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STATE OF WISCONSIN Division of Hearings and Appeals - Download as PDF


									DHA-15 (R10/97)


                                  STATE OF WISCONSIN
                              Division of Hearings and Appeals

 In the Matter of


                                     PRELIMINARY RECITALS

Pursuant to a petition filed February 11, 2003, under WI Stat § 49.45(5) and WI Admin Code § HA
3.03(1), to review a decision by the Fond du Lac County Dept. of Social Services in regards to
overpayments of Medical Assistance (MA), a hearing was held on March 19, 2003, at Fond Du Lac,
Wisconsin. The record was held open for 10 days for the county to submit additional information, and
this information has been received.

The issue for determination is whether the county agency may seek recovery of an overpayment of MA
from a non- - MA recipient as the parent of a recipient minor who was overpaid.

There appeared at that time and place the following persons:


          Wisconsin Department of Health and Family Services
          Division of Health Care Financing
          1 West Wilson Street, Room 250
          P.O. Box 309
          Madison, WI 53707-0309
                      By: Laurine Aanson, ESS
                           Fond Du Lac County Dept Of Social Services
                           87 Vincent Street
                           Fond Du Lac, WI 54935-4595
          Kenneth D. Duren
          Division of Hearings and Appeals

                                         FINDINGS OF FACT
1.       Petitioner (SSN xxx-xx-xxxx, CARES #xxxxxxxxxx) is a resident of Fond Du Lac County. He is
         the biological father of A.B., (dob 11/5/01); he resides with A.B.’s mother, (redacted) and her
        three minors by another father. The petitioner was not at any time during 2002, a recipient of
2.      Petitioner and (redacted) are not married.
3.      Petitioner’s daughter, A.B., was previously eligible for MA as a newborn. The child turned one
        year of age on 11/5/02. At that time she was no longer eligible for “newborn MA” and was
        transferred to Healthy Start MA.
4.      On November 4, 2002 the county agency issued a notice of decision explaining (1) MA Newborn
        Eligibility for A.B. was discontinuing, and (2) A.B. was not eligible for BadgerCare due to the
        insurance coverage provided by her father.
5.      On November 7, 2002, (redacted) appealed to the Division of Hearings & Appeals contesting the
        discontinuance of A.B.’s MA as described in Finding #3, above, in DHA Case No. MED-
        20/55476. The agency continued the child’s benefits pending a hearing.
6.      The hearing in MED-20/55476 was held before Administrative Law Judge Kenneth Adler on
        November 25, 2002. On November 29, 2002, ALJ Adler issued a decision affirming the
        discontinuance of A.B.’s MA.
7.      On December 3, 2002, the county agency issued a Notice to (redacted) informing her that it had
        determined that she was overpaid $54.62 in MA; this overpayment was the cost of A.B.’s MA
        covered service in December, 2002, during the period when her MA was continued pending the
        hearing in MED-20/55476. This Notice did not reference any liability of (petitioner) in its text.
8.      On December 9, 2002, (redacted) appealed to the Division of Hearings & Appeals contesting the
        MA overpayment recovery action described in Finding of Fact #6, in DHA Case No. MED-
9.      The hearing in MED-20/55884 was held before Administrative Law Judge Joseph Nowick on
        January 21, 2003. On January 30, 2003, ALJ Nowick issued a decision affirming the MA
        overpayment recovery decision against (redacted).
10.     On February 4, 2003, the county agency issued a Notice to the petitioner informing him that it
        had determined that he was responsible to pay back an MA overissuance of $54.62 for the period
        of December, 2002.
11.     The petitioner filed an appeal with the Division of Hearings & Appeals on February 11, 2003,
        contesting the agency determination that he was liable for the $54.62 overpayment to his daughter
12.     The petitioner’s employer provided health insurance coverage for him and A.B. in December,

The validity of the overpayment itself has been fully adjudicated in the prior appeals by (redacted). The
issue presented here is whether the biological father is also liable for his child’s MA overpayment because
he was living in the same household with (redacted) and A.B.. at the time of the overpayment. He conceded
he was, but noted that his employer was providing medical coverage to A.B. at that very time. He was also
not a member of the MA assistance group in December, 2002.

MA overpayment recovery is authorized by a statute, as follows:

        Recovery of incorrect medical assistance payments. (1) ...The department may recover
        any payment made incorrectly for benefits specified under s. 49.46, 49.468 or 49.47 if the
        incorrect payment results from any misstatement or omission of fact by a person supplying

        information in an application for benefits under s. 49.46, 49.468 or 49.47. The department
        may also recover if a medical assistance recipient or any other person responsible for giving
        information on the recipient's behalf fails to report the receipt of income or assets in an
        amount that would have affected the recipient's eligibility for benefits. The department's
        right of recovery is against any medical assistance recipient to whom or on whose behalf
        the incorrect payment was made. The extent of recovery is limited to the amount of the
        benefits incorrectly granted. The county department under s. 46.215 or 46.22 or the
        governing body of a federally recognized American Indian tribe administering medical
        assistance shall begin recovery actions on behalf of the department according to rules
        promulgated by the department.

Wis. Stat. §49.497(1). (Emphasis added.)

Recovery is also authorized by a duly promulgated rule in the Wisconsin Administrative Code at § HFS
108.03(3)h, which states:

        (h) The agency's decision concerning ineligibility and amounts owed may be appealed
        pursuant to ch. HA 3. During the appeal process the agency may take no further recovery
        actions pending a decision. Benefits shall be continued pending the decision on the
        appeal. When the hearing decision is subsequently adverse to the client the benefits paid
        pending a decision on the appeal shall be collectable as incorrect payments.

