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Warner Norcross + Judd LLP is a corporate law firm with over 230 attorneys serving clients in nine offices throughout Michigan. Among the largest law firms in Michigan, Warner works in virtually all areas of business law.

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<a href="#transportation">TRANSPORTATION</a>

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<a href="#executive-branch-action-regarding-health-care">EXECUTIVE BRANCH ACTION REGARDING HEALTH CARE</a>

<a href="#freedom-and-individual-rights">FREEDOM AND INDIVIDUAL RIGHTS</a>

<a href="#criminal-justice">CRIMINAL JUSTICE</a>

<a href="#executive-action">EXECUTIVE ACTION</a>

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The 97<sup>th</sup> Legislature met for three weeks in its “lame duck” session, that period of time after the November general election and prior to a new Legislature assuming power in January. The Legislature’s last day of voting was in the early morning hours of Dec. 19. Final adjournment for this Legislature officially occurred on Dec. 30.

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To say that transportation funding was the dominant issue during this period would be an understatement. In fact, one legislative leader described the issue as “sucking the air out of the entire session.”

However, there were other issues the Legislature addressed, or chose not to address, in the lame duck session. Among them was legislation in the areas of health care, religious and individual rights and insurance, to mention a few. The following is a brief description of key legislation in different areas of interest and how it fared in this Legislature.

Michigan’s roads and infrastructure have been in bad shape for nearly 20 years. The 4-cent per gallon of gas tax increase passed by the Legislature in 1997 was hardly enough to keep pace with the need. Back in 2011, Gov. Rick Snyder proposed an increase in the fuel tax and hikes in registration fees in order to generate enough money to at least, at the time, meet the need. That proposal was shot down even before it could get consideration by a Legislature loathe to raise taxes. Since that time, the problem has just grown worse. Last winter, which was one of the most severe in recent history, caused even greater damage to highways and secondary roads alike. Addressing the road funding issue was going to be unlikely prior to the 2014 election, and that turned out to be true. Earlier in the year the Speaker of the House, on behalf of his Caucus, had proposed a package of bills that amounted to approximately $400 million. When the funding proposal reached the Senate, it could not achieve enough support. In fact, the Senate Majority Leader sought a more comprehensive solution of either increasing the sales tax by way of a vote of the people or increasing the tax on fuels. That go-round produced nothing and the Legislature went home for the summer without a solution to the road funding dilemma.

This fall, the Senate and House each passed their own plan to address the road and infrastructure repair situation. However, the two plans were vastly different. The Senate plan raised approximately $1.2 billion annually, and possibly as much as $1.5 billion, by multiplying the average wholesale price by the applicable proposed statutory percentage and rounding to the nearest one-tenth of 1 percent. The applicable percentage would change upward annually. In 2015, the percentage would be set at 15.5 percent.

The House plan did not raise any new revenue. To the contrary, the House Republican measure would have phased out the sales tax on fuel and shift it to the fuel tax, which is dedicated to roads. When fully phased in, this shift would bring approximately $1.1 billion additional funds for roads. The problem is schools and local governments rely on the sales tax to fund much of their services. When fully implemented, the House Republican proposal would have shifted almost $800 million from schools, over $100 million from local government, over $100 million from the general fund and $50 million from the Comprehensive Transportation Fund to fix roads. Understanding there would be an uproar from the school and local government lobbies about lost revenue, the sales tax as a funding source for these entities would have been reinstated if one of the following occurred between Jan. 1, 2016 and Dec. 31, 2020:

Total state appropriations in the school aid budget were less than that in the immediately preceding year; or,

Total state appropriations to cities, villages, townships and counties were less than in the immediately preceding year.

The Governor, most Senate Republicans and most House and Senate Democrats supported the Senate version of raising $1.2 billion in new revenue rather than shifting funds from local government to roads. Still, House Republicans stood firm on their plan and intense negotiations went well into the last two days of the lame duck session. During that time, several alternatives were discussed, such as imposing a service tax on “transportation-reliant services,” higher license registration fees, steeper fines for overweight trucks, and lowering weight limits on trucks.

In the end, a compromise was reached between House and Senate conferees, one that requires approval by the voters. The compromise:

Places a constitutional ballot proposal before the voters to increase the sales tax from the current 6 percent to 7 percent;

Ends sales taxes on motor fuel, but converts the fuel tax to a wholesale tax, which increases the overall tax and dedicates it to transportation; and

Adds $95 million in license registration fees, with $50 million paid by heavy trucks.

