“The law of unintended consequences, often cited but rarely defined, is that actions of people — and especially of government — always have effects that are unanticipated or unintended. Economists and other social scientists have heeded its power for centuries; for just as long, politicians and popular opinion have largely ignored it.”
– Rob Norton, The Concise Encyclopedia of Economics
The state of Michigan got a taste of its own medicine yesterday when the Court of Appeals, in a 2-1 decision, booted the attorney general’s Medicaid False Claims Act suit against Merck, the manufacturer of the anti-inflammatory drug Vioxx.
Writing for the majority in Attorney General State of Michigan, et al. v. Merck Sharp & Dohme Corp., Judge Henry Saad applied Michigan’s drug immunity law to bar the state’s claim against Merck.
Michigan’s immunity statute is the only one of its kind in the United States and the claims made by the parties raise an issue of first impression under Michigan law.
We hold that where, as here, the drug in question was approved by the FDA [Food and Drug Administration], the state’s suit to recover Medicaid money premised on fraud by the drug company in its representations regarding the safety and efficacy of the drug is barred by MCL 600.2946(5), which exempts drug companies from product liability suits regarding FDA-approved drugs.
Saad, joined by Judge David H. Sawyer, ruled that:
[N]othing in the statute limits its application to claims brought by consumers and that the statute in no way precludes a claim pursued under the [Medicaid False Claims Act] or described as an action for unjust enrichment. Again, by its own terms, MCL 600.2946(5) applies to actions “based on a legal or equitable theory of liability,” which includes the claims at issue here.
If the plain language of the statute results in an outcome that the Legislature now deems improper, it is for the Legislature, not this Court, to narrow the application of the statute by amending or redrafting its terms.
In his dissent, Judge E. Thomas Fitzgerald argued that the state’s claim was not a product liability suit:
[P]laintiffs claim is a “product liability action” subject to the absolute defense of
MCL 600.2946(5) if (1) the action is based on a legal or equitable theory of liability, (2) the action is brought for the death of a person or for injury to a person or damage to property, and (3) that loss was caused by or resulted from the construction, design, formulation, development of standards, preparation, processing, assembly, inspection, testing, listing, certifying, warning, instructing, marketing, selling, advertising, packaging, or labeling of a product.The point of contention is whether plaintiffs’ claim was “brought for the death of a person or for injury to a person or damage to property.” Here, plaintiff is seeking money damages “representing Medicaid overpayments wrongfully received by Defendant” as a result of defendant’s allegedly fraudulent conduct that occurred after the FDA’s approval of Vioxx.
To treat this case as a product liability action would require a finding that plaintiffs’ claim for money wrongfully paid was brought for damage to property. …
[T]he present case is not a product liability action, as defined in MCL 600.2945(h), because a suit brought for
the return of Medicaid overpayments is not “brought for … damage to property.”
The Michigan Lawyer 