Despite Supreme Court Vaccine Mandate Defeat, OSHA Still has Authority to Regulate COVID-19 Workplace Safety

The major headlines about the Occupational Safety and Health Administration (OSHA) and COVID-19 over the last few weeks have all been focused on the fact that on January 13, 2022, the United States Supreme Court blocked OSHA’s vaccine mandate for employers with 100-plus employees. On January 25, 2022, OSHA officially withdrew the mandate.

But that doesn’t mean that OSHA has no role in enforcing workplace safety in connection with COVID-19. A stark reminder of OSHA’s enduring enforcement powers is a recent case in which significant fines were proposed by OSHA against an Ohio-based auto supplier because it failed to follow its own policies and federal guidance related to COVID-19 health and safety protocols.

OSHA’s Investigation and Allegations

According to a January 14, 2022, news release from OSHA, a complaint was lodged against the auto supplier alleging that it ignored guidelines to limit employee exposure to COVID-19 and that several employees became sick. OSHA then launched an investigation.

During its first inspection of the facility, OSHA found that 65 employees had tested positive for COVID-19. A few days later, 88 had tested positive. Five employees were hospitalized and two died, and OSHA determined that at least one of the deaths was work-related.

While investigators determined that the company issued a corporate-wide social distancing policy in March 2020 and trained employees in May 2020 on precautions for returning to work that included social distancing and mask wearing, OSHA found that the company did not adhere to these policies during the COVID-19 outbreak and OSHA inspection.

OSHA cited the company and proposed penalties of $26,527.

Implication for Employers

Given that we have now been dealing with the COVID-19 pandemic for two years, employers (and their employees) are understandably fatigued and finding it difficult to remain vigilant in terms of maintaining COVID-19 safety protocols. Many welcomed the Supreme Court’s ruling blocking OSHA from enforcing its large employer vaccine mandate. However, it’s important for employers to remember that OSHA—as well as other federal, state and local regulatory authorities—are still investigating violations of safety protocols, and levying penalties when appropriate.

Indeed, as demonstrated by the Ohio auto supplier case described above, OSHA still has the authority to regulate workplace safety—notwithstanding the Supreme Court’s ruling. OSHA’s authority derives from several provisions of federal law, including 29 C.F.R. § 1910.132-140 (Personal Protective Equipment), 29 C.F.R. § 1904 (Recording and Reporting Occupational Injuries and Illnesses), and 29 U.S.C.A. § 654 (General Duty Clause).

Accordingly, vigilance remains essential. If your business hasn’t audited its COVID-19 protocol compliance recently, or is uncertain of its obligations, please contact your Fraser Trebilcock attorney.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.


Elizabeth H. Latchana, Attorney Fraser TrebilcockElizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.


Lauren  D.  Harrington is an associate attorney at Fraser Trebilcock focusing on Employment Law. You can reach her at 517.377.0874, or email her at lharrington@fraserlawfirm.com.

Michigan Law Imposes New Product Liability Insurance Requirements on Legal Cannabis Licensees

At the end of 2021, the Michigan legislature passed and Governor Whitmer signed into law a new cannabis liability insurance law that mandates proof of product liability insurance coverage for licensed cannabis businesses and new applicants. The new rules take effect March 30, 2022.

Michigan Senate Bill 461 (Public Act 160 of 2021) requires every licensee or applicant to file with the Michigan Marijuana Regulatory Authority (MRA): “[P]roof of financial responsibility for liability for bodily injury to lawful users resulting from the manufacture, distribution, transportation, or sale of adulterated marihuana or adulterated marihuana-infused product in an amount not less than $100,000.00 for each license.”

The statute defines “adulterated marihuana” as “a product sold as marihuana that contains any unintended substance or chemical or biological matter other than marihuana that causes adverse reaction after ingestion or consumption.”

Additional requirements include:

  • The insurance policy is issued by a licensed insurance company or licensed captive insurance company in Michigan.
  • The insurance policy does not include a provision relieving an insurer from liability for payment of any claim for which the insured may be held liable under the act.
  • Covers bodily injuries to a qualifying patient, including injuries that are caused by the intentional conduct of the licensee (but not if the licensee acted with the intent to harm).