In order to gain support from legislative Democrats for the ballot proposal to raise the sales tax, the compromise:

Restores the Earned Income Tax Credit to the rate it was before being reduced in 2011; and

Eliminates all diversions from the School Aid Fund (SFA). In recent years SFA has helped fund colleges and universities.

The proposal will be on the May 5 ballot and it is expected that advocates will spend millions to obtain approval by the voters.

Senate Bills 1128, 1129 and 1130 require individuals to be tested for Hepatitis C upon being assigned to a correctional facility and prior to their release. One of the reasons for the move is the Legislature’s growing concern with the cost of medications for the treatment and care for the virus, adding up to nearly $100,000 per treatment. Other legislation classifies Hepatitis C as a communicable disease, making it a felony to not inform a sexual partner if the person infected knew of their condition. The bills sailed through the Senate but died in the House Appropriations Committee.

SB 993 would have made Michigan part of an interstate health care compact that oversees health care regulation. With Congressional approval, the authority for health insurance regulation pursuant to the Affordable Care Act (ACA) would rest with the states. The compact would have, among other things, allowed physicians to contract directly with the patient for care rather than having to comply with insurance regulations. The bill died on the House floor the last day of session.

House Bills 5839-5842 allow disciplinary committees to issue a permanent revocation of a license under certain circumstances, including convictions for assault with intent to murder, manslaughter, and first degree murder if the actions occurred within the health service the health service professional was licensed or registered to provide. The bills were enacted the last full day of the legislative session and have been signed by the Governor.

For nearly two years, Advanced Practice Registered Nurses (APRNs) have been promoting legislation that would, to an extent, allow them to engage in the practice of medicine. For instance, APRNs would be given prescriptive authority and would be authorized to conduct laboratory testing and imaging in order to reach a diagnosis. Moreover, APRNs would have this authorization without having to rely on the supervision or collaboration of a physician. Physician groups vehemently opposed the measure. Nevertheless, it narrowly passed the Senate by a 20-18 vote in November 2013. Upon its arrival in the House, it was referred to the House Health Policy Committee. A hearing on the bill before that committee took place on Sept. 30. Nurses and physicians testified on the bill, including representatives of the Michigan Radiological Society, Family Practice Physicians and the Dean of the University of the Michigan School of Nursing. However, no committee vote was taken on the bill. In spite of intense pressure placed on lawmakers, no further action was taken and SB 2 died.

Legislation banning the sale of electronic cigarettes to minors had passed the House and Senate six months ago. However, Gov. Rick Snyder wanted a measure that would discourage consumption, like taxing e-cigarettes if not in the full amount as tobacco, in such a way as to discourage their use. In fact, behind the scenes the Gov. threatened to veto the package. The Senate delayed official presentment to the Governor for six months. The Legislation has been now officially been presented to the Governor for his consideration.

For more than a year, a national organization called “Are you Dense?” has been seeking state legislation requiring mammography and breast imaging providers to notify patients if their breast tissue was dense and suggesting that those patients with dense breast tissue should seek alternative testing to determine whether they may have a higher risk for breast cancer. The medical community resisted such legislative initiatives as being not well grounded in science. First, they argue that breast density is not the highest risk for breast cancer. Secondly, mammography is still the state of the art for detection of breast cancer possibilities. Third, urging additional testing without a scientific basis for the same would do a disservice to the patient and would lead to overutilization of other imaging tests such as MRI. Nevertheless, legislation was introduced in the House and Senate that required notification of breast density and which suggested to the patient that more advanced alternative testing should be pursued. Arguing against legislation that had passed in 17 other jurisdictions in some form or another was very difficult. Consequently, breast imagers and other physicians providing women’s health care sought amendments to the legislation that would not convey to patients that higher breast density alone with a reason for concern or that alternative testing to mammography was a panacea. Finally, many in the medical community wanted time to educate physicians and facilities regarding the new notification law and to establish procedures and protocols for the notification.&nbsp; Eventually SB 879, with the amendments offered by breast imagers, was enacted with an effective date of June 1, 2015.&nbsp; This bill has been presented to the Governor and he is expected to sign it.

