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Michigan Supreme Court narrows shield for insurers in consumer lawsuits
The court overruled two earlier rulings, saying the Michigan Consumer Protection Act exemption depends on whether the specific conduct is authorized by law, not the insurer's general regulated status.
Michigan's highest court has narrowed a decades-old exemption that insurers and other regulated companies used to block consumer-protection claims under the Michigan Consumer Protection Act (MCPA). In a decision issued July 31, 2026, it overruled two prior rulings, Smith v Globe Life Ins Co and Liss v Lewiston-Richards, Inc, which had allowed regulated businesses to invoke the exemption broadly.
The MCPA bars unfair, unconscionable, or deceptive business practices, with an exemption for a transaction or conduct specifically authorized under laws administered by a regulatory board or officer. The court rejected the earlier, more expansive reading, saying it had effectively immunized a broad range of industries, and it emphasized a narrower test focused on the specific conduct alleged rather than a company's general line of business.
In Smith, a life insurer had relied on the exemption to defeat a claim tied to allegedly misleading policy terms after a coverage denial. Under the court's updated approach, a licensed insurer cannot automatically set aside an MCPA claim just by pointing to its regulated status; the trial court will need to assess whether the specific practice challenged is itself specifically authorized by law.
The case also involved drugmaker Eli Lilly and insulin pricing, with the Michigan Attorney General investigating allegations that the company artificially increased list prices. The court noted that allegations alone were before it, no MCPA violation had been pleaded, and it returned the matter to the trial court.