Michigan Court of Appeals; Docket # 352139; Unpublished
Judges Letica, Riordan, and Cameron; per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Personal Protection Insurance (PIP) Benefits [§500.3105] (General/Miscellaneous)
TOPICAL INDEXING:
Cancellation and Recission of Insurance Policies
SUMMARY:
In this unpublished per curiam opinion, the Court of Appeals affirmed the trial court’s grant of partial summary disposition to Defendant because the intervening Plaintiff’s services were not lawfully rendered as required by the no-fault act.
This case arose from an accident involving Nadwah Harbi and Merry Kasnona in which both suffered injuries in a motor vehicle accident and were subsequently prescribed medication for their injuries by Dr. Sam Hakki. Dr. Hakki utilized EQMD – a “pharmacy management organization” – for inventory management, billing, and collections when providing prescription drugs to Harbi and Kasnona. EQMD billed Defendant as the insurer of Harbi and Kasnona for over $20,000 in services related to Harbi and $13,000 for services related to Kasnona. Defendant paid a portion of the invoices, $9,500 and $4,500, respectively. Consequently, Harbi and Kasnona sued Defendant for payment of no-fault benefits, including those owed to EQMD. Defendant filed a motion for summary disposition and argued that EQMD was not licensed in Michigan at the time it provided services and therefore its services were not “lawfully rendered” as required for payment of no-fault benefits by an insurer and that EQMD’s services were provided to Dr. Hakki and not an “injured person” as required by the no-fault act. Consequently, Harbi and Kasnona both assigned their claim for benefits from Defendant to EQMD. EQMD then filed a motion to intervene. The trial court denied EQMD’s motion to intervene, but permitted EQMD to participate in the hearing on Defendant’s motion for summary disposition. At this hearing, EQMD argued that it was not subject to licensing requirements because it did not physically handle medication and was not a manufacturer or wholesale distributor as a result, and that while its business arrangement was with Dr. Hakki, its services benefitted the injured parties. The trial court ultimately granted Defendant’s motion for summary disposition in part because EQMD was not licensed by the Michigan Department of Regulatory Affairs (hereinafter LARA) at the time it provided the medications to Harbi and Kasnona. EQMD’s motion for reconsideration was denied by the trial court. Thus, EQMD sought leave to appeal with the Michigan Court of Appeals. The Michigan Court of Appeals instructed the trial court to enter an order granting EQMD’s motion to intervene. EQMD then filed a motion to set aside the trial court’s order granting partial summary disposition to Defendant and attached to its motion a letter from LARA that made note of EQMD’s unlicensed status but “concluded as of that date ‘a violation of the Public Health Code could not be established. The trial court denied the motion without a hearing and issued a final order dismissing the case, which EQMD appealed.
In its analysis, the Michigan Court of Appeals first considered EQMD’s argument that the trial court improperly granted summary disposition to Defendant on this issue of whether its services were rendered unlawfully. In doing so, the Court noted that the Public Health Code requires that “[t]o do business in this state, a pharmacy, manufacturer, or wholesale distributor, whether or not located in this state, must be licensed.” MCL 333.17748. “Manufacturer” is defined as:
a person that prepares, produces, derives, propagates, compounds, processes, packages, or repackages a drug or device salable on prescription only, or otherwise changes the container or the labeling of a drug or device salable on prescription only, and that supplies, distributes, sells, offers for sale, barters, or otherwise disposes of that drug or device and any other drug or device salable on prescription only, to another person for resale, compounding, or dispensing. [MCL 333.17706(1).]
and “wholesale distributor” is defined as:
a person, other than a manufacturer, who supplies, distributes, sells, offers for sale, barters, or otherwise disposes of, to other persons for resale, compounding, or dispensing, a drug or device salable on prescription only that the distributor has not prepared, produced, derived, propagated, compounded, processed, packaged, or repackaged, or otherwise changed the container or the labeling of the drug or device. [MCL 333.17709(5).]
The Court noted that Defendant had presented evidence from EQMD’s website stated that it “offere[ed] a line of custom compounded chemicals” and “provided physicians with certain medications through a mail order program.” Defendant also submitted deposition testimony from Dr. Hakki that EQMD had provided his office with prescription medication. EQMD argued in response that its website was merely an advertisement and that EQMD was not required to obtain a license because it never physically handled prescription medicine. The Court noted, however, that the plain language of the Public Health Code did not make any such requirement of physical possession. Similarly, the Court disagreed with EQMD’s argument that it was not a manufacturer or wholesale distributor because there was no evidence that it offered prescription medications for sale. In so holding, the Court found that the arrangement between Dr. Hakki and EQMD clearly demonstrated a sale. Finally, the Court disagreed with EQMD’s argument that the trial court abused its discretion when it failed to consider the letter from LARA it submitted with its motion for reconsideration. In its holding, the Court found that “contrary to EQMD’s assertion, the LARA letter does not demonstrate that EQMD was not required to obtain a license under MCL 333.17748. Rather, it merely indicates that LARA could not conclude that EQMD has violated a Public Health Code.” Accordingly, the Michigan Court of Appeals concluded that “the trial court did not err when it concluded that EQMD’s unlicensed services were not lawfully rendered and non-compensable under the no-fault act.”