The following opinion is presented on-line for informational use only and does not replace the official version. (Mich. Dept. of Attorney General Web Site - http://www.ag.state.mi.us)



STATE OF MICHIGAN

MIKE COX, ATTORNEY GENERAL

MEDICAL MARIHUANA ACT:                                                                     Authority of Michigan Department of Community Health
                                                                                                                               to enter into an agreement with a private or public contractor
DEPARTMENT OF COMMUNITY HEALTH:                                              for the purpose of administering the Medical Marihuana Program

The Michigan Medical Marihuana Act, Initiated Law 1 of 2008, MCL 333.26421 et seq, does not prohibit the Department of Community Health from entering into an agreement or contract with an outside vendor to assist the department in processing applications, eligibility determinations, and the issuance of identification cards to patients and caregivers, if the Department of Community Health retains its authority to approve or deny issuance of registry identification cards.

2009 AACS, R 333.121(2) promulgated by the Department of Community Health under the Michigan Medical Marihuana Act, Initiated Law 1 of 2008, MCL 333.26421 et seq, which provides that the confidential information "may only be accessed or released to authorized employees of the department," prevents the Department of Community Health from entering into a contract with an outside vendor to process registry applications or renewals.

Opinion No. 7250

August 31, 2010

Honorable Roger Kahn, M.D.
State Senator
The Capitol
Lansing, MI 48909

You have asked two questions regarding the authority of the Michigan Department of Community Health (DCH) to contract out certain of its responsibilities under the Michigan Medical Marihuana Act (MMA or Act), Initiated Law 1 of 2008, MCL 333.26421 et seq.

The MMA was an initiative approved by a majority of Michigan voters in November 2008, and which became effective December 4, 2008. See Const 1963, art 2, § 9. Under the MMA, "[t]he medical use of marihuana is allowed under state law to the extent that it is carried out in accordance with the provisions of this act." MCL 333.26427(a). The Act protects qualifying patients with debilitating medical conditions, and their primary caregivers, if any, from arrest, prosecution, and penalty for the medicinal use of a limited amount of marihuana in accordance with the MMA. MCL 333.26424(d)(1) and (2). In order to receive the protections of the MMA, patients and caregivers must apply for and receive a registry identification card issued by DCH. MCL 333.26424(a).

You ask whether DCH is prohibited under the MMA from contracting with an outside vendor to handle the processing of applications, eligibility determinations, and the issuance of registry identification cards to patients and caregivers.

Because the Act was a citizen initiative under Const 1963, art 2, § 9, it must be interpreted in light of the rules governing the construction of citizen initiatives. "There is no essential difference in the construction of statutes enacted directly by the people and those enacted by the Legislature." OAG, 1985-1986, No 6370, pp 310, 313-314 (June 10, 1986). "[A] study of all of the provisions of the initiated statute" may reveal the intent of the electorate. Id.

The key inquiry in construing an initiative is "the collective intent of the people," and the people's intent may be measured by their "common understanding . . . of the purpose of the initiated law." Id. The language of the ballot proposal itself and, when appropriate, the arguments set forth during the campaign regarding the initiative should be consulted in discerning the people's intent. Id.

The Michigan Court of Appeals has explained that initiatives should be "liberally construed to effectuate their purposes" and to "facilitate rather than hamper the exercise of reserved rights by the people." Welch Foods v Attorney General, 213 Mich App 459, 461; 540 NW2d 693 (1995). In addition, the words of an initiated law should be given their "ordinary and customary meaning as would have been understood by the voters." Id. To the extent that the initiative contains any ambiguity, it must be constructed in light of the purpose of the initiative. Id. at 462.

