Health Care Lawyer Blog

*Today's post was authored by FHW attorney Michelle D. Bayer

When the Michigan legislature enacted the Michigan Medical Marihuana Act, MCL §333.26421 et seq, effective December 4, 2008, it joined about 12 other states which at that time had legalized the medical use of marihuana. However, recent developments indicate that even individuals who are legally authorized to use medical marihuana may still come under fire for a variety of related offenses.

There has always been a conflict between federal law, which classifies marihuana as a Schedule I controlled substance which is prohibited under the Federal Controlled Substances Act, and these state statutes legalizing medical marihuana use. A 2009 memo from Deputy Attorney General David Ogden directed U.S. Attorneys not to target medical marihuana businesses in areas where they're legal, as long as they're following state law, was seen as a green light for the state legislation.

Despite this pronouncement by the Obama administration and the Deputy Attorney General, medical marihuana statutes across the country and in Michigan have come under attack.

Recently, the Federal DEA has sought to obtain state medical marihuana program members’ information as part of its investigations. In Michigan, legislation has been proposed which would require the Michigan Department of Licensing and Regulatory Affairs, the governmental body which processes medical marihuana program applications, to give the Michigan State Police the names and addresses of registered patients and caregivers. Right now, law enforcement authorities can only check registrations by obtaining a patient or caregiver’s personal identification number.

Significantly, in Michigan, and other states, card carrying program members have been prosecuted for a variety of actions including, driving under the influence, violations of zoning ordinances, probation violations, excessive plant growing, and other technical violations of the state statute, even though they are properly enrolled in the medical marihuana program. The discharge of an employee for off-duty marihuana use, who was in compliance with the state medical marihuana statute, was affirmed.

Continue reading "Has Freedom to Use Medical Marihuana Burned Out? " »

As author Erich Segal once famously said, “Love means never having to say you’re sorry.” However, as many Michigan physicians can attest, so does the fear of medical malpractice suits.

This may change if a proposed law currently pending in the Michigan legislature passes. Dubbed the “I’m Sorry” law, the bill seeks to amend the Michigan revised judicature act and disallow the use of apologies, condolences or expressions of sympathy as evidence of an admission of liability in medical malpractice cases.

Generally, physicians often refrain from apologizing for errors (either made by themselves or by hospitals) out of fear of being sued for medical malpractice. However, according to the bill’s sponsor Jim Marleau (R-Lake Orion), such practices often lead to more civil suits. In an interview with the Detroit Free Press, Marleau cited to the physician apology policy currently used at the University of Michigan hospitals. The policy permits physicians to convey apologies or condolences to families, and since it was launched in 2004, U-M hospitals have actually seen a 40 percent decline in malpractice lawsuits.

Marleau explained that when physicians fail to express sympathy or admit that something went wrong, patients and families are often spurred to file suit out of frustration for a lack of information, or to make sure that the problem doesn’t happen again. This in turns leads to increased medical costs.

A similar proposal was introduced in the Michigan legislature before but failed to pass. Marleau hopes that the bill will have a better chance of passage this time given the current attention on health care reform. In fact, Michigan is one of only 15 states without legal protection for physicians who want to apologize to patients or families.

The full text of the bill (H.B. 6073) is available here.

While efforts to pass health care reform legislation are currently at a standstill, some states are already braced to object to requirements that all Americans carry health insurance. This proposed mandate, which was included in both the House and Senate versions of reform legislation, allows the government to impose financial penalties on individuals who do not carry health insurance.

According to a recent Detroit Free Press column, legislatures in 36 states – including Michigan – have proposals pending to reject such requirements in the name of states’ rights. Those who oppose the requirement, such as the Health and Human Services Task Force at the American Legislative Exchange Council, claim the mandate it akin to “the government requiring something of you because you exist.”

“This is not like requiring care insurance for the privilege of driving,” said Jorge Amselle, director of public affairs for the council. “If you exist, you have to have health insurance.”

Generally, the Bill of Rights gives the states “the powers not delegated to the United States” in the U.S. constitution. However, the Constitution acknowledges that the government was established to “promote the general welfare.” Additionally, the Constitution also provides Congress with the power to “regulate commerce…. Among the several states.” This is commonly referred to as the “commerce clause” and is liberally construed. Specifically, under Congress’ ability to regulate any state-level activities having a “substantial effect” on interstate commerce, Congress may easily have the power to regulate insurance coverage.

