Department of Health and Human Services v Nrk Rx, Inc
Key claim: The Michigan Supreme Court held that in a civil action by DHHS alleging Medicaid overpayment and tort claims against a pharmacy, the mandatory tort venue statute (MCL 600.1641(2)) controls over the permissive Attorney General venue statutes, and venue is proper in Ingham County as the situs of the original injury.
Abstract
Michigan Supreme Court opinion decided 2026-06-08. Michigan Supreme Court Lansing, Michigan
Syllabus Chief Justice: Justices: Megan K. Cavanagh Brian K. Zahra Richard H. Bernstein Elizabeth M. Welch Kyra H. Bolden Kimberly A. Thomas Noah P. Hood
This syllabus constitutes no part of the opinion of the Court but has been Reporter of Decisions: prepared by the Reporter of Decisions for the convenience of the reader. Kimberly K. Muschong
DEPARTMENT OF HEALTH AND HUMAN SERVICES v NRK RX, INC
Docket No. 167917. Argued January 21, 2026 (Calendar No. 1). Decided June 8, 2026.
The Department of Health and Human Services (DHHS)—represented by the Attorney
General—filed a five-count civil action in the Ingham Circuit Court against NRK RX, Inc., and
Raad Kouza, alleging, among other things, that defendants tortiously converted overpaid Medicaid
funds. Defendants operated a pharmacy enrolled with DHHS to provide services to eligible
Medicaid beneficiaries. Under this arrangement, NRK purchased various medications for these
beneficiaries and then billed Medicaid to recover the costs associated with the purchases. DHHS,
as administrator of Michigan’s Medicaid program, was responsible for overseeing NRK’s
Medicaid-related billing. DHHS audited NRK’s Medicaid claims and concluded that between
2011 and 2016, NRK billed Medicaid for a higher quantity of drugs than NRK’s wholesaler sales
records supported. NRK challenged this determination before an administrative law judge (ALJ),
who upheld the overpayment amount and recommended that DHHS affirm its decision to recover
the overpayments. DHHS adopted the ALJ’s recommendation and issued a final order to collect
the alleged overpayment from NRK. Several unsuccessful challenges to DHHS’s final order
followed. In 2022, DHHS filed its complaint, seeking enforcement of DHHS’s final order and
alleging that defendants’ failure to repay the alleged overpayment constituted common-law and
statutory conversion; the complaint further alleged breach of contract and unjust enrichment.
Defendants moved to change venue from Ingham County to Wayne County, arguing that the tort
venue provisions—MCL 600.1629 and MCL 600.1641(2)—controlled venue in this case rather
than the Attorney General venue provisions—MCL 14.102 and MCL 600.1631(a)—because tort
allegations were part of the pleadings. Defendants further contended that Wayne County was the
most appropriate venue under these provisions because that is where Kouza resided and where the
cause of action arose. The trial court, James S. Jamo, J., granted defendants’ motion in part and
transferred the case to the Oakland Circuit Court instead of the Wayne Circuit Court based on its
determination that the original injury occurred in Oakland County, where NRK had its registered
office and, accordingly, where defendants refused to return the sought electronic funds. DHHS
appealed, and the Court of Appeals, RIORDAN, P.J., and O’BRIEN, J. (N. P. HOOD, J., dissenting),
affirmed, holding that the tort venue statutes controlled over the Attorney General statutes by way
of MCL 600.1641(2) and that venue was proper in Oakland County. ___ Mich App ___ (2024).
DHHS sought leave to appeal in the Supreme Court, and the Supreme Court granted the
application. ___ Mich ___ (2025).
In an opinion by Chief Justice CAVANAGH, joined in full by Justices BERNSTEIN and BOLDEN, joined by Justices ZAHRA and THOMAS as to Part III(A) only, and joined by Justice WELCH as to Part III(B) only, the Supreme Court held:
The Court of Appeals correctly held that MCL 600.1629(1) controls the venue
determination in this case, but the Court of Appeals erred by holding that venue was proper in Oakland County under that provision; venue was proper in Ingham County because Ingham County was the situs of the original injury and where DHHS resides, has a place of business, or conducts business.
1. Venue concerns the appropriate forum in which to bring and try a case, and this inquiry
is controlled by statute in Michigan. This case required analysis of the proper relationship between the Attorney General venue statutes—MCL 14.102 and MCL 600.1631(a)—and the tort venue statutes—MCL 600.1641(2) and MCL 600.1629—as applied to this action. MCL 14.102 states, in pertinent part, that any action at law brought by the Attorney General in the name of the state or of the people of the state, for the use and benefit thereof, may be begun in the circuit court in and for the county of Ingham, and may be prosecuted to final judgment and satisfaction thereof, with like effect as though the cause of action arose in such county. MCL 600.1631(a) similarly provides that the county in which the seat of state government is located—i.e., Ingham County— is a proper county for the Attorney General to bring suit. Both Attorney General statutes use permissive rather than mandatory language. MCL 14.102 states that the Attorney General “may” bring certain cases in Ingham County, and MCL 600.1631(a) designates Ingham County as “a proper county”—not the proper county. Accordingly, the Attorney General venue statutes do not require venue to be placed in Ingham County.
Turning to the tort venue statutes, each subsection of MCL 600.1629 includes substantially
the same indefinite, permissive “a” county language employed in MCL 600.1631(a); however, MCL 600.1641(2) provides that if more than one cause of action is pleaded in the complaint or added by amendment at any time during the action and one of the causes of action is based on tort or another legal theory seeking damages for personal injury, property damage, or wrongful death, venue shall be determined under the rules applicable to actions in tort as provided in MCL 600.1629. The use of “shall” in this provision makes it a mandatory provision that demands the application of MCL 600.1629 over the permissive Attorney General venue statutes in this case. Because DHHS pleaded more than one cause of action in its complaint and one of the causes of action was based on tort, MCL 600.1641(2) applies here. Accordingly, the Court of Appeals correctly determined that MCL 600.1641(2) compelled the application of MCL 600.1629 in this case.
2. Under the tort venue rules set forth in MCL 600.1629, MCL 600.1629(1)(a) and (b)
require a determination of the county in which the original injury occurred. The history of the relevant language in MCL 600.1629(1) informs its current meaning. MCL 600.1629 was amended in 1995 to replace the phrase “[a] county in which all or part of the cause of action arose” with the current phrase “[t]he county in which the original injury occurred.” This amendment considerably limited the county in which a cause of action can be brought—the amended statute requires that courts look to the first injury resulting from an act or omission of a defendant to determine where venue is proper. In this case, DHHS alleged that defendants committed common-law and statutory conversion by failing to return Medicaid overpayments. Because the operative inquiry was the location where DHHS suffered the first actual injury result
Why this matters
The ruling settles where DHHS must litigate Medicaid overpayment recovery actions that include tort claims against providers, channeling such suits to Ingham County rather than allowing the Attorney General to choose venue under permissive AG venue statutes. For pharmacies and other Medicaid providers facing state recoupment actions, this creates a predictable, centralized forum and affects litigation strategy without altering substantive Medicaid fraud liability.