Health Update: Centra Wellness wins lawsuit against Michigan mental health proposal – What Experts Say

Earlier this month, Centra Wellness Network and Manistee County were two entities victorious in a court case against the state of Michigan. 

In October 2024, twelve groups that serve 51 counties community mental health services, including Centra Wellness Network, filed a lawsuit in Michigan’s Court of Claims. 

The agencies that sued opposed the state’s plan for changing how it hires and pays companies that provide behavioral health care services, as well as how mental health services are funded and managed across the state.  

There were civil suits filed as well that represented plaintiffs from northern, central and southern Michigan.   

Centra Wellness Network is the publicly funded community mental health service for Manistee and Benzie counties. It serves more than 1,200 individuals annually. Most clients are insured through Medicaid or have no insurance coverage. 

In 2024, the Michigan Department of Health and Human Services proposed rebidding the state’s 10 regional Prepaid Inpatient Health Plans, which manages Medicaid-funded behavioral health services.  

The state’s proposal supported shifting from a single-source system to a competitive bidding system, like insurance companies.

Chip Johnston, Centra Wellness Network executive director and chief executive officer, deemed the bid unlawful and cited the mental health code detailed in the Michigan constitution. 

“In the mental health code, the state has a partnership with counties to provide behavioral health services in the community,” he said. “There’s a series of contractual obligations and oversights for these individuals who can’t fend for themselves … County commissioners are in charge of making sure that services are delivered by creating a mental health board.” 

Johnston said that the Manistee County Board of Commissioners supports Centra Wellness Network through funding and contracting, which allows the mental health network to serve individuals with intellectual and developmental disabilities.  

“The Michigan constitution requires the state of Michigan to take care of its most disabled folks, specifically individuals who are intellectually and developmentally disabled,” he said. “The proposal (would have) stripped our statutory requirements to contract for services on behalf of the clients we’re mandated to serve.” 

Johnston said that having local oversight and a connection with the local Manistee County government enables Centra Wellness to assist those needing urgent behavioral health help as well. 

“We interact with the sheriff departments, city police, hospitals,” he said. “We try to get people into treatment as quickly as we can, not only for their health, but for the community’s health in general. That’s why it’s important to be tied into the county because, ultimately, the (Manistee County Board of) Commissioners are in charge of me. They have oversight of the sheriff and make sure we all work together.” 

Manistee County joined the lawsuit in September. 

If the state’s proposal had been allowed to stand, it would have severed Centra Wellness’ community ties, leaving 90% of funds in the hands of other entities making key decisions about localized care.  

“We would have to try to figure out how to string all that money together to make services work, assuming that we could even enter into a contract with them,” Johnston said. “That would be impossible with it being diluted … The clients, in essence, would be stranded.” 

During the trial’s final arguments in December, Johnston served as a witness who testified on behalf of community mental health services programs. His testimony focused on the mental health service programs’ statutory obligations to vulnerable individuals and emergency services.  

During the March Manistee County Board of Commissioner’s meeting, Johnston gave an update on the lawsuit and was praised by the commissioners.  

“Thank you for your service, I’m glad we as a board could come and assist on this legal challenge,” said Jeff Dontz, District 5 Commissioner and board chair.

 District 6 Commissioner Karen Goodman previously served as Centra Wellness Network’s chief operating officer. She retired from that role last year.

“I do want to note for everybody that Chip has been working like a dog behind the scenes, putting in the time to keep our state on the right course, not just representing us but representing the whole community health system, which is a huge task,” said Goodman. “He’s done a marvelous job from the very top of Michigan all the way down south, and we really do appreciate all your hard work.”

Johnston has worked in mental health services for 37 years and said that proposal requests like this are not new. In fact, this is the third one in his career.  

“Every 10 years they want to do this, but when I read this one in detail, I was just appalled by all of the state law violations,” he said. “I had 50 pages of law violations that I tracked in the proposal.” 

Johnston said that this ruling is for the benefit of the state and protects the community’s most vulnerable citizens, but he suspects that the state will issue a new proposal.

While Johnston plans to retire soon, he said he will remain on retainer for Centra Wellness Network and be a consultant for the Manistee County Board of Commissioners. He doesn’t plan to ever stop advocating for mental health and disability rights. 

“For the remainder of my career, I’m going to continue here,” he said. “I’m going to continue to work on what I see as probably the biggest issue for our agency right now … I can’t say it enough, training and customer service, not only to our clients but to our people we work with, the sheriff’s departments, the hospitals, high school …That’s what I’m going to focus on, and then my intent afterwards is that I’m going to be put on retainer, and the state will really hate that. ”