Heightened Scrutiny in Michigan: Lara’s Expanding Use of Hospital and Employment Reports To Open Licensing Investigations

By: Jesse Adam Markos, Esq.
Wachler & Associates, P.C
January 2026

Healthcare providers in Michigan are facing increased scrutiny as the Department of Licensing and Regulatory Affairs (LARA) adopts a more aggressive approach to opening licensing investigations.  While LARA has always possessed broad authority under the Michigan Public Health Code, providers have traditionally assumed there is a clear line between employment issues and licensing oversight.  More specifically, workplace disputes, performance problems, and internal discipline were typically handled by employers, while investigations by LARA were generally limited to matters involving patient safety, professional misconduct, or clear violations of the Public Health Code.  However, recent enforcement trends suggest that any such distinction is eroding. 

Historically, certain types of disputes between providers and employers were treated as employment matters rather than regulatory concerns.  Issues such as workplace conflicts, documentation issues, or compliance with institutional policies were typically addressed through corrective action, performance improvement plans, or human resources processes.  Unless patient harm, professional misconduct, or incompetence was alleged, these matters, while reportable to LARA, often did not trigger a licensing investigation.  By contrast, matters necessitating a licensing investigation traditionally involved allegations of unprofessional conduct, substance abuse, boundary violations, fraud, or repeated substandard care.  These cases raised clear concerns about a provider’s fitness to practice and fell squarely within LARA’s regulatory mandate to protect the public.

In recent years, however, LARA has demonstrated an increasingly aggressive posture in treating employment-related actions as regulatory issues.  As a result, reports arising from hospital privileging decisions or employment actions, such as terminations, resignations, or administrative suspensions, are now more frequently serving as the basis for licensing investigations, even when the employer does not believe the issue warrants regulatory review.

Under the Michigan Public Health Code, certain employment and privileging actions must be reported when they involve concerns related to a provider’s competence, conduct, or ability to safely practice.  When LARA receives a report, it conducts an intake review to determine whether there is a reasonable basis to believe a violation of the Public Health Code may have occurred.  Typically, a panel of at least two or three licensing board members must agree to authorize a formal investigation.  This initial intake review is intended to serve as a safeguard to help ensure that claims are screened thoughtfully before proceeding and matters.  While these reporting provisions have existed for decades, LARA’s current enforcement approach means that matters once considered internal employment disputes are increasingly being reframed as potential violations of licensing standards.

This evolving enforcement posture has significant implications for Michigan healthcare providers.  Providers should no longer assume that an “employment matter” will necessarily remain confined to the workplace and should consult with an experienced healthcare licensing attorney to help mitigate the risk that such an issue escalates into a licensing investigation.  For additional information or assistance, please feel free to contact Jesse Markos at Wachler & Associates at (248) 544-0888.