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Warner Norcross + Judd LLP is a corporate law firm with over 230 attorneys serving clients in nine offices throughout Michigan. Among the largest law firms in Michigan, Warner works in virtually all areas of business law.

Michigan Law Firm - Warner Norcross + Judd LLP

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<a>OVERVIEW</a> The Michigan Legislature returns on January 10 to begin the second year of this legislative session. Prior to the end of 2017, the Legislature enacted a series of measures meant to: curb the opioid addiction crisis; relieve the stress of an underfunded public pension system; further efforts toward integration of physical and behavioral health care; advance the concept of uniformity and consistency with broadband and small cell hookups; and make progress toward clarifying the tax obligations of several small businesses.

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What it failed to do was once again enact revisions to the Michigan Auto No Fault Insurance law. <a>HEALTH CARE</a> <a>OPIOID CRISIS</a>

In Michigan, and nationwide, the opioid addiction crisis has reached epidemic levels. In order to help curb the alarming abuse of addictive pain killers, the Legislature enacted a series of bills much of which were based upon the recommendations of a Gubernatorial Task Force.

SBs 166, 167, 270 and 274 require, among other things, that:

With the Governor out of the state on&nbsp;business, the Lt. Governor just signed these bills into law. &nbsp; <a>CARES TASK FORCE</a> &nbsp; Last summer, House Speaker Tom Leonard (R-Dewitt) formed a bipartisan task force called Community, Access, Resources, Education and Safety (CARES). Members had hearings around the state and found out that mental health services are delivered in silos and are often not coordinating activities, resulting in either duplicative effort and/or poor outcomes. What was most concerning to some members was the stress the current situation is having on law enforcement and the judicial system. It is expected that a series of bills will be introduced this year aimed at the coordination of mental health services. &nbsp; <a>PHARMACISTS AND PHARMACY</a> &nbsp; Legislation originating in the House makes a pharmacist immune from civil liability for refusing to fill a prescription based upon a good faith belief it was wrongfully obtained. Under current law, a pharmacist is exempt for such a refusal for state actions against his/her license.&nbsp; HB 4405 would exempt the pharmacist for damages to patients or property as a result of the good faith refusal. The bill is now with the Senate Health Policy Committee. &nbsp; Bills HB 5228 and 5229 were sponsored by Rep. Daire Rendon (R-Lake City) and were introduced in November. The bills prohibit a pharmacist and pharmacies from entering into a contract whose terms require the pharmacist or pharmacy not to disclose the actual cost of pharmaceuticals. This legislation is viewed as protection for pharmacists and an attempt at transparency for pharmacy benefit managers (PBMs) and drug companies. The bills have been referred to the House Health Policy Committee. &nbsp; SB 360, now Public Act 165 of 2017, sponsored by Sen. Margaret O’Brien (R-Portage), allows a pharmacist to dispense additional quantities of a prescription drug up to the amount authorized by the original prescription. This bill is perceived as a way for smaller pharmacies to keep their clientele, rather than being regimented with 30 or 90-day doses, causing inconvenience to the consumer. &nbsp; SB 287, sponsored by Sen. Tonya Schuitmaker (R-Lawton), is a comprehensive package that, among other things:

The bill has been referred to the Senate Insurance Committee where it has stayed dormant for nearly a year due to a number of reasons, including political. Consequently, making an effort to introduce legislation in the House that would not be so all encompassing, and opposed by a number of different and varied interests. Instead, the legislation will target PBMs to register with, and be regulated by, the State.

HB 4282, sponsored by Rep. Robert Kosowski (D-Westland), prohibits a pharmacist from disclosing a patient’s mental illness to a third party. The bill remains with the House Health Policy Committee.

Late 2017, the State issued a Request For Information (RFI) in furtherance of the legislative mandate to begin pilot projects toward health care integration. The integration of physical and behavioral health care is a goal for many in the health care community. Advocates see it as being patient centered and cost effective. Opponents, or those concerned with its implementation, fear management by a health plan will jeopardize care. Through Section 298 of this year’s budget, the Legislature mandated that the Department of Health and Human Services (DHHS) begin and implement no fewer than three pilot projects with one specifically in Kent County to implement administration. DHHS expects an applicant or applicants to be chosen by February 28, 2018, and hopes to implement the projects by July 1, 2018.