In addition, a licensee must file an “attestation of compliance” with the requirements of the statute with the MRA, on a form approved by the MRA, which is signed by the officer of the licensed insurance company or licensed captive insurance company that issues the policy.

To the extent a licensee fails to maintain proof of financial responsibility as required under statute, the MRA will immediately suspend the licensee’s license until such proof is provided. A licensee also cannot cancel required liability insurance unless the licensee gives the MRA 30 days’ prior written notice and procures new proof of financial responsibility and delivers that proof to the MRA within 30 days after giving notice.

Given that this law takes effect on March 30, 2022, it is important for existing licensees and applicants to move fast in order to meet its requirements. For questions or assistance, please contact Paul Mallon or your Fraser Trebilcock attorney.


mallon-paulPaul C. Mallon, Jr.  is Shareholder and Chair of Fraser Trebilcock’s cannabis law practice. You can reach him at pmallon@fraserlawfirm.com or (313) 965-9043. 

The Importance of Uninsured/Underinsured Motorist Coverage in Michigan

Michigan’s auto insurance law requires drivers/owners of motor vehicles operated on Michigan streets/roads to carry three types of coverage: Personal injury protection (PIP) for medical expenses/work loss, property protection, and residual bodily injury and property damage liability. While these coverages are mandatory, you should also consider purchasing uninsured and underinsured motorist insurance coverage. You may already have this coverage, but if you are not sure, it is recommended that you contact your insurance agent and discuss these coverages.

Why is Uninsured/Underinsured Motorist Insurance a Good Idea?

Unfortunately, it is a fact of life that there are uninsured drivers everywhere. When individuals or families struggle financially, auto insurance may be one of the bills they can’t afford to pay. They think or hope they can get away without it by avoiding getting pulled over or being involved in a crash.

The Insurance Research Council (IRC) found one in eight U.S. drivers were uninsured in 2019. The rate of uninsured drivers varies significantly from one state to the next. For example, while 3.1% of New Jersey drivers were uninsured, 29.4% of Mississippi drivers lacked auto insurance.

Michigan’s rate of uninsured drivers fell 10.1 percentage points between 2015 and ’19, according to the IRC. Yet, 25.5% of Michigan drivers were still uninsured in 2019.

Michigan changed its auto insurance laws, and the new requirements went into effect July 1, 2020. However, we don’t know yet whether those changes, especially the opportunity to pay reduced premiums, will lower the rate of uninsured drivers.

Uninsured motorist coverage is helpful if one of the many uninsured drivers causes a crash and you or a family member is injured or worse. Uninsured motorist insurance helps you when the other driver failed to do what the law requires: purchase automobile insurance coverage. The purchase of underinsured motorist coverage is important to consider as well.

What is the Difference Between Uninsured and Underinsured Motorist Coverage?

Underinsured motorist coverage provides you and your family protection when an at-fault driver causes injury or death, but has purchased an inadequate level of liability coverage. At present, an owner of a vehicle need purchase only $100,000 of liability coverage. Underinsured motorist coverage will make up the difference between what the at-fault driver’s insurance provides and the measure of your or your family member’s damages. In other words, underinsured motorist coverage covers the “gap” between the available coverage from the at-fault driver and your damages. Note: You must purchase underinsured motorist coverage at a level in excess of $100,000 or the coverage becomes “illusory” because if the at-fault driver is insured he/she must have had at least $100,000 of liability insurance. Thus, if you purchase only $100,000 of underinsured motorist coverage, there will be no “gap.” You will end up paying a premium when there is no real coverage.

Does Michigan Require Uninsured/Underinsured Motorist Coverage?

As stated above, Michigan does not require drivers to carry uninsured or underinsured motorist coverage. It’s entirely optional. It’s simply another way to protect yourself, given its relatively inexpensive premium for the coverage; it is a recommended optional coverage.

When Does Uninsured/Underinsured Coverage Apply to a Crash?

To use uninsured motorist insurance, you’ll have to show:

  • You were not more at fault in causing the accident than the other driver, and
  • The at-fault driver doesn’t have liability insurance, or
  • You were a victim of a hit and run.

To use your underinsured motorist insurance, you’ll have to show:

  • You were not more at fault in causing the accident than the other driver, and
  • You or your family member recovers the maximum benefits possible under the at-fault driver’s policy, and
  • The at-fault driver’s insurance policy is inadequate to compensate for your or your family’s damages.