After the jump - Constitutional considerations on mandatory coverage

Continue reading "States Balk At Proposed Mandatory Health Care Coverage" »

Non-smokers in Michigan can finally breathe easy – literally.

Effective May 1, 2010, all restaurants and bars in the state will be required to be smoke-free following legislation that was passed by the Michigan House and Senate Thursday. The bill (H.B. 4377) is headed to the desk of Governor Jennifer Granholm, who has stated that she intends to sign it.

Efforts to pass the non-smoking legislation were log-jammed for years by groups who claimed such laws would affect business owners’ autonomy, or have an adverse impact on casino business. The approved bill does not apply to Indian gaming casinos, and allows smoking on the gaming floors of other casinos, but not in casino bars, restaurants or hotels. Also exempt are tobacco specialty shops and existing cigar bars that have humidors and derive at least 10 percent of their revenue from the sale of cigars. The legislation does not permit new cigar bars to open.

Affected establishments are required under the legislation to remove all ashtrays from the business premises by May 1, and post signs that smoking is not allowed. In the event a patron does choose to light up, the penalties will be assessed against the smoker, and not the establishment. Violating the smoking ban counts as a civil infraction, with the first violation resulting in a $100 fine and subsequent violations in a fine of up to $500.

After the jump - author's comments on the legislation.

Continue reading "Michigan Bars, Restaurants to be Smoke-Free By May 2010" »

A proposal which would have imposed a 3 percent tax on physicians' gross revenues was defeated Wednesday in the Michigan State Senate. HB 5386, which was intended to raise state Medicaid funds and in turn garner additional federal matching funds, was stopped short by a 32-4 vote in the Republican-controlled Senate.

The tax was designed to ultimately increase access to health care by producing higher payments to physicians who treat Medicaid patients. However, opponents to the bill such as the Michigan State Medical Society expressed concerns that such a tax would exacerbate the already-present drought of primary care physicians in Michigan by provoking doctors to look elsewhere for employment.

Last week Michigan Speaker of the House Andy Dillon (D-Redford Township) introduced legislation which, if passed, will consolidate the health benefits of all Michigan’s public employees into a single state health insurance plan. HB No. 5345, which was proposed by Dillon back in July of this year faced strong dissent from parties ranging from the Michigan Education Association to Jennifer Granholm, and is expected to be the subject of similar debate as it makes its way through the legislature.

Entitled “The Michigan Health Benefits Program Act”, the legislation creates a 13-member program board to develop a health benefit plan and determine the total premium cost for each plan to be adopted. The plan will cover all employees of “public employers” which is defined to include the state; any city, village, township, county or other political subdivision; any intergovernmental, metropolitan or local department, school district, and certain community colleges and institutions of higher education.

Any health benefits plan approved by the board may include health and wellness incentives (i.e. reward improvements in health outcomes for individuals with chronic diseases, the increased utilization of appropriate preventive health services, or reductions in medical errors), and may also provide financial incentives for the increased use of health information technology.

The full plan is available here. To date, the bill has been introduced in the House and referred to the Committee on Public Employee Health Care Reform. The Health Care Lawyer Blog will continue to monitor developments.

Speaker of the House Andy Dillion (D-Redford Township) recently issued a proposal that suggests consolidating the health care plans of all Michigan's public workers - state, local, and public school employees - into a single state health insurance plan. Dillion claims that plan will save up to $900 million a year by efficiently organizing a single insurance “pool.” Other savings would come from careful monitoring of patients to make sure they are diagnosed and treated correctly, in order to prevent wasteful spending.

The proposal will also lump tens of thousands of retired public workers into the plan. It would essentially require unionized public employees across the state to negotiate one extensive health care plan (with various options) to replace the scattered plans that now cover everyone from teachers to police to firefighters; university, and muncipal employees such as courts and police, judges and even the legislature/governor. Under the plan, lower wage employees would pay smaller premiums.

The Michigan Education Association has already voiced objections to the plan, claiming that it is an “assault on collective bargaining.” Michigan Government Jennifer Granholm also critiqued Dillion’s plan, claiming that there are no discernable approaches to save money and that Dillion’s categorization of state employee benefits – i.e. cheaper and better than those of public sector employees – is off-base. In a statement issued Monday, Granholm (perhaps channeling Cuba Gooding Jr.) requested that Dillion "Show me the money" and that she didn't see where the savings would come from.

