Community Health Authorities Win Lawsuit Against State

Northeast Michigan Community Mental Health Authority successfully challenged MDHHS proposal to restructure funding for mental health services.

Published on Feb. 18, 2026

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The Northeast Michigan Community Mental Health Authority (NeMCMH) and several other community mental health authorities in northern Michigan have successfully sued the Michigan Department of Health and Human Services (MDHHS) to stop a controversial Request for Proposal (RFP) that would have stripped the authorities of their statutory obligations to provide mental health services in their regions.

Why it matters

This case highlights the ongoing tensions between state-level health agencies and local community mental health authorities over the funding and provision of critical mental health services, especially in rural areas where resources are more limited. The lawsuit victory preserves the role of community-based mental health providers and prevents the state from unilaterally restructuring the system.

The details

The MDHHS RFP would have prevented current Pre-Paid Inpatient Health Plan (PIHP) regions, including NeMCMH, from bidding on services, forcing them to contract out to private entities that do not exist in their service areas. NeMCMH and other northern Michigan CMHs sued, arguing this would have illegally stripped them of their statutory obligations to provide mental health care as required by state law. The court sided with the CMHs, leading MDHHS to withdraw the RFP.

  • On Jan. 29, MDHHS officially pulled the controversial RFP.
  • In November 2025, NeMCMH first spoke out against the MDHHS proposal.

The players

Northeast Michigan Community Mental Health Authority (NeMCMH)

The community mental health authority serving Alpena, Alcona, Montmorency, and Presque Isle counties in Michigan.

Michigan Department of Health and Human Services (MDHHS)

The state agency that oversees public health and human services programs in Michigan, including mental health services.

Dana Labar

A NeMCMH board member from Presque Isle County who commended the leadership team for challenging the state.

Centra Wellness Network

A community mental health authority serving Manistee and Benzie counties that partnered with NeMCMH in the lawsuit.

Manistee County Commissioners

The county government that also partnered with NeMCMH in the lawsuit against MDHHS.

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What they’re saying

“I am really proud of our director, and the three or four directors, for taking on the state, for stopping the privatization of community mental health which is exactly what this was trying to do.”

— Dana Labar, NeMCMH Board Member (Instagram)

“My staff was heartbroken … they know if this gets privatized, what's going to happen to Mike? Because we take care of Mike and what's going to happen to this community when Mike isn't stable? What's going to happen to the jails when nobody's there to manage their symptoms?”

— Kathy Sork, NeMCMH Director (The Alpena News)

What’s next

NeMCMH and other community mental health authorities expect the state to make another attempt to restructure the mental health service delivery system in the future, so they remain vigilant against any future proposals that could undermine their role.

The takeaway

This victory demonstrates the importance of local community mental health providers in ensuring access to critical services, especially in rural areas, and the need for state agencies to work collaboratively with these authorities rather than unilaterally imposing changes that could disrupt care.