered in Waukesha).

 

2010AP232-AC                                  State v. Abbott Labs

This case involves the interpretation and application of statutes governing the relationship between drug companies and the state with respect to the reimbursement of pharmacies through Wisconsin’s Medicaid program.

Some background: Reimbursements to pharmacists for prescription drugs dispensed to Wisconsin Medicaid recipients is based on a formula established by the Legislature, involving in part, the average wholesale price (AWP).

 In 2004, the state of Wisconsin sued more than 30 major drug manufacturers, alleging that they published false and inflated AWPs, resulting in overpayments to pharmacies for Medicaid reimbursements. The lawsuit claimed violations of Wis. Stat. §§ 100.18 and 49.49, and 133.05, and unjust enrichment.

Pharmacia was the first defendant to proceed to trial.  On Feb. 16, 2009, a jury returned a verdict in favor of the state, awarding $2 million on the § 100.18 claim and $7 million on the § 49.49(4m) claim.  The trial court granted summary judgment of dismissal on § 133.05 claims and the state withdrew its unjust enrichment claim.  The remaining claims proceeded to trial. 

On May 15, 2009, the trial court vacated the answer to special verdict question five, which was the basis for forfeitures under the § 49.49(4m) claims.  The court supplied its own answer to question five and imposed forfeitures totaling $4,578,000. 

Pharmacia appealed, presenting nine issues, including: questions about how the trial court handled the case; separation of powers; and possible evidentiary errors, among other things. The state cross appealed, arguing that the circuit court: erroneously struck the jury’s finding of the number of false statements; misinterpreted the “materiality” requirement; considered two improper factors in fixing the amounts for violation; and erroneously failed to provide effective injunctive relief. 

The Court of Appeals concluded that while the appeal raises many issues, only three required certification. 

The first issue involves the test for determining a party’s right to a jury trial outlined in Village Food & Liquor Mart v. H&S Petroleum, Inc., 2002 WI 92, ¶16, 254 Wis. 2d 478, 647 N.W.2d 177.  This test provides a party has a constitutional right to have a statutory claim tried to a jury when:  (1) the cause of action created by the statute existed, was known, or recognized at common law at the time of the adoption of the Wisconsin Constitution in 1848; and (2) the action was recognized as at law in 1848.  Here, the trial court determined that the § 100.18 claim was akin to common law “cheating” and the § 49.49 claim was akin in common law “fraud.” 

The next certified issue involves the process by which Medicaid reimbursement prices are set.  The state presented evidence from which an inference could be made that the Legislature knew the reported AWP might be high, but had no way to know by how much because of conflicting information.  The state also presented evidence that the Legislature would have been obligated to reduce the reimbursement amounts if accurate AWP was known.  The state argued because of federal regulations, if accurate AWP were available, the Legislature would have to use it.

Pharmacia argued because a Medicaid reimbursement formula was set as part of the legislative process, there was no way to know what the Legislature and governor would have done with a more accurate AWP estimate.

The third certified issue appears to involve the interpretation of § 49.49(4m)(b), providing forfeitures for those violations “for each statement, representation, concealment or failure.”  The state argued that every claim from a pharmacy generated a statement about the relevant drugs AWP is part of the formula that determined the amount of reimbursement. The state argued these claims were made 1,440,000 times in the relevant time period.