With the view toward coordinating health care, the Legislature enacted SB 690 which calls for Medicaid health plans to administer the integration of mental and behavioral health pilot projects called for in this 2018’s budget boilerplate. Pursuant to the legislation, Medicaid health plans replace Prepaid Inpatient Health Plans (PIHPs) as administrators of the integration pilot projects.&nbsp; Ten PIHPs in Michigan currently help administer behavioral health. They and certain advocacy groups oppose this change, calling it the “privatization” of mental health services. On the other hand many in the Legislature, officials in the Administration and health plans, believe it is a positive step toward the efficient use of resources which will promote the best outcome for the patient.

Lawmakers, especially those dealing with budget details, are getting increasingly concerned with the increasing cost of pharmaceuticals. Recently, a major drug company made a presentation before the House Health Policy Committee on the cost effectiveness of pharmaceuticals. It is argued that drug therapy, though at times very costly, is still often a less expensive alternative than extended hospital stays or procedures such as organ transplants.&nbsp; Nevertheless, the House Health Policy Chair recently introduced HB 5223, which requires drug companies to disclose actual costs incurred, including advertising, in order to bring a drug to market. This would be required of any drug manufacturer whose product exceeded $10 thousand in a dose or a treatment. The bill was referred to the Health Policy Committee where it will most assuredly receive a hearing.

Democrats continue to call for a repeal of the so-called “FDA Defense” for pharmaceutical manufacturers. Passed in 1995, the law gives manufacturers immunity from damages to persons or property caused by a drug, which was properly and lawfully approved by the federal Food and Drug Administration. Some Democratic Party candidates for Governor are now calling on the Legislature to repeal the law, citing the inability of victims and a victim’s family to sue opioid drug manufacturers for the damage caused by improper use. While perhaps a campaign issue, don’t look for any action to repeal the law from this Legislature. <a>PENSION AND RETIREMENT</a> <a>MPSERS</a>

Recently, Senate Majority Leader Arlan Meekhof (R-West Olive) said that making changes to the Michigan Public School Employees Retirement System (MPSERS) was probably the biggest legislative accomplishment of 2017. Over objections from teacher unions, the Republican controlled Legislature enacted changes to the system, which include:

The Legislature overwhelmingly passed revisions to the Municipal Retirement System, but the version ultimately enacted was a significantly scaled down version of the original. As originally proposed, the legislation called for the appointment of a financial management team in the event that certain triggers for unfunded mandates were reached. The financial management team would have broad powers to make changes in local government budgets in order to adequately fund their retirement systems. However, local public employee unions, most notably police and firefighter unions, strongly opposed the measure and lobbied hard against it. It soon became clear there was not enough support for the measure, as constituted and legislative leaders went back to the drawing board. What emerged was a two bill package (HB 5298 and SB 686) which requiresadditional reporting and transparency of local units of government so state officials could keep up to date on the scope of a particular problem. <a>TAX</a> <a>PREMIUM TAX, CORPORATE TAX, OR BOTH?</a>

For-profit Medicaid health plans were worried earlier this year due to interpreting last year’s amendments to the Insurance Code to include Medicaid health plans for taxation purposes. For-profit Medicaid health plans have always paid the corporate income tax required of business entities other than insurance companies. In 2016, amendments were made to the Insurance Code which some claimed required those health plans to pay a premium tax paid by insurance companies. In essence, this interpretation would have subjected the affected health plans to double taxation. The Michigan Department of Treasury issued an interpretive memo indicating that the affected plans are only subject to the corporate income tax and not the premium tax as well. However, Treasury did urge the passage of legislation to clarify the matter in statute. In the fall of 2017, Rep. Hank Vaupel (R-Fowlerville) introduced HB 4950 and 5047, which do just that. The bills have passed the House of Representatives overwhelmingly and are now with the Senate Finance Committee with a hearing expected to take place in late January.

