By Zach Gorchow
Gognwer News Service
Michigan law allowing the Michigan Department of Attorney General to file suit in the Ingham Circuit Court when bringing litigation on behalf of the state does not always apply, the Michigan Supreme Court ruled Monday.
If the complaint includes multiple causes of action, including at least one tort, as the one in question did, then the Revised Judicature Act of 1961’s provisions on tort venues holds sway, a 5-1 majority of the court held, affirming the Michigan Court of Appeals. In a tort case, the proper venue is the court where the original injury occurred.
Michigan Department of Health and Human Services v. NRK RX., Inc. (SC Docket No. 167917) involves DHHS’s attempts to collect alleged Medicaid overpayments NRK RX received in 2011 and 2016. The company operated a pharmacy enrolled with the department to provide services to Medicaid beneficiaries where NRK RX purchased medications for beneficiaries and then billed Medicaid to recover the costs.
The DHHS Office of Inspector General audited the claims and found the company billed Medicaid for a higher quantity of drugs than the firm’s records supported, $541,591 in alleged overpayments.
In 2022, DHHS, represented by the Department of Attorney General, filed suit in the Ingham Circuit Court, following statute saying the seat of state government is “a proper county” when the attorney general brings suit in the name of the state.
NRK RX sought to change the venue to Wayne County, contending tort provisions controlled the venue in the case, citing it as the home county of the company’s leader. DHHS countered that tort statutes did not apply. Further, DHHS argued that even if tort provisions requiring the venue to be where the original injury occurred applied, that injury was in Ingham County, not Wayne.
The Ingham County Circuit Court agreed to transfer the case to the Oakland County Circuit Court, citing the company’s registered office address in that county. DHHS appealed, and the Court of Appeals, in a 2-1 decision, affirmed that the torts law controls venue and that the case should stay in Oakland.
Chief Justice Megan Cavanagh, writing for a 5-1 Supreme Court majority, affirmed the lower courts that the torts language controls venue. The court, in a 4-2 ruling, overturned the Appeals court on where the original injury occurred, however. Cavanagh wrote the injury occurred in Ingham.
Cavanagh – joined by Justice Richard Bernstein, Justice Kyra Harris Bolden, Justice Kimberly Thomas and Justice Brian Zahra – wrote that the language on the attorney general bringing cases in the name of the state is permissive. State law does not require the attorney general to bring cases in the name of the state in Ingham, Cavanagh wrote.
However, the language on torts is mandatory when a case involves a tort, Cavanagh wrote.
On this point, Justice Elizabeth Welch dissented, saying the torts law does not abrogate the attorney general’s ability to file a multicount lawsuit that includes tort claims in Ingham County.
On the question of whether Ingham or Oakland was the proper venue, Bernstein, Bolden and Welch joined with Cavanagh to rule for the case to be heard in Ingham.
“The injury stemming from defendants’ alleged conversion was DHHS’s lack of possession and its concomitant inability to exercise control or dominion over the intangible electronic funds in question,” Cavanagh wrote. “And that injury was suffered by DHHS at its Ingham County headquarters, where it administers all relevant portions of Michigan’s Medicaid program. Indeed, we fail to see how DHHS’s injury resulting from defendants’ alleged conversion of electronic funds could have occurred in a county in which DHHS was never in, principally or otherwise, for purposes of this case.”
Thomas, in a dissent joined by Zahra, wrote the original injury was in Oakland because that’s where NRK RX acted.
Justice Noah Hood did not participate in the case because he was part of the Court of Appeals panel that heard it. He aligned with the appellate majority that the torts rules on venue held sway but dissented on where the original injury occurred. He ruled it occurred in Ingham.
Gognwer News Service
Michigan law allowing the Michigan Department of Attorney General to file suit in the Ingham Circuit Court when bringing litigation on behalf of the state does not always apply, the Michigan Supreme Court ruled Monday.
If the complaint includes multiple causes of action, including at least one tort, as the one in question did, then the Revised Judicature Act of 1961’s provisions on tort venues holds sway, a 5-1 majority of the court held, affirming the Michigan Court of Appeals. In a tort case, the proper venue is the court where the original injury occurred.
Michigan Department of Health and Human Services v. NRK RX., Inc. (SC Docket No. 167917) involves DHHS’s attempts to collect alleged Medicaid overpayments NRK RX received in 2011 and 2016. The company operated a pharmacy enrolled with the department to provide services to Medicaid beneficiaries where NRK RX purchased medications for beneficiaries and then billed Medicaid to recover the costs.
The DHHS Office of Inspector General audited the claims and found the company billed Medicaid for a higher quantity of drugs than the firm’s records supported, $541,591 in alleged overpayments.
In 2022, DHHS, represented by the Department of Attorney General, filed suit in the Ingham Circuit Court, following statute saying the seat of state government is “a proper county” when the attorney general brings suit in the name of the state.
NRK RX sought to change the venue to Wayne County, contending tort provisions controlled the venue in the case, citing it as the home county of the company’s leader. DHHS countered that tort statutes did not apply. Further, DHHS argued that even if tort provisions requiring the venue to be where the original injury occurred applied, that injury was in Ingham County, not Wayne.
The Ingham County Circuit Court agreed to transfer the case to the Oakland County Circuit Court, citing the company’s registered office address in that county. DHHS appealed, and the Court of Appeals, in a 2-1 decision, affirmed that the torts law controls venue and that the case should stay in Oakland.
Chief Justice Megan Cavanagh, writing for a 5-1 Supreme Court majority, affirmed the lower courts that the torts language controls venue. The court, in a 4-2 ruling, overturned the Appeals court on where the original injury occurred, however. Cavanagh wrote the injury occurred in Ingham.
Cavanagh – joined by Justice Richard Bernstein, Justice Kyra Harris Bolden, Justice Kimberly Thomas and Justice Brian Zahra – wrote that the language on the attorney general bringing cases in the name of the state is permissive. State law does not require the attorney general to bring cases in the name of the state in Ingham, Cavanagh wrote.
However, the language on torts is mandatory when a case involves a tort, Cavanagh wrote.
On this point, Justice Elizabeth Welch dissented, saying the torts law does not abrogate the attorney general’s ability to file a multicount lawsuit that includes tort claims in Ingham County.
On the question of whether Ingham or Oakland was the proper venue, Bernstein, Bolden and Welch joined with Cavanagh to rule for the case to be heard in Ingham.
“The injury stemming from defendants’ alleged conversion was DHHS’s lack of possession and its concomitant inability to exercise control or dominion over the intangible electronic funds in question,” Cavanagh wrote. “And that injury was suffered by DHHS at its Ingham County headquarters, where it administers all relevant portions of Michigan’s Medicaid program. Indeed, we fail to see how DHHS’s injury resulting from defendants’ alleged conversion of electronic funds could have occurred in a county in which DHHS was never in, principally or otherwise, for purposes of this case.”
Thomas, in a dissent joined by Zahra, wrote the original injury was in Oakland because that’s where NRK RX acted.
Justice Noah Hood did not participate in the case because he was part of the Court of Appeals panel that heard it. He aligned with the appellate majority that the torts rules on venue held sway but dissented on where the original injury occurred. He ruled it occurred in Ingham.
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