Background
NRK RX, Inc., a pharmacy owned by Raad Kouza, was enrolled with the Michigan Department of Health and Human Services (DHHS) to dispense medications to Medicaid beneficiaries and bill the program for reimbursement. A 2016 DHHS audit concluded that NRK had billed Medicaid for a larger quantity of drugs than its wholesale purchase records could support, yielding a final alleged overpayment of $541,590.71. After an administrative law judge upheld the overpayment finding and DHHS issued a final collection order, defendants exhausted multiple unsuccessful challenges in both administrative and judicial forums.
In 2022, DHHS—represented by the Attorney General—filed a five-count civil action in Ingham Circuit Court seeking enforcement of the final order and asserting common-law and statutory conversion, breach of contract, and unjust enrichment. Defendants moved to transfer venue to Wayne County, arguing that the tort venue statutes (MCL 600.1641(2) and MCL 600.1629) controlled over the permissive Attorney General venue statutes (MCL 14.102 and MCL 600.1631(a)). The trial court transferred the case not to Wayne County but to Oakland County, finding the original injury occurred where NRK’s registered office was located. The Court of Appeals affirmed, holding Oakland County was the situs of the original injury because that is where defendants converted the Medicaid funds.
DHHS sought leave to appeal in the Michigan Supreme Court, which granted the application and directed briefing on the relationship among the four competing venue statutes and the proper location of the “original injury” under MCL 600.1629.
The Court’s Holding
The Supreme Court, in an opinion by Chief Justice Cavanagh, agreed with the Court of Appeals that MCL 600.1641(2) mandates application of the tort venue rules whenever a complaint pleads more than one cause of action and at least one sounds in tort. The Attorney General venue statutes—MCL 14.102 and MCL 600.1631(a)—use permissive language (“may” and “a proper county”), whereas MCL 600.1641(2) uses the mandatory term “shall.” Because the Legislature employed an unqualified mandatory directive without carving out any exception for the Attorney General, the tort venue framework of MCL 600.1629 controls here and overrides the permissive AG venue provisions.
The Court parted ways with the Court of Appeals, however, on where the “original injury” occurred under MCL 600.1629. The Court traced the 1995 amendment that replaced “where the cause of action arose” with “the county in which the original injury occurred,” which narrowed the inquiry to the plaintiff’s first actual injury rather than the location of the defendant’s wrongful act. For DHHS’s conversion claim, the first actual injury was the deprivation of possession and control over the electronic funds—and that loss was felt in Ingham County, where DHHS is headquartered and administers Michigan’s Medicaid program. Because Ingham County is also where DHHS resides, has a place of business, and conducts business, venue was proper there under MCL 600.1629(1)(b)(i).
The Court affirmed the Court of Appeals in part (tort venue statutes control), reversed in part (original injury occurred in Ingham, not Oakland, County), and remanded to the Oakland Circuit Court for entry of an order transferring the case back to the Ingham Circuit Court. Justice Welch concurred in the Ingham County result but would have harmonized the AG and tort venue statutes rather than treating the latter as displacing the former. Justices Thomas and Zahra agreed that tort venue governs but dissented on the situs of injury, arguing the original injury of a conversion claim occurs where the defendant wrongfully retained the property—Oakland County in their view. Justice Hood did not participate due to his prior service on the Court of Appeals panel.
Key Takeaways
- When the Attorney General files a multi-count complaint that includes even one tort claim, MCL 600.1641(2)’s mandatory “shall” compels venue analysis under MCL 600.1629, overriding the permissive AG venue statutes that would otherwise allow filing in Ingham County as of right.
- The “original injury” under MCL 600.1629 is determined by where the plaintiff first suffered actual harm, not where the defendant was located when the wrongful conduct occurred—a distinction with significant practical consequences for state-agency plaintiffs headquartered in Ingham County.
- Because DHHS’s first actual injury (loss of control over the Medicaid funds) was felt at its Ingham County headquarters, Ingham County satisfies MCL 600.1629(1)(b)(i) as the county where both the original injury occurred and the plaintiff conducts business.
- The Legislature’s use of “a proper county” rather than “the proper county” in both MCL 14.102 and MCL 600.1631(a) confirms those provisions are permissive—they create an option, not an entitlement, to venue in Ingham County.
Why It Matters
This decision resolves a structural tension in Michigan’s venue framework that arises whenever the Attorney General pursues a mixed pleading—combining tort theories with contract, equitable, or enforcement claims. By holding that MCL 600.1641(2)’s mandatory language displaces the AG’s traditional home-court advantage in Ingham County, the Court effectively requires the Attorney General to satisfy the plaintiff-side criteria of MCL 600.1629 to retain Ingham County as the forum. For state agencies headquartered in Lansing, that standard will often be met, but the path now runs through the tort venue statute, not the AG venue statute—a distinction that matters when defendants are located outside Ingham County and seek transfer elsewhere.
The decision also clarifies the “original injury” standard for conversion claims under MCL 600.1629, emphasizing a plaintiff-centric inquiry focused on where the deprivation was first experienced rather than where the defendant’s wrongful act occurred. This holding has implications beyond Medicaid enforcement—it guides venue analysis in any Michigan tort suit where a government plaintiff suffers financial harm at its administrative seat while the alleged wrongdoing takes place elsewhere.