First there was the Quality Assurance Assessment Program (QAAP), an assessment on Medicaid health plans and certain other Medicaid providers, used to raise money for the State’s Medicaid matching funds obligation. When the QAAP was ruled to not qualify as a mechanism for the state match by the Centers for Medicare and Medicaid Services (CMS), the Legislature turned to a mechanism called the Health Insurance Claims Assessment (HICA).&nbsp; HICA is really a tax on all paid health care claims. HICA amounted to a tax of one percent on all claims and was estimated to rise upwards of $700 million toward the State’s Medicaid match obligation of approximately $1 billion. The problem was that the revenue raised by HICA only amounted to approximately one half of what was estimated due in part to many health care claims being exempt by federal statue or not accruing in Michigan. So, the Legislature enacted a six percent use tax on all health plans in order to supplement HICA. The use tax proved to be wildly successful in raising revenue, so much so that the loathed HICA could be repealed. But not so fast. CMS then gave the Governor every indication the use tax would no longer be acceptable as a method to fund Medicaid as it was using Medicaid dollars to obtain even more federal Medicaid dollars. Since that time, HICA revenue has been used with the General Fund to meet the State’s obligation for Medicaid. The Snyder Administration, in an effort toward a permanent fix, floated a Health Insurance Tax (HIT) which imposes a tax on insurance companies and plans. The only problems with the initial draft were:

Nevertheless, look for another plan before the middle of February. <a>WHAT’S IN STORE FOR 2018?</a> The Legislature will work in earnest, probably through the first week of June and before the summer break to allow those members, who are not term limited or who are seeking offices, to campaign for the August primary. Here are some of the items that legislative leaders are talking about for the coming year:

<a>POLITICS – WHAT’S SHAPING UP FOR 2018?</a> The 2018 election will have all statewide offices up for election. Control of the Governor’s Office, the Secretary of State, the Attorney General, the Legislature, the State Board of Education and governing bodies of Michigan’s three largest universities are at stake. In addition, Democratic incumbent U.S. Senator Debbie Stabenow will face the voters for re-election against a Republican opponent.

It appears the race to be the Republican nominee for Governor to succeed incumbent Rick Snyder will come down to two current office holders and heavyweights within the Party, Lieutenant Governor Brian Calley and Attorney General Bill Schuette. The Attorney General appears to be the current leader in the polls and at this stage has greater name identification and money than Calley. However, Calley, who just recently got into the race, will have access to a considerable war chest as well. Still, the Attorney General, who has held various public offices for over 30 years, is at this point the favorite Republican nominee among Republican voters in the Primary Election, which is seven months away. &nbsp; Other candidates vying for the GOP nomination are State Senator Patrick Colbeck, who has received the endorsement of conservative U.S. Senator Ted Cruz, insurance agent Joseph Derose, physician Jim Hines, private investigator Mark McFarlin, and businessman and Tax Party nominee for Governor in 2014, Evan Space.

For the Democrats, the clear leader, especially in endorsements and name recognition is former State Senate Democratic Leader Gretchen Whitmer of East Lansing. Whitmer has already obtained the endorsement of several labor unions, critical to winning the nomination. &nbsp; Other candidates include millionaire businessman Shri Thanedar of Ann Arbor, who appears to be running a self-funded campaign, Abdul El-Sayed, former executive director of the Detroit Department of Health and Wellness, and businessman Bill Cobbs. At this stage, it appears that the nomination is Whitmer’s to lose.

With the recent withdrawal from this race of former Michigan Supreme Court Justice Robert Young, the Republicans have three alternatives left. They are Grosse Pointe businessman Sandy Pensler, a Metro Detroit businessman and Iraq war veteran John James, and preservationist and businessman Bob Carr. There is no clear frontrunner for the nomination at this time, but the race seems to be coming down to Pensler vs. James.

