The Court of Appeals recently issued a published opinion involving a decision made by the Department of Licensing and Regulatory Affairs (LARA) to investigate a periodontist’s medical malpractice settlement.
The facts of the case are straightforward. Dr. Kazor, a periodontist, settled a malpractice claim brought against him by a former patient. Importantly, Dr. Kazor did not admit liability in settling the case. Thereafter, the National Practitioner Data Bank (NPDB) reported to LARA that Dr. Kazor’s insurance carrier paid a malpractice settlement to one of Dr. Kazor’s patients. LARA then forwarded the report to the Board of Dentistry, which authorized an investigation into whether Dr. Kazor violated the Public Health Code (the Code). See, Kazor v Department of Licensing and Regulatory Affairs, Bureau of Professional Licensing, 2019 WL 1266854 at *1.
Thereafter, LARA informed Dr. Kazor that it had initiated an investigation against him to determine his compliance with the Code and requested that Dr. Kazor provide it with the non-redacted dental records of the patient with whom he had settled. In response, Dr. Kazor filed a lawsuit against LARA and the Board of Dentistry in the Court of Claims. Dr. Kazor’s lawsuit sought a ruling from the Court that LARA was not authorized to undertake an investigation based solely on a NPDB report of the malpractice settlement. The Court of Claims dismissed Dr. Kazor’s lawsuit and he appealed the ruling. Id.
In upholding the ruling from the Court of Claims, the Court of Appeals noted that the Code provides that if LARA determines, after reviewing an application, or an allegation, or a licensee's file, that there is a reasonable basis to believe that a violation of the Code occurred, it is required to take certain actions. Id. at *3. These required actions include a review of the entire file of a licensee with respect to whom there is a report of an adverse malpractice settlement, award, or judgment.
The Court of Appeals determined that under the Code, Dr. Kazor received an “adverse malpractice settlement” because he entered into a settlement with his former patient with respect to a claim of malpractice, agreeing to pay the former patient a sum of money. Id. As such, the Court of Appeals stated that LARA was required to review Dr. Kazor’s entire file. It is important to note that the portion of the Code at issue does not reference any particular settlement amount that renders a settlement an “adverse malpractice settlement.” Id. Instead, it simply states that when there has been an adverse medical malpractice settlement, LARA “shall” promptly review the licensee’s entire file.
If after reviewing Dr. Kazor’s file LARA determined that there was a reasonable basis to believe that a violation of certain Code provisions occurred, then, “with the authorization of a panel of at least 3 board members that includes the chair and at least 2 other members of the appropriate board or task force designated by the chair, the department shall investigate the alleged violation.” Id. Thus, under the facts of this case, it appears that after reviewing Dr. Kazor’s file, LARA determined there was a reasonable basis to believe he committed a violation and forwarded the information to the Board of Dentistry, which authorized an investigation. LARA was thereafter required to investigate under the terms of the Code.
The Court of Appeals then went on to discuss LARA’s broad discretionary authority to investigate the activities related to the practice of a health profession by a licensee. Id. at *4. The Court of Appeals stated that although LARA received the information regarding its belief that Dr. Kazor violated a provision in the Code through a NPBD report of the malpractice settlement, that did not mean that LARA determined the settlement itself justified the investigation. Id. Rather, as the Court of Appeals noted, LARA could have determined that the facts underlying the allegations of malpractice – and not the settlement itself – led to a reasonable belief that Dr. Kazor violated the Code and prompted its investigation. Id.
In short, the Michigan Court of Appeals has determined that LARA’s authority to investigate malpractice settlements is extremely broad. The Court of Appeals decision in Kazor makes clear that LARA has the authority to initiate an investigation of a single medical malpractice settlement reported by the NPDB, and/or the underlying facts leading to the settlement, regardless of the amount of the settlement or a denial of liability.
If you have been contacted by LARA for a copy of a patient’s file, for an interview, or if you have been served with an Administrative Complaint, please contact an experienced attorney to help you navigate through the process and protect your interests. The earlier the attorney is involved, the better they will be able to assist you.
If you have any questions, please feel free to contact the author, R. Paul Vance of Cline, Cline & Griffin, P.C. at firstname.lastname@example.org or by calling the office at 810-232-3141.
 Under MCR 7.215(C)(2), “[a] published opinion of the Court of Appeals has precedential effect…”
 Kazor v Department of Licensing and Regulatory Affairs, Bureau of Professional Licensing, ___ Mich App ___, ___ N.W.2d ___; 2019 WL 1266854, (Docket No. 343249).
 MCL 333.16231(2).
 MCL 333.16211(4).
 “Shall” indicates a mandatory directive. See, e.g. People v Lockridge, 498 Mich 358, 387, 870 N.W.2d 502 (2015).
 MCL 333.16231(2)(a) (emphasis added).
 MCL 333.16231(2); See also, In re Petition of Attorney General for Subpoenas, ___Mich. App.___, ___ N.W.2d ___, 2019 WL 942947 (Docket No.’s 342086 & 342680 2019).
 See also, MCL 333.16231(2)(a); MCL 333.16221.