In either case, you’ll have to give your uninsured/underinsured motorist insurance provider reasonable notice of your claim. How long you have to tell the company depends on your policy’s language. Do not wait, or delay. Good advice – contact an attorney that specializes in no-fault automobile insurance law soon after your or your family member’s accident.

When Can an Insurer Deny an Uninsured/Underinsured Motorist Claim?

Uninsured/underinsured coverage replaces the other driver’s liability insurance, or lack thereof. If you were the primary cause of the crash, then this type of policy will not cover your or your family’s claim of injury or death.

Should I Buy Uninsured/Underinsured Motorist Coverage in Michigan?

If your budget allows for additional auto insurance coverage, then yes. It’s a smart idea to invest in uninsured/underinsured motorist coverage to protect yourself and your family. It helps to avoid financial catastrophe in the event the at-fault driver has failed to either purchase insurance or has purchased liability insurance at an inadequate level.

If you have any questions, please contact Gary, Emily, or your Fraser Trebilcock attorney. Fraser Trebilcock lawyers have expertise in insurance law and would be happy to  consult with you or a family member at no cost.


Fraser Trebilcock Shareholder Gary C. Rogers has firsthand experience with car/deer accidents, having been involved in four himself; Gary is recognized as one of the top civil defense attorneys in the area of automobile related cases, and he has co-written Michigan No-Fault Law-The Insurers’ Perspective, a handbook for handling claims under Michigan’s No-Fault Automobile legislation. Gary can be reached at grogers@fraserlawfirm.com or (517) 377-0828.


Emily M. Vanderlaan is a litigation associate at Fraser Trebilcock serving some of the largest and most sophisticated insurers in Michigan. From case evaluation, to settlement negotiations, to trial and appeal work, Emily has experience representing insurance companies in a wide range of cases in Michigan state courts. You can reach her at (517) 377.0882 or at evanderlaan@fraserlawfirm.com.

Ward off 2022 Tax Season Flu – File Early and Electronically

My grandfather was very understated, if he said he was “concerned” it meant he was worried sick about it. If he said he was “worried,” he meant, “all hands on-deck, 5 alarm fire, women and children to the life boats.” So, it is with that the Internal Revenue Service kicked off the 2022 tax filing season this week with an urgent reminder to taxpayers to take extra precautions this year to file an accurate tax return electronically to help speed refunds. “Urgent” may be a bit of an understatement. IRS commissioner, Chuck Rettig, recently commented, “In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs.” He also noted the agency’s inability to respond to a record number of phone calls. 

As of the start of this tax season, the IRS has at least 10 million unprocessed returns from last year. Paper is kryptonite to the IRS, accounting for most of their backlog and workforce requirements during tax season. Certainly, yes, the pandemic and the requirement to work remotely has contributed to the IRS’s woes this year, but it’s not just COVID-19 affecting the IRS, there are systemic issues as well. Since 2010, the number of individual returns has increased nearly 20%, while the agency’s workforce has shrunk 17%. This circumstance has caused the IRS to pivot its workforce at its various Service Centers (offices where the bulk of most of the IRS customer facing functions occur) from their normal functions to simply processing returns and, where possible, requiring overtime by IRS employees. Anecdotally, IRS Service Centers are shutting down their taxpayer service operations for the next 5 or 6 months just to process returns. And, the IRS announced just today, January 28, its’ intention to stop some notices to taxpayers as they increase resources to process backlogged returns. “We decided to suspend notices in situations where we have credited taxpayers for payments but have no record of the tax return being filed,” the IRS said in a statement. “In many situations, the tax return may be part of our current paper tax inventory and simply hasn’t been processed.” This action is designed to ward off additional correspondence with taxpayer that would only add to the paper logjam plaguing the agency.

So, what can you do to avoid or minimize your tax season frustration? Filing early and electronically is a way – perhaps the only way – to avoid frustration. 