The Medicaid Eligibility Management Handbook, Appendix 34.1.1 (01-01-02) states that a MA
overpayment may be recovered under certain circumstances. The third example states the following in

                Client Loss of an Appeal

                Benefits a client receives due only to a fair hearing order can be recovered if the
                client losses the appeal.

                A client may choose to continue to receive benefits pending an appeal decision…

In addition, the policy guide specifically provides that Department is to seek recovery of incorrect MA
payments from the recipient of the payments, except from a minor. If the recipient is a minor, the
Department directs that the claim must be made against the minor’s parent or legally responsible relative
if the parent or legally responsible relative was in the home at the time of the overpayment. See,
Medicaid Eligibility Management Handbook, Appendix 34.10.0 (04-01-01).

The only real issue in this case is whether a non-MA recipient parent living in the household, can be
compelled to pay back any of the MA overpaid on behalf of his minor daughter who was the actual
recipient when the biological mother was the casehead that sought the MA in the first place.

This is a novel case. I have reviewed prior decisions of the Division of Hearings & Appeals and
Wisconsin caselaw, and I cannot find any case directly addressing the issue of parental recovery liability
for overpayments of MA public assistance funds made on behalf of minor recipients. This situation is,
however, very similar to a past decision by Administrative Law Judge Nancy Gagnon in DHA Case No.
MED-52/35024 (Wis. Div. Hearings & Appeals December 18, 1998)(DHFS) in which she concluded that
the limitation upon the person from whom recovery may be made in the statute precluded recovery from a
non-MA recipient husband for incorrect payments made to a MA-recipient wife.

In addition, the parental liability issue has arisen in the context of other types of public assistance cases in
the past. In the case of In the Matter of Guardianship of Kordecki, 95 Wis. 2d 275(1980), at p. 279, the
Supreme Court found that no statutorily granted recovery right existed against a minor child for
overpayments of Aid to Families with Dependent Children (AFDC) his or her parent received that may
have benefited the child. Ibid. The court determined that the AFDC recovery statute specifically limited
recovery to the parents by its terms. Ibid. The court noted that as a general rule, a county agency cannot
recover for relief furnished to a poor person in the absence of a statute because the relief furnished has
been regarded as charity. The court also concluded that the general rule, and the ultimate decision in
Kordecki, did not preclude a commonlaw action to recover from a guardianship account owned by the
minor under the equitable principals of quasi-contract, unjust enrichment, and restitution. Kordecki, at

In analyzing the limits of the recovery statute at issue in Kordecki, the Court stated as follows:

        Sec. 49.195, Stats., imposes liability on the parent, not on the child. Accordingly, as we
        explained in In re Estate of Bundy, 81 Wis. 2d 32, 36, 259 N.W.2d 701 (1977), the
        county department cannot rely on sec. 49.195, Stats., as authority to recover because the
        action was not brought against the person who is made liable for recovery under the

Kordecki, at p. 279.

In this case, WI Stat § 49.497(1) imposes liability on the MA recipient to whom or upon whose behalf,
MA payments have been made. (petitioner) was never a MA recipient during the eligibility period for
which overpayments were made. As in Kordecki, the county agency cannot rely on § 49.497(1) as
authority to recover from the father because the action was not brought against the person who is made
liable for recovery under the statute, the recipient child, and/or, the MA recipient household’s head,
(redacted), upon whose behalf the MA was paid.           (redacted) made the application; provided the
household information; filed the appeals; requested the continued benefits that were overpaid; and she
also received MA.

In addition, I conclude that the Handbook provision providing for recovery against any parent, regardless
of their recipient status at the time of the overpayment, is void ab initio as contrary to the clear limits of
WI Stat § 47.497(1). The MA overpayment recovery action against (petitioner), personally, must be
reversed and rescinded.
                                         CONCLUSIONS OF LAW

1) That the provision contained in Medicaid Eligibility Management Handbook, at §, allowing
   recovery of MA paid for a minor against any parent regardless of MA recipient status, is contrary to
   the limits of recovery described in WI Stat § 49.497(1).

2) The county agency may not seek recovery against the petitioner because he was not a recipient or
   member of the MA assistance group in December, 2002, and no payments of MA were made on his

NOW, THEREFORE, it is                            ORDERED

That the matter is remanded to the county agency within instructions to rescind the MA overpayment
collection action in Claim #(redacted) against (petitioner), only; and to cease all collection actions
premised upon this claim against (petitioner). These actions shall be completed within 10 days of the date
upon which the Secretary of the Department of Health & Family Services adopts this Proposed Decision
as a Final Decision, if she so adopts it.


This is a Proposed Decision of the Division of Hearings and Appeals. IT IS NOT A FINAL DECISION

If you wish to comment or object to this Proposed Decision, you may do so in writing. It is requested that
you briefly state the reasons and authorities for each objection together with any argument you would like
to make. Send your comments and objections to the Division of Hearings and Appeals, P.O. Box 7875,
Madison, WI 53707-7875. Send a copy to the other parties named in the original decision as “PARTIES

All comments and objections must be received no later than 15 days after the date of this decision.
Following completion of the 15-day comment period, the entire hearing record together with the Proposed
Decision and the parties’ objections and argument will be referred to the Secretary of the Department of
Health & Family Services for final decision-making.

The process relating to Proposed Decision is described in WI Stat. § 227.46(2).

                                                                 Given under my hand at the City of
                                                                 Madison, Wisconsin, this 26th day of
                                                                 March, 2003.

                                                                 Kenneth D. Duren
                                                                 Administrative Law Judge
                                                                 Division of Hearings and Appeals


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