A bill which would ban smoking in almost all Michigan workplaces was recently approved by the House of Representatives and will now move to the Senate for consideration. House Bill 4733, which would prohibit smoking in all public establishments with the exception of cigar bars and the gaming floors of casinos (including Native American casinos), is similar to the smoke-free workplace laws already passed in 37 states and the District of Columbia. A previous bill introduced last year, HB 4163, was approved by the House and Senate but failed to receive enough votes to be passed to Michigan Governor Jennifer Granholm for signing.

Supporters of the Bill, such as the Michigan Campaign for Smokefree Air, urge that such anti-smoking restrictions are necessary to protect the health of Michigan workers and consumers. However, HB 4733 has been met with opposition from restaurant and bar owners who claim such a bill would strip them of their autonomy as business owners. (Perhaps due to these sentiments, the current Bill includes an anti-provision which prohibits business owners from taking adverse action against employees who exercise their rights under the Bill.)

While restaurant and bar owners may claims that their "business autonomy" is restricted by bills such as HB 4733, it is important to note that such business have never been granted free reign over their operations. For example, there are restrictions imposed on restaurants/bars with respect to whom alcohol can be served and when. Such businesses must pay their employees at least minimum wage (with some exceptions, such as waitstaff) and obey health and sanitation regulations with respect to how food is stored and prepared. Few would argue that such laws and regulations are necessary to protect the safety and well-being of employees and consumers.

Continue reading "Michigan "Smoke-Free Workplace" Bill Passes House, Moves to Senate" »

As I reported earlier, the Michigan Medicaid False Claims Act was amended effective January 1, 2006 through the efforts of Attorney General Mike Cox and Representative David Law (R., Commerce). I worked actively for passage of the amendment and testified before the Michigan House of Representative Judiciary committee, then chaired by Rep. Law..

The State of Michigan can recoup extra funds from combined state/federal recoveries because of the provisions of the federal Deficit Reduction Act of 2005 ('DRA"). To explain, shortly after the the Michigan Medicaid False Claims Act amendment passed the Michigan Legislature and Governor Granholm signed the Act, the U.S. Congress passed the DRA providing for a 10% incentive to States which enacted a "compliant" Qui Tam statute addressing Medicaid fraud. Specifically, the Medicaid program is a joint federal/state program. Thus, in Michigan, the federal government pays about 56% and the state 44% of the costs of the Medicaid program and fraud recoveries are divided on the same percentage.

If the state has a "compliant" Qui Tam statute, the state receives an extra 10% of the recovery--that is, 54% in Michigan--of the recovery--instead of 44%--a significant amount of money since most recoveries are in the tens of millions of dollars or more!!

However, on December 21, 2006, the U.S, Department of Health and Human Services/Office of Inspector General ("HHS/OIG") advised the state, by letter, that its Medicaid False Claims Act was NOT "DRA compliant" (that is, a mirror image of the federal False Claims Act).

In order to comply, all that was needed was a simple bill adding civil monetary penalties of at least $5000 for each violation and making one other technical amendment. Since the revisions would not have had any negative fiscal impact on the state and would have had a potentially tremendous positive impact in the event of any recovery, one would have expected Representative Law to quickly introduce a clarification/modification bill and obtain quick passage--after all, the State would most certainly not turn down the opportunity to reverse the flow of funds from Michigan to Washington??

Unfortunately, in 2006 and 2007, petty partisan bickering was rampant in the Michigan Legislature--we were paralyzed by the absurd budget fight and leadership was non-existent.

Rep. Law, finally, on September 17, 2007, introduced a one-page bill. The date of introduction is significant. In addition to being a Saturday, the day of the Notre Dame-UM football game (a game, I suspect, Rep. Law, a Notre Dame grad, was attending), it was three days before Ray Sayeh, then a WXYZ-TV investigative reporter, had scheduled (at my request) an interview with the representative to discuss the failure to take action on the revisions.

Unfortunately, again because of partisanship and Democratic control of the House of Representatives, the bill went nowhere while the Attorney General continued to obtain recoveries from fraud-feasors and the unclaimed 10% incentive was lost to Washington.

Finally, on February 19, 2008, Representative Marc Courveau (D., Northville) introduced HB 5757. The amended FCA, as presented in HB 5757, would allow the Michigan FCA to become DRA compliant. Once again, the small changes made by HB 5757, as required by the federal HHS/OIG., would cost the state nothing in administrative or other costs and would bring millions of dollars in the future back from Washington.

