A Michigan Court of Claims judge signaled Tuesday that he is likely to issue a declaratory judgment in consolidated challenges to a state request for proposals (RFP) that would reorganize Medicaid behavioral-health purchasing into three regional prepaid inpatient health plans (PIHPs).

The judge opened the third day of a hearing on two consolidated cases and framed the core questions as whether the RFP and its architecture comply with Michigan law and, if not, what remedy the court should order. "My strong inclination, if I think relief is warranted, is merely to issue a declaratory judgment and then retain jurisdiction," the Presiding Judge said, adding he would reserve injunctive relief for later if agencies did not comply with any directive.

Plaintiffs — community mental health service programs (CMHSPs) and related regional entities — told the court the RFP conflicts with multiple provisions of the Mental Health Code because it would transfer payer authority, contract oversight and certain administrative duties away from CMHSPs to large PIHPs. "There's no way to manage a system if you don't have the money," Plaintiffs' counsel (Speaker 2) said, arguing CMHSPs must retain financial contracting authority to meet statutory duties such as operating recipient-rights offices, contracting with hospitals for involuntary commitments and administering residential programs.

State counsel countered that the mental-health code and Medicaid managed-care law are separate frameworks that can be harmonized and that the RFP does not, on its face, require PIHPs to be the department-designated community mental-health entity for all services. "In the state's perspective, those are two completely separate frameworks," State counsel (Speaker 4) said, urging the court to identify specific provisions that do not conform with Michigan law rather than void the entire procurement.

Counsel debated specific statutory provisions and operational consequences the court must consider. Plaintiffs emphasized public-safety and access concerns tied to involuntary commitment and recipient-rights investigations, saying local CMHSPs need contract authority and immediate ability to act when a person presents in crisis. "If we cannot contract and cannot hold contracts with providers, with hospitals, then how are we going to effectuate that immediacy of that necessary remedy?" a CMHSP advocate (Speaker 5) asked.

The parties also discussed remedial options the court could order if it finds nonconformity: a limited notice-of-deficiency that corrects discrete, in-scope errors; severing problematic provisions; or a more consequential pullback and reissuance of the RFP. Plaintiffs argued foundational statutory conflicts would require a pullback and reissue; the state urged narrow, specific declarations and left operational remedies to DTMB (the Department of Technology, Management & Budget), which administers major procurements.

The record included disputes over evidence admitted earlier (a summary based on EQI reports), with an attorney for plaintiffs renewing an objection and saying they would consider a motion for reconsideration because they could not verify underlying spreadsheets. The Presiding Judge acknowledged the document had been admitted but said he expected to give it "very little weight." "We have no way to verify the accuracy of the summary," the attorney (Speaker 3) said during argument.

The parties flagged practical deadlines and transition mechanics: current PIHP contracts contain a two-year transition clause that the state said could keep services flowing through Sept. 30, 2026, and the RFP contemplates a statutory deadline for creating new contracts by that date. Counsel also noted a compressed procurement calendar could increase the risk of service disruption if significant rework is required.

The judge said he will try to produce an opinion quickly, that he intends to limit remedies to declarations that identify specific nonconforming terms where possible, and that he prefers that DTMB and MDHHS exercise remedial discretion rather than the court ordering a wholesale pullback unless the defects are truly foundational. He also said he plans to retain jurisdiction to address further compliance or, if necessary, injunctive relief.

Next steps: the court will issue an opinion and the parties may submit targeted supplemental briefing or motions contemplated in the transcript (including a potential motion for reconsideration on the admitted summary exhibit). The practical impact for beneficiaries and providers will depend on whether the court’s declarations require DTMB or MDHHS to amend or pull the RFP and whether the state pursues contractual continuity measures before the transition date.