Dane County, Through Dane County Dept. of Social Services v. Wisconsin Dept. of Health and Social Services

• Decision Date: 01 July 1977
• Docket Number: No. 75-348,75-348
• Citation: 255 N.W.2d 539,79 Wis.2d 323
• Parties: COUNTY OF DANE, a Municipal Corporation, Through the DANE COUNTY DEPARTMENT OF SOCIAL SERVICES, Plaintiff-Appellant, v. WISCONSIN DEPARTMENT OF HEALTH AND SOCIAL SERVICES, Defendant-Respondent.
• Court: Wisconsin Supreme Court

Page 539

255 N.W.2d 539

79 Wis.2d 323

COUNTY OF DANE, a Municipal Corporation, Through the DANE COUNTY DEPARTMENT OF SOCIAL SERVICES, Plaintiff-Appellant, v. WISCONSIN DEPARTMENT OF HEALTH AND SOCIAL SERVICES Defendant-Respondent.

No. 75-348.

Supreme Court of Wisconsin.

Argued Feb. 1, 1977.

Decided July 1, 1977.

Robert M. Hesslink, Jr., Asst. Corp. Counsel, Madison, for plaintiff-appellant; Glenn L. Henry Corporation Counsel, Madison, on the briefs.

Ward L. Johnson, Asst. Atty. Gen., for defendant-respondent; Bronson C. La Follette, Atty. Gen., and Charles D. Hoornstra, Asst. Atty. Gen., on the brief.

Thomas A. Schroeder, Sheboygan, legal counsel, and Robert Mortensen, Madison, executive director, for Wis. County Board Ass'n, amicus curiae.

DAY, Justice.

Dane County seeks to overturn a judgment of the circuit court which affirmed an order of the Wisconsin Department of Health and Social Services (DHSS).

The question is: Does a county have standing to challenge an administrative rule affecting it that was not promulgated in conformity with the rule-making procedure of Chapter 227 Wisconsin Stats.? We hold that it does.

The facts which give rise to the dispute between the county and DHSS are as follows: Miss D.P. is permanently disabled. In 1974, when the litigation began, D.P. was forty-seven and A.P., her mother, was eighty-seven. Prior to September 1969, D.P. lived in Kenosha, Wisconsin with her mother in a large three room apartment with the aid of visiting nurses and six or seven other attendants a week. D.P. said she managed the apartment and the employees on approximately $700 a month paid by Kenosha County and the State.

In September 1969, D.P. and her mother moved to Madison in order to be close to the University of Wisconsin Hospitals. D.P. and her mother moved to a nursing home in Dane County rather than set up a new apartment. Both women became dissatisfied with the arrangement and desired to return to an independent living situation in Dane County.

D.P. believed the living expenses of her and her mother could be paid for from supplemental security income payments which both received and from a Veterans Administration pension to which A.P. was entitled. Both women are eligible for Group I medical assistance benefits. D.P. applied to Dane County Department of Social Services for additional payments to cover the wages of attendant personnel. Based on a thirty day month with personnel on duty twenty-two to twenty-four hours a day at $2.00 per hour, it was estimated this additional cost would be $1,440 per month.

Dane County refused to authorize such payments on the ground they were too expensive. The policy of the county was to allow only $260 per person or $520 for both women per month for social services.

In February 1974, D.P. appealed the county's decision to the Division of Family Services, Department of Health and Social Services (DHSS). ¹

November 11, 1974, the Secretary of DHSS ordered the Dane County Department of Social Services to provide petitioner with the social services required for noninstitutional living if those services were found to cost no more than the cost of institutionalization. The matter was remanded to the county department to compare costs and act accordingly. ²

The Secretary concluded the county agency "improperly determined that the maximum service payroll payments it would make to provide petitioner with social services necessary to avoid continued institutionalization would be $260 per month. The Secretary cites portions of the Department's Income Maintenance and County Administration Manuals, both of which indicate a strong policy in favor of avoiding institutionalization.

The Secretary wrote,

"Section II, contained in Chapter III, part E, page 5, of this Department's Income Maintenance Manual, states under, 'Mandatory Social Services':

" 'Whatever social services are necessary to prevent institutionalization of an individual or removal from his or her own home, (such as placement in county home, hospital, extended care facility, intermediate care facility, residential care facility or nursing home) shall be provided. THIS IS A MANDATORY REQUIREMENT FOR ALL COUNTIES. The services must be acceptable to the client and the client must be competent to make the decision.'