Filing electronically and early has the added benefit of receiving your tax refund sooner. Several factors can determine when you may receive your tax refund, including: 

  • How early you file
  • Whether the return is e-filed or sent by mail
  • If you are claiming certain credits (especially EITC and CTC)
  • If you have an existing debt to the federal government
  • The COVID stimulus payments sent out earlier in 2021 will not affect your income tax refund (however, if you were entitled to a stimulus check, but did not receive one, it can be added to your 2022 refund as a credit . . . but it will slow receipt down). 

The chart below shows the 2022 IRS Refund Schedule. Of course, it is not exact – the internal situation at the IRS and your own situation could cause delays. 

IRS Accepts E-Filed Return By: Direct Deposit Sent (Or Paper Check Mailed One Week Later):
January 24January 31 (February 11)**
January 31February 11 (February 18)*
February 7February 18 (February 25)*
February 14February 25 (March 4)*
February 21March 4 (March 11)*
February 28March 11 (March 18)
March 7March 18 (March 25)
March 14March 25 (April 2)
March 21April 1 (April 9)
March 28April 8 (April 15)**
April 4April 15 (April 22)**
April 11April 22 (April 29)**
April 18April 29 (May 6)
April 25May 6 (May 13)
May 2May 13 (May 20)
May 9May 20 (May 27)
May 16May 27 (June 4)
May 23June 4 (June 11)

* = Returns with EITC or CTC may have refunds delayed until March to verify credits.

** = Filing during peak season can result in slightly longer waits.


If you have any questions, please contact your Fraser Trebilcock attorney.


Fraser Trebilcock attorney Paul V. McCord has more than 20 years of tax litigation experience, including serving as a clerk on the U.S. Tax Court and as a judge of the Michigan Tax Tribunal. Paul has represented clients before the IRS, Michigan Department of Treasury, other state revenue departments and local units of government. He can be contacted at 517.377.0861 or pmccord@fraserlawfirm.com.

FAQs Spell Out Employer-Sponsored Health Plan Requirements for Reimbursing Over the Counter COVID Tests Effective as of January 15, 2022

Effective January 15, 2022, employer-sponsored group health plans and health insurers are required to provide reimbursement to plan participants, or to provide coverage to plan participants, for over-the-counter (“OTC”) COVID-19 self-tests. No cost sharing (such as deductibles), prior authorization or other medical management requirements can apply.

These and other explanations of coverage requirements for OTC COVID-19 testing are addressed in guidance issued in a “Frequently Asked Questions” format on January 10, 2022. The FAQs were prepared jointly by the Departments of Labor, Health and Human Services (HHS), and the Treasury (collectively, the “Departments”) regarding implementation of the Families First Coronavirus Response Act (FFCRA), the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and the Affordable Care Act.

Some of the important issues addressed in the FAQs include the following:

  • A plan or insurer is not required to provide coverage by reimbursing sellers of OTC COVID-19 tests directly (i.e., direct coverage). Instead it may require a participant, beneficiary, or enrollee to submit a claim for reimbursement to the plan or insurer. However, the FAQs state that plans and insurers are strongly encouraged to provide direct coverage for OTC COVID-19 tests without requiring participants, beneficiaries, or enrollees to provide upfront payment and seek reimbursement.
  • To the extent a plan or insurer provides direct coverage for tests, it may not limit coverage to only tests that are provided through preferred pharmacies or other retailers, and must take reasonable steps to ensure that participants have adequate access to tests through an adequate number of retail locations (including in-person and online locations).
  • Reimbursement of tests from non-preferred pharmacies or other retailers may be limited to no less than the actual price, or $12 per test (whichever is lower); however plans and insurers may elect to provide more generous reimbursement up to the actual price of the test.
  • A plan or insurer may limit the number of tests covered to no less than 8 tests per 30-day period.
  • Plans and insurers are permitted to address suspected fraud and abuse. The FAQs state, for example, that a plan or insurer may require (i) an attestation that the OTC COVID-19 test was purchased by the participant for personal use, not for employment purposes, and (ii) reasonable documentation (such as a UPC code) of proof of purchase with a claim for reimbursement.

The Centers for Medicare and Medicaid Services also issued a set of FAQs on January 10, 2022, explaining to consumers “How to get your At-Home Over-The-Counter COVID-19 Test for Free.”

We will continue to keep you updated regarding new developments on these issues. Given the nationwide lack of availability of tests, and many insurers indicating that they cannot meet the January 15 deadline, it may be a rocky start for this program.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.


Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.


Brian T. Gallagher is an attorney at Fraser Trebilcock specializing in ERISA, Employee Benefits, and Deferred and Executive Compensation. He can be reached at (517) 377-0886 or bgallagher@fraserlawfirm.com.


Lauren  D.  Harrington is an associate attorney at Fraser Trebilcock focusing on Employment Law. You can reach her at 517.377.0874, or email her at lharrington@fraserlawfirm.com.

Client Alert: SCOTUS Rules on Vaccine Mandate – OSHA’s Mandate Stricken; CMS Mandate Upheld

New Deadlines for Compliance Have Been Announced


On Thursday, January 13, 2022, the Supreme Court of the United States released opinions on the much anticipated vaccine mandate litigation. As discussed in our previous blog posts, late last year the Occupational Safety and Health Administration (OSHA) and the Center for Medicaid and Medicare Services (CMS) published two different vaccine mandates to respond to everlasting Covid-19 pandemic. OSHA’s mandate required all private employers of 100+ to enforce Covid-19 vaccinations on employees OR require them to wear a mask and test weekly. (OSHA COVID-19 Vaccination and Testing Emergency Temporary Standard.) CMS’ mandate subjected virtually all health care workers who work for providers and suppliers that participate in the Medicaid and Medicare programs to a Covid-19 vaccination requirement, allowing for religious and medical exemptions. (CMS Interim Final Rule: Omnibus COVID-19 Health Care Staff Vaccination.) Both mandates were challenged by conservative states resulting in a rollercoaster of litigation prohibiting and then again permitting enforcement. Just before SCOTUS heard the cases on January 7, 2022, the OSHA mandate had been validated by the Sixth Circuit Court of Appeals and OSHA had set new dates for enforcement to begin just a few days later. The CMS mandate, however, had been prohibited in 25 states and ordered eligible for enforcement in the other 25, District of Columbia, and US territories with deadlines for compliance of Phase 1 implementation set for January 27, 2022 and of Phase 2 implementation for February 28, 2022. Nonetheless, the Supreme Court released its decisions, and here is what you should know:

In the case of National Federation of Independent Business v. Department of Labor, the Supreme Court issued a stay on OSHA’s vaccine mandate, putting an indefinite hold on implementation and enforcement of the rule while its validity is challenged at the Sixth Circuit Court of Appeals. In the per curiam opinion, the court held: “Although Congress has indisputably given OSHA the power to regulate occupational dangers, it has not given that agency the power to regulate public health more broadly. Requiring the vaccination of 84 million Americans, selected simply because they work for employers with more than 100 employees, certainly falls in the latter category.” While this is not necessarily a final rule, it is almost impossible to foresee any difference in an outcome. The Supreme Court’s stay is a temporary halt as the merits are decided by the Sixth Circuit. However, even if the Sixth Circuit determines that the rule is valid, it will be appealed to the Supreme Court who has just expressed where it stands. Unless Congress takes any action, it will fall on states and employers to develop their own vaccine mandates and safety measures to combat Covid-19 in private workspaces.

Opposite to this defeat, the Biden administration received a victory with CMS’ health care worker vaccine mandate. In Biden v. Missouri, the Supreme Court by a 5-4 decision stayed the preliminary injunctions from the Eastern District of Missouri and the Western District of Louisiana, allowing the implementation and enforcement of the mandate in all jurisdictions except for Texas. Texas initiated its own litigation separate from the injunctions protecting the other 24 states and the Supreme Court’s ruling did not affect its current status. Considering the overwhelming support from health care workers and public health organizations, the court stated that “their support suggests that a vaccination requirement under these circumstances is a straightforward and predictable example of the health and safety regulations that Congress has authorized the Secretary to impose. We accordingly conclude that the Secretary did not exceed his statutory authority in requiring that, in order to remain eligible for Medicare and Medicaid dollars, the facilities covered by the interim rule must ensure that their employees be vaccinated against COVID–19.” As with the OSHA decision, this decision too is not a final rule but is unlikely to change once litigation on the merits proceeds through court channels.

