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.