The MMA is silent with respect to whether DCH may contract with a third party to carry out its duties to process applications and issue registry identification cards. The Act defines the term "department" as used in the Act to mean "the state department of community health," or DCH. MCL 333.26423(b). Section 6(a) of the Act provides, in part, that "[t]he department shall issue registry identification cards to qualifying patients . . . ." MCL 333.26426(a). Section 6(c) states that "[t]he department shall verify the information contained in an application or renewal submitted pursuant to this section, and shall approve or deny an application or renewal within 15 days of receiving it." MCL 333.26426(c). Similarly, section 6(e) directs that "[t]he department shall issue registry identification cards within 5 days of approving an application or renewal, which shall expire 1 year after the date of issuance." MCL 333.26426(e). Nowhere in the language of these sections – or the other relevant provisions of the Act – does the MMA refer to or authorize an entity other than DCH to perform its statutory duties.

However, by specifically designating DCH as the state department charged with carrying out the duties of the MMA, the Act implicitly incorporated the administrative or ministerial powers and authority that enable the department to function as a department. Part 22 of the Public Health Code (Code), 1978 PA 368, MCL 333.2201 through 333.2264, describes the general powers and duties of the Department of Public Health, now DCH, and its director. MCL 333.2226(c) provides that "[t]he department may" "[e]nter into an agreement, contract, or arrangement with governmental entities or other persons necessary or appropriate to assist the department in carrying out its duties and functions." This section clearly authorizes DCH to engage the services of a third party to assist the department in performing its duties.1 Pursuant to the MMA, the processing and issuance of medical marihuana registry identification cards are now duties or functions of DCH. Reading the Act and section 2226(c) of the Code in harmony with one another leads to the reasonable conclusion that DCH may exercise its authority to contract with a third party to assist the department in carrying out its new functions and duties under the MMA. See, e.g., Edmond v Dep’t of Corrections, 254 Mich App 154, 157-158; 656 NW2d 842 (2002).

This interpretation is consistent with the principle that initiatives should be "liberally construed to effectuate their purposes" and to "facilitate rather than hamper the exercise of reserved rights by the people." Welch Foods, 213 Mich App at 461. Allowing DCH to utilize an outside vendor to process registry applications furthers the purpose of the Act by helping ensure the efficient processing of current and future applications and renewals.

There is a caveat, however. While DCH may enter into an agreement with an outside vendor to "assist" the Department in processing registry applications, DCH cannot delegate its discretionary authority to make a final determination with respect to the issuance of registry identification cards. In OAG, 1979-1980, No 5639, p 580 (January 31, 1980), the Attorney General concluded that the Barrier Free Design Board could not delegate its duties to grant or deny exceptions to the barrier free design requirements "because administrative agencies may not delegate the exercise of discretionary acts unless they have been granted legislative authority to do so." Id. at 581. The Barrier Free Design Board had not been granted such authority.

Similarly, the MMA only empowers DCH to grant or deny applications for registry identification cards. Thus, it would constitute an improper delegation of the department's authority if an outside vendor were charged with the ultimate task of granting or denying registry identification cards. Ultimately DCH – through its authorized employees – must make the final decision whether to grant or deny an identification card under the Act. DCH, however, may delegate "ministerial duties" such as receiving and processing patient applications to an outside vendor. Id.

It is my opinion, therefore, in answer to your first question, that the Michigan Medical Marihuana Act, Initiated Law 1 of 2008, MCL 333.26421 et seq, does not prohibit the Department of Community Health from entering into an agreement or contract with an outside vendor to assist the department in processing applications, eligibility determinations, and the issuance of identification cards to patients and caregivers, if the Department of Community Health retains its authority to approve or deny issuance of registry identification cards.

You next ask whether the confidentiality provisions in the MMA have the effect of preventing DCH from entering into a contract with an outside vendor for the purpose of assisting the department in administering the Medical Marihuana program.

The MMA's confidentiality provisions apply to a "person," including DCH and other state agencies and local units of government, as well as law enforcement agencies. Section 6(h) of the Act specifically describes the information deemed confidential or expressly exempted from public disclosure:

               (1) Applications and supporting information submitted by qualifying patients, including information regarding their primary caregivers and physicians,
          are confidential.