As has been announced by several news articles quoting CMS officials today, the deadline to come into compliance (where employees are fully vaccinated) remains the same for the 24 states and D.C.  not protected by the Missouri and Louisiana injunctions  (including Michigan), which is February 28, 2022. As for the other 24 states (Alabama, Alaska, Arizona, Arkansas, Georgia, Idaho, Indiana, Iowa, Kentucky, Kansas, Louisiana, Missouri, Mississippi, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Utah, West Virginia, and Wyoming), health care facilities are required to have their staff fully vaccinated by March 15, 2022.

As deadlines approach, health care employers should consult with counsel as quickly as possible to establish the policies and procedures necessary to meet the rule’s requirements. Vaccinations are the pinnacle of the mandate, but there is work needed to facilitate reaching that goal.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.


Lauren  D.  Harrington is an associate attorney at Fraser Trebilcock focusing on Employment Law. You can reach her at 517.377.0874, or email her at lharrington@fraserlawfirm.com.


Elizabeth H. Latchana, Attorney Fraser TrebilcockElizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.

The Importance of Insuring Your Teen Drivers

Teenage drivers in Michigan must be named on an automobile insurance policy covering the vehicle they will be driving. This means that once your teen has passed their road test and is legally licensed to drive, as the parent, you should notify your insurer before your teenager actually begins driving independently. Your insurance company can then add your teenager to your policy as a “named driver” for all of the vehicles that they will regularly be driving. This would also be a good time to confirm with your insurer whether any additional coverage should be added.

On a separate note, if the vehicle your teen will be driving is going to be purchased and titled in only your teen’s name, most insurance companies will require that a separate automobile no-fault insurance policy be purchased specifically for that vehicle. In instances such as these, only the teenage driver’s name will be listed on the insurance policy.

It may come as no surprise that adding your teen to your policy will likely increase your insurance rates significantly. In an attempt to combat this increased expense, some people may be tempted to withhold information from their insurance company regarding their teen drivers.

DO NOT DO THIS!

If a policy is purchased without full transparency and honesty, the insurance company can legally cancel your policy, even after an automobile accident has occurred. This could mean that you and your teen driver will lose out on your benefits, including your insurer not paying your medical bills and you losing the ability to bring a lawsuit against an at-fault driver. This is true even if your teenager is completely free of fault and/or was seriously injured in the accident!

By keeping your insurance company up to date with who will be driving your vehicles, you’ll ensure that you are not paying your insurance premiums for benefits you will be disqualified from receiving.

If you have any questions, please contact Emily or your Fraser Trebilcock attorney.


Emily M. Vanderlaan is a litigation associate at Fraser Trebilcock serving some of the largest and most sophisticated insurers in Michigan. From case evaluation, to settlement negotiations, to trial and appeal work, Emily has experience representing insurance companies in a wide range of cases in Michigan state courts. You can reach her at (517) 377.0882 or at evanderlaan@fraserlawfirm.com.

January Update: Legal, Legislative and Regulatory Developments Impacting the Michigan Cannabis Industry

Despite some bumps in the road—which are to be expected for any nascent industry—the year 2021 was a remarkable and record-breaking one for the legal cannabis industry in Michigan. As we gear up for what’s ahead in 2022, here are a few recent, noteworthy developments that those competing in the industry should be aware of.


Governor Signs Legislation Easing Financial Reporting Requirements for Medical Marijuana Growers


Medical marijuana growers in Michigan previously were required to submit financial statements to the Michigan Regulatory Agency (“MRA”) and the municipality in which they operate every state fiscal year. That requirement was eased with Governor Whitmer’s signing of Michigan House Bill 4921, which amends the Michigan Medical Marijuana Licensing Act to allow medical marijuana growers to submit financial statements every three years. A copy of the bill, which became effective as of December 7, 2021, can be viewed here.

The MRA issued a bulletin on January 3, 2022, explaining that, based on the legislation, the MRA will revise the AFS report forms and combine the AFS requirements for medical and adult-use licensees into a consolidated report.

The MRA also explained that in the interim, the requirements for annual financial statements are as follows:

  • An annual financial statement will not be required for fiscal year 2022, unless a licensee is required to file a fiscal year 2022 report as a condition of a final order.
  • Licensees must file an annual financial statement for fiscal year 2020 and fiscal year 2021.