HB 5757 quickly passed the House with NO opposition and was sent to the Senate.

Tragically, because of continued political maneuvering, the Bill sits in the Judiciary Committee.

It seems that Rep. Courveau was elected at the expense of a Republican and the leadership of the Judiciary Committee and Senate Majority Leader, Mike Bishop will not allow this largely unopposed, fiscally responsible bill, to be brought up at the committee or floor level because it would give "points" to Rep. Courveau!!!!

The State of Michigan is in a deep recession/depression, unemployment sits at 8.5%, the highest in the nation, GM is in deep trouble, the City of Detroit is selling assets and landmarks--such at the Detroit-Windsor tunnel--and the Legislature cannot pass a one-page bill that will bring money to the state and its Medicaid recipients.

This Bill is under the radar, unfortunately--Ray (now Rez) Sayeh has joined CNN International and is posted in Pakistan, columnists such as Brian Dickerson and others have been unresponsive despite my entreaties, my solicitations to the Legislature and the use of my contacts have been unavailing.

I am frustrated. Medicaid fraud is rampant, the Attorney General is acting diligently in pursuing the cheaters, and we have been filing qui tam cases under the new Act, but even if all of these activities are successful--and they will be--the State will not receive the full benefit of its recoveries!!!

I will not stop my efforts, but it will take action by my readers to move this along. Sen. Mike Bishop may be contacted by email and his office phone number is (517) 373-2417.

The other Senators on the Judiciary Committee may be emailed at:

senwkuipers@senate.michigan.gov Sen. Kuipers - Chair

senacropsey@senate.michigan.gov Sen. Cropsey

senasanborn@senate.michigan.gov Sen. Sanborn

senbpatterson@senate.michigan.gov Sen. Patterson

sengwhitmer@senate.michigan.gov Sen. Whitmer - minority vice-chair

senhclarke@senate.michigan.gov Sen. Clarke

senmprusi@senate.michigan.gov Sen. Prusi

In May, I commented upon the oral arguments presented to the Michigan Supreme Court in the appeal from the Michigan Court of Appeals decision in the case of Miller v Allstate.

This case raised the issue of whether a physical therapy clinic, incorporated under the Michigan Business Corporation Act, was lawfully rendering services entitling it to reimbursement from its auto-accident injured patient's No-fault insurance carrier.

Allstate Insurance Company argued that a physical therapy clinic-a medical service provider-needed to incorporate under Michigan's Professional Service Corporation Act in order to lawfully render services under Michigan's No-Fault auto-insurance act, even though the physical therapist actually performing the services was a lawfully licensed physical therapist.

The lower courts permitted the claim and the Supreme Court issued its opinion affirming those decisions on July 2, 2008, although not for the same reason the lower courts did.

Essentially, the Supreme Court held that once a corporation, of any sort, files its Articles of Incorporation with the State, it is conclusively determined that the incorporation is lawful--unless the state Attorney General successfully challenges that incorporation in a court proceeding. this conclusion was based on statutory language and the Supreme Court's interpretation of long-standing Michigan law.

I believe the result in this case is correct (although one of the two concurring Justices, Elizabeth Weaver, believes that the Court's tortured logic in reaching the decision was incorrect because of a long-standing battle she has on the Court's Standing decisional process (a topic for some law professor's blog some day))because, as the Court stated, allowing challenges to every corporation in every suit brought by a corporation would affect the very stability of the economy. Every patient would have to verify compliance by every provider with every corporate statute before accepting treatment and whether payment would be made would depend on the creativity of every insurance lawyer in every case when payment decisions were made.

For once, the Supreme Court majority seems to have gotten it right.

Let's see if the Michigan Legislature and the Department of Labor and Economic Growth follow suit and picks up on this decision and clarifies the incorporation requirements as Michael Hamblin of our firm has described on his blog, Michigan Business Lawyer, for peripheral medical and other licensed providers.

Until they do, however, every licensed practitioner and other individuals in Michigan must immediately consult competent health care business lawyers such as my firm, to review their corporate status and to consider re-incorporation as Professional Corporations if permitted and advisable.

HAVE A HAPPY AND SAFE 4TH OF JULY HOLIDAY---AND GOD BLESS AND KEEP OUR TROOPS AND THEIR FAMILIES. LET'S BRING THEM HOME SOON!!!

