WisBar News: Failure to seek stay and appeal means aggrieved bidder's claims are moot, appeals court says:

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  • WisBar News
    September
    08
    2011

    Failure to seek stay and appeal means aggrieved bidder's claims are moot, appeals court says

    Joe Forward
    Legal Writer

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    Sept. 8, 2011 – A losing bidder that did not appeal to stop a Wisconsin agency from entering into contracts with winning bidders lost its opportunity to challenge the bidding process.

    Failure to seek stay and appeal means aggrieved bidder’s claims are moot, appeals court says

    Bidders beware: When asserting a flaw in the bidding process, the aggrieved bidder must obtain a temporary injunction or appeal an adverse determination to prevent claims from becoming moot.

    By org jforward wisbar Joe Forward, Legal Writer, State Bar of Wisconsin

    Failure to seek stay and appeal means 
aggrieved bidder’s claims are moot Sept. 8, 2011 – A losing bidder that did not appeal to stop a Wisconsin agency from entering into contracts with winning bidders lost its opportunity to challenge the bidding process.

    That’s what the District I Wisconsin Appeals Court held in Managed Health Services Ins. Corp. v. Wisconsin Department of Health Services, 2010AP2551 (Sept. 7, 2011), a case in which Managed Health Services (Managed Health) sought a Health Maintenance Organization (HMO) contract.

    In 2009, the Department of Human Services (DHS) issued a request for proposal (RFP) to procure Medicaid HMO services through BadgerCare Plus for southeastern Wisconsin. Managed Health was one of five bidders to submit a timely response, and the only bidder to lose out on a promised contract.

    Managed Health subsequently filed a protest notice with DHS based on the belief that ex parte communications between DHS staff and a winning bidder during the RFP process violated established DHS protocols and Wisconsin’s bidding laws. Managed Health’s protest was denied by DHS.

    Managed Health asked DHS to cease and desist awarding contracts pending its appeal with the Wisconsin Department of Administration (DOA). DHS agreed to hold the contracts, but obtained permission from the DOA to begin preparing for implementation of the contracts.

    When the DOA denied Managed Health’s administrative appeal, it filed a declaratory action in circuit court, alleging violations of Wisconsin’s bidding and administrative laws. It also obtained a temporary restraining order to prohibit DHS and DOA from entering into contracts resulting from the RFP process.

    But when the circuit court later denied Managed Health’s motion for temporary injunction, Managed Health did not appeal the circuit court’s decision. DHS then signed the contracts with winning bidders. The circuit court denied Managed Health’s remaining claims by upholding the DOA’s decision.

    Managed Health appealed.

    The appeals court ruled that Managed Health’s remaining claims were moot because Managed Health failed to obtain a temporary injunction before DHS signed contracts with winning bidders.

    “Despite being notified that DHS intended to enter into contracts with the winning proposers, Managed Health failed to take further action to prevent DHS from doing so,” Judge Kitty Brennan wrote. “Because it did not, DHS signed contracts with the four winning proposers, and now Managed Health’s claims are moot.” That is, resolution would have no practical effect since contracts were already signed.

    The appeals court explained that Managed Health “could have, and should have” asked the circuit court to stay proceedings while it sought appeal of the non-final injunction order with the appeals court. In reaching that conclusion, the appeals court followed PRN Associates LLC v. State of Wisconsin Dept. of Administration, 2009 WI 53, 317 Wis. 2d 656, 766 N.W.2d 559.

    In PRN, the Wisconsin Supreme Court dismissed as moot PRN’s claim that the DOA’s flawed RFP process led to an improper denial of PRN’s bid to renovate a State building.

    The appeals court also rejected Managed Health’s argument that an aggrieved bidder need only file a temporary injunction to prevent claims from becoming moot.