Most Recent Sales Numbers Show that Industry is Strong


The MRA’s most recent financial numbers for Michigan’s adult-use marijuana market show strong sales in November of 2021 (the most recent data available from the MRA at the time this was published). Combined medical and recreational sales were approximately $153 million in November. In addition, a recent report by the Marijuana Policy Project estimates that Michigan will collect nearly $350 million in taxes related to recreational marijuana sales in 2021, which includes $80 million in sales tax and $270 million in excise tax.


Massive Marijuana Recall Cut in Half, MRA Asks Judge to Reconsider


In mid-November, the MRA issued a massive recall affecting more than $200 million in marijuana products tested by Viridis Laboratories and Viridis North over a three-month period. Viridis filed a lawsuit, and the Michigan Court of Claims, on December 3, partially granted Viridis’ request for a preliminary injunction that halted the recall for Viridis North but not Viridis Laboratories.

On December 15, the MRA requested that the judge reconsider his decision that limited the scope of the recall to just Viridis Laboratories. The MRA asserted that it had gathered more testing data since the judge’s initial decision and found 26 percent of Viridis North recalled and retested source packages failed microbial retesting for total yeast and mold.

On December 20, 2021, the Court of Claims denied the MRA’s motion for reconsideration.

We will continue to keep you apprised of these and other important developments in the Michigan legal cannabis industry. If you have any questions, please contact Paul Mallon or your Fraser Trebilcock attorney.


mallon-paulPaul C. Mallon, Jr.  is Shareholder and Chair of Fraser Trebilcock’s cannabis law practice. You can reach him at pmallon@fraserlawfirm.com or (313) 965-9043. 

Client Alert/Reminder: Form W-2 Reporting Due for Employer-Provided Health Care / Disclosure Due to CMS for Medicare Part D

Upcoming Deadlines: (1) Form W-2 Reporting of Employer-Provided Health Coverage; and (2) Medicare Part D Notices to CMS


Reminder: Form W-2 Reporting on Aggregate Cost of Employer Sponsored Coverage

Unless subject to an exemption, employers must report the aggregate cost of employer-sponsored health coverage provided in 2021 on their employees’ Form W-2 (Code DD in Box 12) issued in January 2022. Please see IRS Notice 2012-09 and our previous e-mail alerts for more information.

The following IRS link is helpful and includes a chart setting forth various types of coverage and whether reporting is required; see here.

Please note this is a summary only and Notice 2012-09 should also be consulted. The IRS has issued questions and answers regarding reporting the cost of coverage under an employer-sponsored group health plan, which can be found here.

If you have questions regarding whether you or your particular benefits are subject to reporting, please feel free to contact us.

Deadline Coming Up for Calendar Year Plans to Submit Medicare Part D Notice to CMS

As you know, group health plans offering prescription drug coverage are required to disclose to all Part D-eligible individuals who are enrolled in or were seeking to enroll in the group health plan coverage whether such coverage was “actuarially equivalent,” i.e., creditable. (Coverage is creditable if its actuarial value equals or exceeds the actuarial value of standard prescription drug coverage under Part D). This notice is required to be provided to all Part D eligible persons, including active employees, retirees, spouses, dependents and COBRA qualified beneficiaries.

The regulations also require group health plan sponsors with Part D eligible individuals to submit a similar notice to the Centers for Medicare and Medicaid Services (“CMS”). Specifically, employers must electronically file these notices each year through the form supplied on the CMS website.

The filing deadline is 60 days following the first day of the plan year. If you operate a calendar year plan, the deadline is the end of February. If you operate a non-calendar year plan, please be sure to keep track of your deadline.

At a minimum, the Disclosure to CMS Form must be provided to CMS annually and upon the occurrence of certain other events including:

  1. Within 60 days after the beginning date of the plan year for which disclosure is provided;
  2. Within 30 days after termination of the prescription drug plan; and
  3. Within 30 days after any change in creditable status of the prescription drug plan.

The Disclosure to CMS Form must be completed online at the CMS Creditable Coverage Disclosure to CMS Form web page found here.

  1. The online process is composed of the following three step process: Enter the Disclosure Information;
  2. Verify and Submit Disclosure Information; and
  3. Receive Submission Confirmation.