"Page 2, part A, Chapter II of this Department's County Administration Manual provides:

" 'Necessary social services shall be provided or purchased for actual, former and potential recipients of AFDC and SSI when such services will prevent institutionalization of the client or removal from his or her own home (i. e., placement in a county home, hospital, extended care facility, intermediate care facility, residential care facility or nursing home). THIS IS A MANDATORY REQUIREMENT FOR ALL COUNTIES. The services must be acceptable to the client or his representative if the client is not competent to make the decision.' "

Were the petitioner not a resident in a nursing home, the Secretary reasoned, she would be entitled to the services enumerated in the cited manual sections. (It is agreed by the parties that the reference to "petitioner" applies to both D.P. and her mother). The fact that she is a resident in a nursing home should have no substantial effect on her eligibility for social services should she leave the home, he wrote. But the Secretary also interpreted the County Administration Manual to mean that the maximum net cost of preventing institutionalization should be no more than the net cost of institutionalization.

Appeal was taken to the circuit court of Dane County and on May 5, 1975, a decision and judgment were entered affirming the order of DHSS. In the circuit court the county had two principal contentions. First, it argued that the DHSS manuals which expressed a preference for non-institutional living and were relied on by the DHSS were not adopted in conformity with the rule-making procedures specified in C. 227, Wis.Stats. ³ The second argument was that the agency erred in comparing the net cost of institutionalization with the net cost of outpatient services without considering whether the county would be entitled to cost reimbursement in the same manner for each. Services in the nursing home were reimbursed according to a sum-sufficient appropriation whereas the outpatient services were reimbursed according to a sum-certain formula. ⁴ Dane County would have to pay the costs in excess of $260 each.

The trial court determined that the county did not have standing to challenge the rule-making procedure employed by the DHSS; and it further found that the DHSS did have authority to order the county agency to consider noninstitutional living for the petitioner. The court expressly avoided the question of the possible outcome if a person other than the county challenged the rule-making procedure. The court noted the county did not allege it was in fact without the funds to comply with the order.

There is no dispute the provisions in the manuals relied on by the DHSS were rules ⁵ within the meaning of sec. 227.01(3), Stats. ⁶ The manuals are not part of the record on appeal.

The county alleges that in adopting the manuals the DHSS failed to conduct a hearing as required by sec. 227.02 Stats.; that the rules were not filed with the Secretary of State as required by sec. 227.023, Stats.; and that the rules were not published in the Wisconsin Administrative Code, as required by sec. 227.025, Stats. The trial court so found. However, if the rules were promulgated merely to comply with federal requirements no hearing was required. ⁷

This court recently reaffirmed the principle that counties are creatures of the Legislature and their powers must be exercised within the scope of authority ceded to them by the state, State ex rel. Conway v. Elvod, 70 Wis.2d 448, 234 N.W.2d 354 (1975). The Legislature's authority to regulate the powers of a county are found in Art. IV, sec. 23, Wis.Const. State v. Sylvester, 26 Wis.2d 43, 132 N.W.2d 249, 253 (1965). In governmental matters, the county is simply the arm of the state; the state may direct its action as it deems best and the county cannot complain or refuse to obey. McDougall v. Racine County, 156 Wis. 663, 146 N.W. 794 (1914). Madison Metropolitan Sewerage District v. Committee on Water Pollution, 260 Wis. 229, 50 N.W.2d 424 (1951). The county exists in large measure to help handle the state's burden of political organization and civil administration. State v. Mutter, 23 Wis.2d 407, 127 N.W.2d 15, 18 (1964), appeal dismissed, 379 U.S. 201, 85 S.Ct. 328, 13 L.Ed.2d 339. But as a creature of the state, it is not permitted to "censor or supervise" the activities of its creator. Marshfield v. Cameron, 24 Wis.2d 56, 63, 127 N.W.2d 809 (1964).

A corollary stemming from these principles and expressed in Columbia County v. Board of Trustees, 17 Wis.2d 310, 116 N.W.2d 142 (1962) is the traditional rule that a county does not have the legal right or status as against the state or another state agency to contest the constitutionality of a statute. "A county as a quasi municipal corporation and as an arm of the state has no right to question the constitutionality of the acts of its superior and creator or of another arm or governmental agency of the state. A county or a governmental agency is created almost exclusively in the view of the policy of the state at large for purposes of political organization and civil administration in matters of state concern. McQuillin, Municipal Corporations, Vol. 1, sec. 112, Young v. Juneau County (1972), 192 Wis. 646, 212 N.W. 295." 17 Wis.2d at 317, 116 N.W.2d at 146.

This no-standing rule is applicable to municipal corporations in general. Joint School District No. 1 of Town of Wabeno v. State, 56 Wis.2d 790, 203 N.W.2d 1, 2 (1973); Town of Germantown v. Village of Germantown, 70 Wis.2d 704, 235 N.W.2d 486 (1975); City of Kenosha v. State, 35 Wis.2d 317, 330, 151 N.W.2d 36 (1967); Douglas...