A number of attempts were made throughout the course of the legislative session to regulate the way pharmacy benefit managers (PBMs) conduct business with pharmacies. Legislation was introduced which would regulate a PBM’s audit of a pharmacy, require disclosure to pharmacies of information used to determine maximum allowable cost pricing and a requirement that a PBM could not arbitrarily exclude a pharmacy from its network called “any willing provider (AWP)” legislation. While the maximum allowable cost legislation was enacted earlier in the year, in the lame duck session the AWP measure was given consideration before the House Insurance Committee. The legislation met with significant opposition, especially from Michigan’s largest health insurer, Blue Cross and Blue Shield, which controls approximately 70 percent of the commercial health insurance market. In the end, the bill died.

HB 4736 authorizes expedited partner therapy (EPT) for the treatment of sexually transmitted infections. Specifically, a health professional would be authorized to dispense or prescribe a drug for the partner of a patient diagnosed with a sexually transmitted infection without directly examining the partner. The bill also does not hold a health professional liable for damages in a civil action or subject to administrative action in connection with the delivery of EPT unless his/her action was grossly negligent. The bill was enacted prior to adjournment and the Governor is expected to sign it.

Two bills meant to regulate medical marihuana facilities and the use of the product died on the Senate Floor. HB 4271 provided that criminal, civil or other sanctions would not apply to a medical marihuana provisioning center or its agents, qualifying patients or a primary care giver for activities involving the purchase, receipt, sale, possession or transfer of marihuana. The bill also would have allowed municipalities to prohibit the operation of provisioning centers within a municipality. The bill died in the Senate.

HB 5104 would have prevented a person from being penalized for manufacturing a marihuana-infused product if the person was a registered patient, a primary care giver, or a provisioning center. The bill also would have established as a felony the unauthorized transfer of a marihuana-infused product. As was the case with HB 4271, this bill died.

EXECUTIVE BRANCH ACTION REGARDING HEALTH CARE

Parents or legal guardians of children who seek a vaccination for their child will now have to be instructed by a local health care worker about diseases the vaccinations intend to prevent and sign a uniform state form in order to waive those vaccinations. The signed statement includes an acknowledgement of the risks of refusing vaccines. This rule change by the Department of Community Health was approved by the Legislature’s Joint Committee on Administrative Rules.

Gov. Snyder announced that federal funding in the amount of $70 million over the next four years will be coming to support innovative health care enhancements that benefit families. The U.S. Department of Health and Human Services will fund Michigan’s “Blueprint for Health Innovation,” a plan designed to create better coordination of care, lower costs and improve outcomes. The model emphasizes a comprehensive approach to health care involving safe and healthy communities, workplaces and lifestyles.

Michigan’s version of Medicaid expansion enabled by the ACA was enacted by the Legislature in 2013, became effective in late March of 2014 and was commenced on April 1. It was estimated that enrollment in the Healthy Michigan Plan in its first full year could reach 450,000. However, not yet nine months into the program, enrollment has exceeded half a million participants. Estimates now exceed 650,000 as the number of people the program will eventually serve.

House Bill 5958 would have created the Religious Freedom Restoration Act (RFSA). The legislation would have prohibited the government from substantially burdening a person’s exercise of religion, even if the burden was the result of a law of general applicability. The government could have substantially burdened a person’s exercise of religion only if it demonstrated a compelling state interest to do so and it was the least restrictive means of furthering that interest. The legislation passed on a party line vote in the House (59-50), but died on the Senate floor the last day of the session.

CIVIL RIGHTS FOR LESBIAN, GAY, BISEXUAL AND TRANSGENDERED INDIVIDUALS

Introduced the same day as RFRA was HB 5859, which amended Michigan’s Elliott-Larsen Civil Rights Act to give statutory protection from discrimination to those individuals of same sexual orientation. Introduction of HB 5859 at the same time as RFRA was no accident. It was meant as a counterweight or compromise to achieve passage for a measure which would be inclusive of the gay and lesbian community. In fact, it was seen by universities and businesses as a way to attract more professional talent to the state. However, the status of sexual identity was not included in the bill over the objections of the transgendered community. In the end, when the House majority could not obtain support for a measure including sexual identity, the gay and lesbian community withdrew its support because the bill, in their view, was not inclusive enough. Consequently, the bill died in the House.

PROHIBITION AGAINST STUDENT-ATHLETES UNIONIZING

In the wake of the union vote by the Northwestern University football team, HB 6074 was enacted to ban student-athletes in Michigan from unionizing. Specifically, it amends the Public Employment Relations Act to among other things exclude from the definition of “public employee” a student participating in intercollegiate athletics on behalf of a public university of this state. The vote of 59-50 in the House and 26-11 in the Senate was along party lines. The Governor has already signed the bill.

