A judge in the Michigan Court of Claims heard hours of testimony on Oct. 1 in West Michigan Partnership for Children v. Michigan Department of Health and Human Services, case no. 25‑000164‑MZ, over whether the department must implement a prospective payment, performance‑based foster‑care system in Kent County and whether the private manager, West Michigan Partnership for Children (WMPC), is entitled to declaratory or injunctive relief after FY2026 appropriations omitted language that had previously guided funding.

Plaintiff WMPC told the court it formerly received about $30 million a year to administer foster‑care services in Kent County through a prospective, front‑loaded payment model that it says produces better outcomes. WMPC chief executive Sonia Norman testified that WMPC had 22 staff and was responsible for care coordination, performance and quality improvement, and finance for about 426 children in its system as of September; 72 of those children were in an enhanced foster‑care program Norman said WMPC developed and expanded to increase relative placements and reduce institutional care. "I was pretty sad when I found out that overnight, the work that our community had done for 12 plus years was just gone," Norman said on the stand.

MDHHS attorneys countered that the FY2026 appropriations removed the specific appropriations or directional language (previously set out in appropriations part sections 503 and 504) and that, read together with the Social Welfare Act provisions stating programs are "subject to appropriation," the department is not required to continue WMPC’s exact model absent an express earmark. Lindsey Levine, representing MDHHS, told the court the department did not know until the budget passed whether WMPC would be included and that, after WMPC’s grant expired Sept. 30, the department instituted direct administration using its existing fee‑for‑service processes to avoid interruptions. "The department is not required to use WMPC services to fulfill its responsibility to run the foster care system," Levine said.

Testimony highlighted practical tensions between statutory language, legislative budget practice and operational readiness. WMPC’s counsel conceded the plaintiffs’ argument for a three‑year master contract was constitutionally difficult, but he urged the court to recognize that the statutes instruct the department to implement a prospective payment system in Kent County and that the appropriations changes should not be read to deprive the county of the payment model the legislature had previously supported.

MDHHS witnesses described daily transition work after the budget passed. Kelly Kesti, a bureau director who oversees aspects of contract oversight and continuous quality improvement, explained that the state funds foster care from a single statewide appropriation and that Kent County historically received quarterly, prospective capitation payments that WMPC then used to fund providers. Senior deputy director Demetrius Starling said the department had daily calls with private agencies, had seen no reports of disrupted services since it took direct responsibility, and believed the department could implement prospective payments if required, though doing so would take planning and time.

WMPC’s chief financial officer, Tim Bergsma, testified in rebuttal about the technical complexity of designing a prospective payment tied to performance metrics, describing actuarial work, reconciliation procedures and performance incentives that, he said, took years to bootstrap. "The prospective performance‑based system is not as easy as writing a check on the first day of a quarter," he said, explaining the role of a performance‑quality‑improvement unit in designing and measuring outcomes.

On legal standards, the court heard defendant motions for summary disposition under MCR 2.116(C)(7),(8) and (10) and plaintiff requests for a declaratory judgment and a preliminary injunction. The judge repeatedly narrowed the legal issue to the meaning of the phrase "subject to appropriations" in the statutes creating the Kent County obligation and whether the word "shall" imposes a mandatory duty even when appropriations language has been changed in the annual appropriations act.

Counsel debated remedies and timing. WMPC argued that immediate injunctive relief or a narrow transition order was necessary to prevent irreparable organizational harm if WMPC’s staff and institutional knowledge dissipate while MDHHS attempts to recreate the model. MDHHS countered that the public interest favors the department’s discretion to allocate statewide foster‑care funds and that the department had acted to maintain continuity of care for children.

After extended argument the judge took the motions under advisement and said he would not decide the case from the bench; he expected to issue a written ruling within days. The judge noted he found the question legally and practically complex and thanked witnesses and counsel for detailed, constructive testimony. The court did not announce a ruling or issue any interim injunctive orders during the hearing.