The Disclosure to CMS Form requires employers to provide detailed information to CMS including but not limited to, the name of the entity offering coverage, whether the entity has any subsidiaries, the number of benefit options offered, the creditable coverage status of the options offered, the period covered by the Disclosure to CMS Form, the number of Part D eligible individuals, the date of the notice of creditable coverage, and any change in creditable coverage status.

For more information about this disclosure requirement (including instructions for submitting the notice), please see the CMS website for updated guidance found here.

As with the Part D Notices to Part D Medicare-eligible individuals, while nothing in the regulations prevents a third-party from submitting the notices (such as a TPA or insurer), ultimate responsibility falls on the plan sponsor.

This email serves solely as a general summary of the Form W-2 reporting requirements and CMS disclosure for Medicare Part D.


If you have any questions, please contact your Fraser Trebilcock attorney.

Client Alert: PCORI Fees Due by July 31, 2022!

The Internal Revenue Service recently released Notice 2022-04 which sets forth the PCORI amount imposed on insured and self-funded health plans for policy and plan years that end on or after October 1, 2021 and before October 1, 2022.

Background

The Patient-Centered Outcomes Research Institute (PCORI) fee is used to partially fund the Patient-Centered Outcomes Research Institute which was implemented as part of the Patient Protection and Affordable Care Act.

The PCORI fees were originally set to expire for plan years ending before October 1, 2019. However, on December 20, 2019, the Further Consolidated Appropriations Act was enacted and extended the fee to plan years ending before October 1, 2029.

The fee is calculated by using the average number of lives covered under a plan and the applicable dollar amount for that plan year. Code section 4375 imposes the fee on issuers of specified health insurance policies. Code section 4376 imposed the fee on plan sponsors of applicable self-insured health plans. This Client Alert focuses on the latter.

Adjusted Applicable Dollar Amount

Notice 2022-04 sets the adjusted applicable dollar amount used to calculate the fee at $2.79. Specifically, this fee is imposed per average number of covered lives for plan years that end on or after October 1, 2021 and before October 1, 2022. For self-funded plans, the average number of covered lives is calculated by one of three methods: (1) the actual count method; (2) the snapshot method; or (3) the Form 5500 method.

Deadline and How to Report

The PCORI fee is due by July 31, 2022 and must be reported on Form 720.

Instructions are found here (see Part II, pages 8-9).

The Form 720 itself is found here (see Part II, page 2).

Form 720, as well as the attached Form 720-V to submit payment, must be used to report and pay the requisite PCORI fee to the IRS. While Form 720 is used for other purposes to report excise taxes on a quarterly basis, for purposes of this PCORI fee, it is only used annually and is due by July 31st of each relevant year.

As previously advised, plan sponsors of applicable self-funded health plans are liable for this fee imposed by Code section 4376. Insurers of specified health insurance policies are also responsible for this fee.

  • For plan years ending on or after October 1, 2017 and before October 1, 2018, the fee is $2.39 per covered life.
  • For plan years ending on or after October 1, 2018 and before October 1, 2019, the fee is $2.45 per covered life.
  • For plan years ending on or after October 1, 2019 and before October 1, 2020, the fee is $2.54 per covered life.
  • For plan years ending on or after October 1, 2020 and before October 1, 2021, the fee is $2.66 per covered life.
  • For plan years ending on or after October 1, 2021 and before October 1, 2022, the fee is $2.79 per covered life.

Again, the fee is due no later than July 31 of the year following the last day of the plan year.

As mentioned above, there are specific calculation methods used to configure the number of covered lives and special rules may apply depending on the type of plan being reported. While generally all covered lives are counted, that is not the case for all plans. For example, HRAs and health FSAs that are not excepted from reporting only must count the covered participants and not the spouses and dependents. The Form 720 instructions do not outline all of these rules.

More information about calculating and reporting the fees can be found here.

Questions and answers about the PCORI fee and the extension may be found here.

As you are well aware, the law and guidance are continually evolving. Please check with your Fraser Trebilcock attorney for the most recent updates.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.


Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.


Brian T. Gallagher is an attorney at Fraser Trebilcock specializing in ERISA, Employee Benefits, and Deferred and Executive Compensation. He can be reached at (517) 377-0886 or bgallagher@fraserlawfirm.com.