A package of bills (HBs 4927, 4928 and 4991) would have allowed faith based adoption agencies to deny placements where such placements would be contrary to their sincerely held religious beliefs. The three bills would have amended three separate laws, the Adoption Code, the Act regulating child care organizations and the Social Welfare Act. If a child placement agency declined to provide the service, it would have been required to use its best efforts to promptly refer the applicant to another child placing agency willing and able to provide the service. The bills passed the House, but were stranded on the Senate floor and died.

SB 783 would have allowed landlords to include a prohibition against growing or smoking medical marijuana in the lease for the premises. After passing the Senate and House committee, the bill was left on the House floor and officially died on Dec. 30.

HB 4186 allows for more crimes to be expunged from a person’s criminal record. Among other things, the bill:

Allows a person to petition the court to set aside a conviction if that person was convicted of not more than one felony or two misdemeanors;

Allows a person who was convicted of not more than two misdemeanors to petition the court to set aside one or both; and

Allows an expunction for 4<sup>th</sup> degree criminal sexual contact only if the conviction occurred before the bill’s effective date and the applicant has not been convicted of another offense except for one or two minor offenses.

The bill was enacted on the last full day of session and has been presented to the Governor.

House Bills 5928-5930 were bills aimed at fact-finding the effectiveness of current sentencing practices and, if appropriate, making recommendations for change. The bills would have created the Criminal Justice Policy Commission within the Legislative Council. The Council would have been required to report to the House Speaker and Senate Majority Leader on any recommendations for sentencing reforms. The package also would have allowed a judge to reduce or terminate a person’s probation after the person served one-third of that probationary period. It would have created the “Swift and Sure Probation Supervision Fund” and require the state Treasurer to allocate money toward grants for the program. It was this part of the three bill package the Senate rejected on the last day of session.

Another package of bills (HB 4206, 5582 and 5585) would have expanded those who could be sentenced under the Holmes Youthful Trainee Act. These bills died on the Senate floor on the last day of session.

Two recently introduced bills that would have prohibited coercing a woman into having an abortion were given swift approval by the Senate. SBs 1156 and 1157 were passed despite the opposition of many who felt the term “coercion” was much too broad. Abortion rights advocates believe the bills should also have a provision prohibiting someone from coercing a woman from having to keep her pregnancy against her will. While these bills passed the Senate, they eventually died in a House committee.

Late in the session, a bill was introduced which would have eliminated the winner take all vote of Michigan’s Electoral College votes in presidential elections. Had the bill passed, the electoral votes would have been allocated as follows:

The candidate of the party receiving the most statewide popular votes would have been given one-half of the presidential electors plus one additional elector;

The political party of the candidate receiving the most statewide popular votes would have been allocated one additional presidential elector for every 1.5 percent of the vote that candidate received over 50 percent of the popular vote; and

Any remaining presidential electors would have been allocated to the political party of the candidate receiving the second most popular votes for president.

Critics of the proposal said Michigan, like most states, has always been a winner-take-all jurisdiction. Democrats said the legislation was a purely political move by Republicans to gain something out of nothing, as the last time a GOP presidential candidate carried the state was George H.W. Bush in 1988. In the end, neither the Majority Leader nor Gov. Snyder wanted to attempt changing the current system and the bill died.

At the request of the national Republican Party, SB 1159 and 1160 were introduced to change the date of a presidential primary to the third Tuesday in March.&nbsp; The bills passed in the Senate, but died in the House.

SB 1167, which eliminates the requirement for petition circulators to be registered voters, was enacted on the last day of session and has been approved by the Governor.

SB 891, which was enacted, amends Part 201 (Environmental Remediation) of the Natural Resources and Environmental Protection Act to revise provisions related to the cleanup of contamination. Among other things, the bill:

Defines terms such as “residential” and “non-residential” with regard to cleanup criteria categories;

Allows a facility owner or operator seeking an exemption from liability for a release to request and receive from the Department of Environmental Quality (DEQ) a determination that the owner’s failure to comply within the time frame in Part 201 for conducting a baseline environmental assessment was inconsequential;

Deletes a requirement that in the selection and implementation of remedial actions, the DEQ show a preference for those that permanently and significantly reduce the volume of toxicity, or mobility of hazardous substances;

Deletes certain language dealing with modifications of a past closure plan through a post closure agreement;

Modifies provisions for site specific criteria regarding drinking water standards and land and resource use restrictions; and

Allows a hazardous waste corrective action to be implemented using the cleanup criteria of Part 201.