The incumbent, and U.S. Senator, Debbie Stabenow from Lansing, is seeking her third term and is predicted as the odds-on favorite for re-election. Polls show her as favorable among voters as well, and she has amassed a war chest of over $6 million to date.&nbsp; &nbsp; Right now Stabenow faces only token opposition for the nomination from Gaylord resident Craig Allen Smith. &nbsp; <a>U.S. HOUSE</a> &nbsp; Michigan currently has fourteen members of the U.S. House in its Congressional delegation, nine of whom are Republicans. Barring a tidal wave year for the Democrats, the partisan makeup of the delegation will be similar to what it is now. The Democrats, however, are hopeful to wrest at least two seats from the GOP. &nbsp; Democrats have their eye on recapturing the State’s 7th&nbsp;and 8th&nbsp;Congressional Districts, which are currently held by Tim Walberg and Mike Bishop. The 7th&nbsp;District consists of six counties and much of a seventh. It encompasses the conservative border counties of Branch, Hillsdale and Lenawee. Another border county, Monroe, is considered a swing area. The other counties are all of Eaton, Jackson and most of Washtenaw minus the City of Ann Arbor.&nbsp; Surprisingly, the Republican base for the district is only 53 percent, but Walberg has consistently run at or ahead of that base. Challenging him will be former state representative Gretchen Driskel who, at one time, was the popular mayor of the City of Saline, an Ann Arbor suburb.&nbsp; Walberg whalloped Driskel in 2016, so if the Dems are to overthrow him, it will have to be with a strong Party reflective of a state and national trend. &nbsp; The other hope for a Democratic pick up appears to be in the 8th&nbsp;Congressional District.&nbsp; The 8th&nbsp;consists of northern Oakland County, all of Livingston County and all of Ingham County, including the heavily Democratic cities of Lansing and East Lansing. However, eastern Ingham, Livingston County and the northern portion of Oakland County still make up 54 percent of the Republican base. It would require a lot of money and, like the race in the 7th, a strong showing by the Party statewide for a Democrat to win the seat.&nbsp; Congressman Mike Bishop won his race in 2017 with over 56 percent of the vote, way ahead of his base. The leading Democratic candidate to unseat Bishop is Elissa Slotkin who served three tours of duty in Iraq with the CIA and held positions with the State Department. The other candidate for the Democratic nomination is Chris Smith. &nbsp; <a>MICHIGAN HOUSE OF REPRESENTATIVES</a> &nbsp; The Democrats must gain nine seats in order to take back the majority, a status they relinquished in the 2010 Republican tidal wave and one they never got back. This was due, in part, to clever GOP gerrymandering. Some Democrats believe this may be their year to take back control, even though some House Democratic campaign staffers publicly said that gaining the majority would be a two, possibly three election cycle effort. In spite of this, Democrats have been encouraged with what they have seen in Virginia and Alabama, to the point of once again talking about the majority. At this time, odds are in favor of the GOP hanging on, but if voter frustration with the Trump Administration and the GOP congress continues, lightning could strike for the Democrats. &nbsp; <a>MICHIGAN SENATE</a> &nbsp; Republicans have held on to the State Senate for 34 years, the one constant in Michigan politics. The Republicans currently hold a 27-11 supermajority. However, most of those Republicans are term limited, giving Democrats a chance in selected competitive districts.&nbsp; Given this and with what appears to be a strong Democratic election year, it looks as if the Democrats could pick up as many as four seats to become a viable minority. &nbsp; <a>SECRETARY OF STATE AND ATTORNEY GENERAL</a> &nbsp; Candidates for both offices are nominated at each Party’s summer convention after their candidates for Governor have been chosen in the August Primary. At times, candidates have been chosen at each convention with a view toward rounding out the ticket. Therefore, a candidate could be chosen that was not anticipated months before the convention. Nevertheless here’s a list:

Republicans hope to keep this office, which will be vacated by term-limited Ruth Johnson. To date, the leading contenders for the nomination to replace Johnson are Stan Grot, the Shelby Township Clerk, Mary Treder Lang, Vice Chairwoman of the Eastern Michigan University Board of Regents, and Joseph Guzman of Okemos.

Democrats hope to take back this post for the first time since 1998. The leading candidate for the nomination is the former Dean of Wayne State University Law School, Jocelyn Benson. Benson was the Party’s nominee in 2010 and ran a very credible campaign, even though she lost in what was a tidal wave Republican year. &nbsp; <a>ATTORNEY GENERAL</a>

Two major candidates for this post are emerging: Rep. Tom Leonard of Dewitt, the current Speaker of the House, and State Senator Tonya Schuitmaker from Lawton.&nbsp; The Speaker is very close with the current AG and Gubernatorial candidate Bill Schuette. If Schuette wins the GOP nomination for Governor, Leonard’s chances for the AG nomination improve.

The two leading candidates for the Party’s nomination are former U.S. Attorney Patrick Miles from Grand Rapids, and Dana Nessel of Detroit, who describes herself as Michigan’s most prominent gay rights attorney. As of now, it would appear that Miles, who has compiled a number of endorsements, is the frontrunner.

From the Capitol – January 2018

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