Lansing — The Michigan Supreme Court on Friday overturned two prior court rulings to clear the way for Attorney General Dana Nessel and future prosecutors to pursue investigations into drug pricing and other consumer protection complaints that had long been off limits.
Prior to Friday’s 4-3 ruling, two high court opinions from 1999 and 2007 barred investigations of an entity already regulated by a separate state or federal agency. Those decisions have effectively blocked the state’s attorney general from investigating other regulated licensed industries such as nursing homes, construction companies, medical professionals and pharmaceutical companies under the Michigan Consumer Protection Act.
Nessel challenged that precedent in 2022 when she attempted to investigate Eli Lilly’s insulin pricing, knowing that she would first need a new Supreme Court ruling to proceed.
On Friday, the high court found the 1999 Smith decision and the 2007 Liss ruling barring the investigation were wrongly decided because the broad interpretation of the Michigan Consumer Protection Act did not match the plain language and “essentially nullify” claims against swathes of industry sectors that would otherwise be governed by the act.
The rulings rendered much of the state’s consumer protection act unworkable, the majority opinion by Judge Noah Hood said. Hood, a Democratic appointee to the court, was joined by Democratic-nominated justices Megan Cavanagh, Elizabeth Welch and Kimberly Thomas.
“By misconstruing a narrow exemption and ignoring the statutes’ plain language and purpose, this court has disrupted the reliance interest for consumer protections,” Hood wrote. “It is this court that should remedy its prior mistakes.”
Hood acknowledged that Friday’s decision “may open the door to increased litigation brought against businesses operating in Michigan” but said that is not enough reason to retain the prior court rulings.
“If Michigan businesses are relying on Smith and Liss to engage in unfair, unconscionable, or deceptive business practices otherwise prohibited by the MCPA (Michigan Consumer Protection Act) without the fear of repercussion, this is not a valid reliance interest,” Hood wrote.
In a dissenting opinion authored by Justice Kyra Harris Bolden and joined by Justices Brian Zahra and Richard Bernstein, Bolden wrote that the attorney general lacked standing to bring the claim.
The attorney general’s office, Bolden wrote, was unable to show any “unfair, unconscionable or deceptive methods, acts, or practices” that could amount to an actionable claim under the Consumer Protection Act. Without that standing, the courts cannot decide the appropriateness of the past 1999 and 2007 decisions.
“…plaintiff has missed the first step of demonstrating that there was an actionable claim under the MCPA,” Bolden wrote.
Nessel celebrated the opinion in a statement Friday, arguing it will help consumer protection watchdogs to help residents “deceived by licensed businesses.”
“We will no longer have to turn away parents who were price-gouged for baby formula at the grocery store or hardworking Michiganders who were swindled by deceptive used car contracts,” Nessel said. “We will no longer have our hands tied while pharmaceutical giants squeeze households over insulin and other necessary medications.”
The Michigan Alliance for Legal Reform, a coalition of business groups, argued the new opinion would expose regulated industries and licensed professionals to overlapping standards and “abusive litigation.”
“The Legislature must act now to codify the regulatory compliance exemption and restore clear, predictable standards for those already operating under extensive government oversight,” said Zach Rudat, director of the group.
For Nessel to investigate Eli Lilly, as she sought to do in 2022, the state Supreme Court had to overturn high court decisions from 1999 and 2007 that bar investigations of an entity already regulated by a separate state or federal agency.
Eli Lilly is regulated by both the Federal Drug Administration and the Michigan Board of Pharmacy, neither of which has authority over pricing. But under the 1999 Smith decision and 2007 Liss order, the Supreme Court found the law exempted the entire transaction where another regulatory body is involved, including pricing.
The Supreme Court previously denied the attorney general’s motion to bypass the lower courts, but ordered the Court of Appeals to consider the case on an expedited basis. Both the Ingham County Circuit Court and Court of Appeals have ruled that they are bound by the 1999 and 2007 cases and cannot consider Nessel’s request without action by the Michigan Supreme Court overturning those rulings.
eleblanc@detroitnews.com
This article originally appeared on The Detroit News: Michigan Supreme Court clears way for drug-pricing probes
Reporting by Beth LeBlanc, The Detroit News / The Detroit News
USA TODAY Network via Reuters Connect
By Beth LeBlanc, The Detroit News | USA TODAY Network
