Merck Corp. took Vioxx, a pain-relief drug, off the market in 2004 (not soon enough, many lawsuits claimed) because the drug had the unintended side-effect of increasing the risk of heart attacks.
Under Michigan’s 1996 drug-manufacturer immunity law, MCL 600.2946(5), Michigan residents could not press Vioxx-related product-liability claims against Merck.
A divided Michigan Supreme Court has upheld a Court of Appeals decision, issued earlier this year, which held that the immunity law also barred the state attorney general’s 2008 suit against Merck under Michigan’s Medicaid False Claims Act for the $20 million the state paid for Vioxx prescriptions dispensed to Medicaid patients.
The attorney general alleged “that because Merck misrepresented the safety and efficacy of Vioxx in its marketing and because Michigan reimbursed providers who prescribed or dispensed Vioxx, Michigan would not have incurred such expenses but for Merck’s fraudulent activity.”
The COA majority in Attorney General State of Michigan, et al. v. Merck Sharp & Dohme Corp., characterized the attorney general’s suit as a product liability action and held that MCL 600.2946(5) barred the suit.
Over the weekend, Chief Justice Robert P. Young Jr., and Justices Stephen J. Markman, Mary Beth Kelly and Brian K. Zahra sided with the COA majority and denied the state’s application for leave to appeal.
Justices Michael F. Cavanagh and Diane M. Hathway would have granted leave. So would have Justice Marilyn Kelly, who said that the suit was a fraud claim, pure and simple, and had nothing to do with product liability:
MCL 600.2945(h) defines a “product liability action” as “an action based on a legal or equitable theory of liability brought for the death of a person or for injury to a person or damage to property caused by or resulting from the production of a product.”
The Court of Appeals majority held that plaintiffs’ allegations fall within this statutory definition because they assert legal and equitable theories of liability for damage to property resulting from the production of a product. Essentially, the court held that plaintiffs’ alleged financial damages in the form of payments to Medicare patients amount to “damage to property.”
This defies common sense and a rational understanding of the statutory phrase “damage to property.”
Kelly said the dissenting COA judge had it right:
As dissenting Court of Appeals Judge FITZGERALD noted, “[w]hen examined in the proper context of a product liability statute, it is clear that ‘damage to property’ means physical damage to property caused by a defective or unreasonably dangerous product.”
Think about this way, Kelly continued:
Product liability cases are generally brought by or on behalf of people who have suffered injury or damage to their physical property because of the use of a product.
Hence, if a customer buys a product and it burns down his or her house, that person may bring a product liability action. However, if that same customer buys a product, such as fireworks, with the expectation that it will blow up, and it does not work as promised, no product liability action lies.
The latter hypothetical situation is analogous to the instant case. Plaintiffs are attempting to recover money spent for a product that allegedly did not live up to defendant’s representations.
This case is not a product liability action because no physical injury is claimed.