               (2) The department shall maintain a confidential list of the persons to whom the department has issued registry identification cards. Individual names
           and other identifying information on the list is confidential and is exempt from disclosure under the freedom of information act, 1976 PA 442, MCL 15.231
           to 15.246.

               (3) The department shall verify to law enforcement personnel whether a registry identification card is valid, without disclosing more information than is
          reasonably necessary to verify the authenticity of the registry identification card.

               (4) A person, including an employee or official of the department or another state agency or local unit of government, who discloses confidential
          information in violation of this act is guilty of a misdemeanor, punishable by imprisonment for not more than 6 months, or a fine of not more than
          $1,000.00, or both. [MCL 333.26426(h).]2

While names, other personal identifying information, applications and information regarding patients, primary caregivers or physicians are deemed confidential and must not be disclosed contrary to the Act, DCH is implicitly authorized to disclose this information to the extent necessary to fully perform its duties under the Act.3 For example, in verifying the information contained in the application, DCH would need to disclose the name of the applicant to the physician listed on the application. Similarly, the MMA would not prohibit DCH from sharing the information with an outside vendor under contract with DCH to assist it in carrying out the application and registration process, so long as the contractual arrangement protected the confidentiality of the information. Under the MMA, any person who gains access to the confidential information would be required to protect its confidentiality under threat of criminal fines and incarceration: "A person . . . who discloses confidential information in violation of this act is guilty of a misdemeanor, punishable by imprisonment for not more than 6 months, or a fine of not more than $1,000.00, or both." MCL 333.26426(h)(4).

DCH has addressed the subject of confidentiality in duly promulgated administrative rules. Section 5(b) of the MMA provides that: "the department shall promulgate rules . . . that govern the manner in which it shall consider applications for and renewals of registry identification cards for qualifying patients and primary caregivers." MCL 333.26425(b). Acting under that authority, DCH promulgated the following rule to implement the requirement to keep information confidential:

               (1) Except as provided in subrules (2) and (3) of this rule, Michigan medical marihuana program information shall be confidential and not subject to
          disclosure in any form or manner. Program information includes, but is not limited to, all of the following:

               (a) Applications and supporting information submitted by qualifying patients.

               (b) Information related to a qualifying patient's primary caregiver.

               (c) Names and other identifying information of registry identification cardholders.

               (d) Names and other identifying information of pending applicants and their primary caregivers.

               (2) Names and other identifying information made confidential under subrule (1) of this rule may only be accessed or released to authorized employees
          of the department as necessary to perform official duties of the department
pursuant to the act, including the production of any reports of non-identifying
          aggregate data or statistics.

               (3) The department shall verify upon a request by law enforcement personnel whether a registry identification card is valid, without disclosing more
          information than is reasonably necessary to verify the authenticity of the registry identification card.

               (4) The department may release information to other persons only upon receipt of a properly executed release of information signed by all individuals
           with legal authority to waive confidentiality regarding that information, whether a registered qualifying patient, a qualifying patient's parent or legal
          guardian, or a qualifying patient's registered primary caregiver. The release of information shall specify what information the department is authorized
          to release and to whom. [2009 AACS, R 333.121; emphasis added.]

The plain terms of the rule only allow employees of DCH to have access to the confidential information as necessary to perform the department's duties under the MMA, which include the processing of applications, eligibility determinations and issuance of registry identification cards. An agency is legally bound by its own valid administrative rules. Detroit Base Coalition for Human Rights v Social Services Dep't, 431 Mich 172, 189; 428 NW 2d 335 (1988). Accordingly, the next question to be determined is whether R 333.121 is valid.

In Luttrell v Dep’t of Corrections, 421 Mich 93, 100; 365 NW2d 74 (1984), the Court adopted the following test for determining the validity of agency rules, citing Chesapeake & Ohio R Co v Public Service Comm, 59 Mich App 88, 98-99; 228 NW2d 843 (1975):

               "Where an agency is empowered to make rules, courts employ a three-fold test to determine the validity of the rules it promulgates: (1) whether the rule is
          within the matter covered by the enabling statute; (2) if so, whether it complies with the underlying legislative intent; and (3) if it meets the first two
          requirements, when [sic] it is neither arbitrary nor capricious."