The votes in both Houses were pretty much along party lines with Republicans voting in favor and Democrats opposed.&nbsp; The bill has been presented to the Governor for his approval.

The long awaited comprehensive changes to Michigan’s 40-year-old No-Fault Auto Insurance law never came about. They key issue, one in which the majority Republicans could never coalesce around, was placing a cap on personal injury protection (PIP) benefits. HB 4612 went through many twists and turns as did proposals from House leadership. Since Michigan is the only state that has unlimited PIP benefits in cases of catastrophic auto accidents, insurers were urging the Legislature to give them some relief as well as their policyholders in the form of lower premiums. In addition, proponents of revision not only sought a cap on PIP, but also fee schedules and even a managed care health plan option. In the end, the Republicans could not get enough members to vote for the measure, or even agree to any form of cap on PIP benefits. One reason was the fact that many House Republicans represent suburban and northern Michigan districts where a hospital or health system is the major employer. Hospitals were adamantly opposed to limiting PIP benefits and a fee schedule.

The Legislature came close to enacting HB 5823, which would have amended the Insurance Code to do, among other things:

Require an insurer to maintain a risk management framework to assist in assessing risk;

Require an insurer to regularly conduct an own risk and solvency assessment (ORSA);

Require the ORSA to be conducted annually;

Require that an annual ORSA Report be submitted to the Director of the Department of Insurance and Financial Services; and

Exempt an insurer from the act’s requirements if it has premiums of less than $500 million or, if it is a member of an insurance group, $1 billion.

After coming back from the Senate in substitute form during the final hours of session, the bill died on the House floor as it was tie-barred to the Holding Company legislation which came back from the Senate in a form that was objectionable to the House.

The Legislature came close to enacting HB 5792, which would have amended Chapter 13 of the Insurance Code regarding Holding Companies. Among other things, the bill would have:

Required confidential notice of divestiture for those seeking to do so;

Required the controlling interest in an insurer to file an annual enterprise risk report with the director;

Allowed the director to hold a public hearing to receive evidence and take testimony of parties affected by the merger or acquisition of an insurer; and

Enabled the director to require an insurer to produce information, even information not in the insurer’s possession, if it could be obtained by the insurer.

HB 4001, which amends Michigan’s Freedom of Information Act (FOIA), was enacted the last day of session. The bill regulates the fees a public body can charge when fulfilling a request made pursuant to the FOIA. Specifically, the bill, among other things:

Provides that the total fee could not exceed the sum of component parts as specified in the bill;

Requires a public body to furnish a public record without charge for the first $50 instead of the current $20;

Requires a public body to reduce its charges for labor costs if it did not respond to the FOIA request in a timely manner;

Allows a person to appeal the fee imposed to the head of the public body; and

Requires that an action against a public body for a violation of FOIA be brought in the Court of Claims rather than a Circuit Court.

The bill has been ordered enrolled and will then be presented to the Governor.

On Dec. 29, Gov. Snyder named Department of Community Health Director Nick Lyon as Interim Director of the Department of Human Services. That post was vacant due to the resignation of Maura Corrigan, former Chief Justice of the Michigan Supreme Court.

GOVERNOR CREATES NEW DEPARTMENT AND AGENCY

On Dec. 18, Gov. Snyder signed an Executive Order creating the Department of Talent and Economic Development (TEDD) and the Michigan Talent Investment Agency. Under the Executive Order, the Michigan State Housing and Development Authority and the Michigan Strategic Fund and associated programs will be within TEDD. The Executive Order also authorizes the director of TEDD to become the Michigan Economic Development Corporation (MEDC) CEO if the MEDC executive committee makes that determination.

The Talent Investment Agency will coordinate all programs across the executive branch of government involving job preparedness, career based education, training for skilled trades and programs targeted at the structurally unemployed.

The Governor also announced leadership changes. Mike Finney, CEO of the MEDC, will take on the new role of Senior Advisor for Economic Growth on the Governor’s executive staff. MEDC Executive Vice President and CEO Steve Arwood will serve as the new director of TEDD. Stephanie Comai, the current deputy director of the Department of Licensing and Regulatory Affairs, will be director of the Talent Investment Agency and will serve as a member of the cabinet.

Senior Counsel

James G. “Jim” Cavanagh

Government Advocacy and Affairs

From the Capitol – January 2015

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From the Capitol – January 2015

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