COA bars state’s Vioxx-Medicaid suit against Merck

“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.”

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In their opinions

“The trial court properly concluded that plaintiff failed to plead facts sufficient to establish mutuality of agreement.”

Michigan Court of Appeals Judges E. Thomas Fitzgerald, Mark J. Cavanagh and Alton T. Davis, exercising remarkable judicial restraint in Sharp v. Dep’t of Corrections, when affirming dismissal of a pro per prisoner’s $19 billion wrongful-imprisonment claim.

Archie Sharp, who’s serving a 30- to 110-year term, sent a letter to his warden, Kurt Jones. Sharp’s missive, styled as a “Private Agreement,” demanded $1 million for every day that he was being kept in the pen.

By its terms, the document was “self-executing” and would become effective if [Jones] allowed a five-day period to expire without responding.

To no one’s surprise, Jones didn’t answer Sharp. So, Sharp sued in the Court of Claims, alleging that Jones was liable “to him under the terms of the ‘Private Agreement,’ as either an express contract or an account stated.”

A claim like Sharp’s can be fertile ground for clever appellate judicial zingers.

But Judges Fitzgerald, Cavanagh and Davis resisted the temptation placed before them. Instead, they patiently explained that the “agreement” lacked mutuality, did not fall under the UCC and did not present a claim for account stated.

And that, folks, is a fine example of a class judicial act.

In their opinions

“Plaintiff’s perplexing arguments contend that it is illegal for defendant to set uniform standards for becoming a member of its association. However, plaintiff’s pleadings cite no authority supporting this position. What is vexing about plaintiff’s arguments is that plaintiff instead cites to authority that is directly in opposition to his position.”

Court of Appeals Judges Mark D. Cavanagh, E. Thomas Fitzgerald and Douglas B. Shapiro, in Davis v. Michigan High School Athletic Ass’n, an unpublished per curiam opinion, explaining why Wayne County Circuit Court Judge Kathleen Macdonald correctly took matters into her own hands and sanctioned a pro per plaintiff $6,076.60 for filing a frivolous complaint.

In the world of high school sports, the MHSAA tries to keeps the playing fields level with an elaborate system of rules governing just about every aspect of student athletics.

Robert Davis, a Highland Park School Board member, decided to take on the MHSAA’s requirements, to which the board had previously agreed, that school districts commit to MHSAA for one year and not join other associations with different rules.

Davis argued that these requirements usurped the school district’s “authority and decision-making capacity.”

Not even close, the COA ruled. The Davis panel pointed out that MSHAA membership is voluntary, the district can still belong to other associations, oh, and by the way, the cases plaintiff cited actually bolster the MHSAA’s defense of the complaint.

***

“We find ourselves in the situation akin to that of a court being asked to apply the laws governing transportation adopted in a horse and buggy world to the world of automobiles and air transport.”

Court of Appeals judges Cavanagh, Fitzgerald and Shapiro, again, this time in Howell Education Ass’n MEA/NEA, et al. v. Howell Board of Education, et al., a published per curiam decision.

The panel was giving context to the task at hand: how to apply the Freedom of Information Act, enacted when paper and ink, carbon paper and mimeographs were king, to a FOIA case involving e-mails.

The school district’s computers retained private e-mails of teachers, who were also union officers, even after the e-mails were deleted.

At issue was whether a citizen, who apparently had an intense interest in school district-teacher contract negotiations, could invoke FOIA to get the e-mails.

Nothing doing, said the Davis panel.

E-mails have in essence replaced mailboxes and paper memos in government offices. Schools have traditionally, as part of their function, provided teachers with mailboxes in the school’s main office.

However, we have never held nor has it even been suggested that during the time those letters are “retained” in those school mailboxes that they are automatically subject to FOIA.

Now, instead of physical mailboxes, we have e-mail. However, the nature of the technology is such that even after the e-mail letter has been “removed from the mailbox” by its recipient, a digital memory of it remains, possibly in perpetuity.

This effect is due solely to a change in technology and, absent some showing that the retention of these e-mails has some official function other than the retention itself, we decline to so drastically expand the scope of FOIA.