An agency's construction of a statute "is entitled to respectful consideration and, if persuasive, should not be overruled without cogent reasons," but "the court's ultimate concern is a proper construction of the plain language of the statute." In re Rovas Complaint, 482 Mich 90, 108; 754 NW2d 259 (2008). "[T]he agency's interpretation cannot conflict with the plain meaning of the statute." Id.

The MMA provides strict confidentiality requirements, violations of which are criminal offenses. In an effort to ensure compliance with the requirement, subsection (2) of the Rule provides that confidential information may only be accessed or released to DCH employees for purposes of performing official duties under the MMA.4 That rule would not allow DCH to contract with an outside vendor, giving the vendor's employees access to the confidential information. Although stricter than required by the MMA, the rule is a reasonable implementation of the confidentiality provisions of the MMA and in the absence of any provision providing for release of confidential information to third-party vendors, is not inconsistent with the intent of the voters. Accordingly, DCH may not contract with an outside vendor to process registry applications since it may not give the vendor access to the necessary information.5

To remedy this situation, DCH could promulgate a new rule as provided in MCL 24.241 and 24.242, or issue an emergency rule if appropriate under MCL 24.248, to allow DCH to pursue contracts with outside vendors permitting access to confidential information under terms that protect the confidentiality. Alternatively, the Legislature could act to amend or rescind the rule, MCL 24.231(5), 24.251, or specifically amend the MMA to allow DCH to pursue contracts with outside vendors. Const 1963, art 2, § 9.

It is my opinion, therefore, in answer to your second question, that 2009 AACS, R 333.121(2) promulgated by the Department of Community Health under the Michigan Medical Marihuana Act, Initiated Law 1 of 2008, MCL 333.26421 et seq, which provides that the confidential information "may only be accessed or released to authorized employees of the department," prevents the Department of Community Health from entering into a contract with an outside vendor to process registry applications or renewals.


MIKE COX
Attorney General

1 Notably, this section does not restrict its application to duties or functions assigned by the Code, as other sections do.  See MCL 333.2205(1), which states "[a] function assigned by this code to the department vests in the director or in an employee or agent of the department designated by the director, or in any employee or agent of the department who is assigned the function in accordance with internal administrative procedures of the department established by the director." 

2 The MMA does require DCH to make public, via an annual report to the Legislature, certain information:

(1)  The number of applications filed for registry identification cards.

 

(2)  The number of qualifying patients and primary caregivers approved in each county.

 

3)  The nature of the debilitating medical conditions of the qualifying patients.

 

(4)  The number of registry identification cards revoked.

 

(5)  The number of physicians providing written certifications for qualifying patients.  [MCL 333.26426(i).]

 

3 The Supreme Court has ruled:  "The absence of an explicit grant of authority is not dispositive.  This Court, in Coffman v State Bd of Examiners in Optometry, 331 Mich 582, 590; 50 NW2d 322 (1951), said 'powers [of administrative boards] are limited by the statutes creating them to those conferred expressly or by necessary or fair implication.'  Quoting 42 Am Jur, § 26, pp 316 ff (emphasis added)."  Public Health Dep't v Rivergate Manor, 452 Mich 495, 503; 550 NW2d 515 (1996).

4 DCH may also disclose confidential information to law enforcement personnel to verify whether an identification card is valid, "without disclosing more information than is reasonably necessary to verify the authenticity of the registry identification card."  MCL 333.26426(h)(3).

5 It is worth observing that R 333.121(4), which authorizes the release of confidential information to additional persons if a waiver is obtained, does not provide a mechanism for allowing DCH to contract with an outside vendor because nothing in the MMA suggests that the processing of an application can be contingent upon a patient's waiver of his or her right to confidentiality.  There are also practical concerns with obtaining the necessary waivers from all of the appropriate individuals on a case-by-case basis.