The Michigan Medicaid False Claims Act was amended effective January 1, 2006 through the efforts of Attorney General Mike Cox and Representative David Law (R., Commerce). I worked actively for passage of the amendment and testified before the Michigan House of Representative Judiciary committee, then chaired by Rep. Law.

The Amendment brought Michigan into line with 22 other progressive states by adding a Qui Tam provision to the existing Medicaid False Claims Act. According to Wallace Hart, an Assistant Attorney General, actively involved in fraud control, the amendments--giving private citizens the right to bring Qui Tam suits to recover fraudulent monies stolen from the taxpayers by providers treating the Medicaid program as their own private ATM machine--the amendment helped him reduce his in-box.

The Michigan Medicaid False Claims Act prohibits the presentment of any false or fraudulent claim for payment under the Social Welfare Act – namely, for Medicaid benefits. The law currently provides for the State to recover the full amount received by a Medicaid provider due to fraudulent conduct, plus triple the amount of damages suffered by the State as a result of the conduct.

HB 5757, a bill pending before the Michigan Senate after having passed the House in near unanimous fashion, would allow the State of Michigan to recoup extra funds from combined state/federal recoveries because of the provisions of the federal Deficit Reduction Act of 2005 ('DRA"). To explain, shortly after the the Michigan Medicaid False Claims Act amendment passed the Michigan Legislature and Governor Granholm signed the Act, the U.S. Congress passed the DRA providing for a 10% incentive to States which enacted a "compliant" Qui Tam statute addressing Medicaid fraud. Specifically, the Medicaid program is a joint federal/state program. Thus, in Michigan, the federal government pays about 56% and the state 44% of the costs of the Medicaid program and fraud recoveries are divided on the same percentage.

If the state has a "compliant" Qui Tam statute, the state receives an extra 10% of the recovery--that is, 54% in Michigan--of the recovery.

Continue reading "David Haron Testifies on Michigan Medicaid False Claims Act Revisions" »

The Michigan Supreme Court recently heard oral arguments in an important case involving the proper incorporation of health care corporations that provide licensed services to the public. The case is Miller v. Allstate. The major issue Miller is whether those providing a service requiring a license must incorporate under the Michigan Professional Services Corporation Act (PSCA) instead of under the Michigan Business Corporation Act (BCA). The Michigan Supreme Court is reviewing the decision of the Michigan Court of Appeals ruled, which ruled that under the language of the PSCA, any licensed professional (including a health care professional) who incorporates must do so under the PSCA and not the BCA.

The Miller decision by the Michigan Court of Appeals has caused quite a stir in the Michigan legal and business communities. It has caught everyone off guard, including the State of Michigan. The State of Michigan has taken the formal position that the Miller decision goes contrary to the plain language and purposes of the business incorporation acts in Michigan, as well as the accepted interpretation of those acts by everyone, including the Michigan Attorney General and the State agency that administers corporate filings.

To understand why the Miller decision has caused such an uproar, it is necessary to understand the history of incorporating professional service corporations in Michigan. Traditionally, only members of the “learned professions” such as doctors and lawyers have been required to incorporate under the PSCA. In the past, any other kind of business that provided professional or personal services had the choice of incorporating under the PSCA or the BCA. This was true even if a license was required to provide the services in question. The Miller decision has changed all of this.

The Miller case concerns a patient who was referred to a physical therapy clinic for treatments. Licensed physical therapists administered the treatments pursuant to medical prescriptions that the patient’s doctor’s properly issued. The physical therapy company was incorporated under the BCA. When Allstate was billed for the patient’s treatments, it refused to pay, because the physical therapy company was supposedly improperly incorporated under the BCA instead of the PSCA.

Allstate claimed that the physical therapy company should have incorporated under the PSCA since its business involves providing professional services that require a license. Allstate took the position that that the physical therapy company’s incorporation was defective because it was incorporated under the BCA instead of the PSCA. Allstate claimed that this alleged technical deficiency gave it the legal right to refuse the charges from the physical Therapy company.

There are a number of interesting and important legal issues involved in the Miller case. But, the issue of which statute professionals should incorporate their businesses under has received the most press. This issue also probably has the most potential to disrupt the businesses that have been incorporated under the BCA and not the PSCA. It appears that a ruling by the Michigan Supreme Court in favor of Allstate point could cause Michigan businesses that incorporated under the BCA and provide licensed services significant difficulties. Some of these difficulties might include difficulty collecting receivables and possible personal shareholder liability for company obligations.