Eastern Market Turns to Tax Law to Make Upgrades

20140224-NEWS--0001-NAT-CCI-CD_-- 2/21/20147:21PMPage1 ©Entire contentscopyright2014byCrainCommunicationsInc.Allrightsreserved cases of2013,Page11 The region’s bigbusiness goes speeddating Auto intellectualproperty may addthirdtower Southfield’s Towne Square with revenuepossibilities ‘Coach’: Atitleendowed intendent. over asBelleIsleParksuper- year DNRemployee,took Buy4Michigan.com. the state’scontractssite, bids willbehandledthrough ing fromtheisland.Larger handled bystatestaffoperat- permits atBelleIslewillbe tive bids. rules donotrequirecompeti- that understatecontracting are nonexclusiveagreements the BelleIsleCasino.Those told businessesataforum term “usepermits,”officials to begrantedundershorter- food andicecreamarelikely T-shirts, foodservice,mobile such thingsascanoerentals, Friday. this firstyear,anofficialsaid “large concessions”operators not expecttoacceptbidsfor renovations. However,itdoes garbage collectiontobuilding tors foreverythingfrom opening, it’sseekingcontrac- Isle foranAprilstatepark Belle Isleunlikelythisyear Bids forlargeconcessionsat

NEWSPAPER www.crainsdetroit.com Vol.30,No.8 Page 3 Focus: Law This JustIn Last week,JoeHall,a19- Most short-termspecial Instead, concessionsfor As thestatereadiesBelle

NAM Y. HUH/AP Strike Force year. any preceding amount chargedin than doublethebadbilling federal program.That’smore more than$380milliontothe charges infraudschemesbilling Unit ofprosecutorstogetherbrought ganized HealthCareFraud Washington, andalocallyor- T development authorities. TIF districtsthatfunddowntown ing structurethatissimilartothe the useofataxincrementfinanc- provements inthemarketthrough ter ofdevelopmentandcapitalim- change allthatbycreatingaclus- Eastern MarketCorp. commercial district. throwing distanceofathriving buildings —allstandingwithin riddled withpotholesandvacant tax lawtomakeupgrades Eastern Marketturnsto metro Detroithitsitbig on Medicarefraudin Federal crackdown Dan Carmodyandhisteamat Crumbling bridges,parkinglots Last year,the CRAIN’S DETROITBUSINESS B yielded thefirstrealpayoff. billing fraudinSoutheastMichigan 2013 theyearitsfightagainstMedicare he Y The curefor N U.S. DepartmentofJustice ATHAN , deployedherefrom CRAIN’S DETROITBUSINESS bogus bills B Y C S HAD Detroit MedicareFraud KID want to H ALCOM FEBRUARY 24–MARCH2,2014 market’s long-termvision. about theTRAanditsrolein property ownersandmerchants of business:morefullyinform pedestrians andnewbusinesses. make theareamorewelcomingto outer edgesofthemarketand egy topushdevelopmentinthe one partofEasternMarket’sstrat- state brownfieldlaw. ment Area,whichoperatesunder state’s firstTargetedRedevelop- Manufacturing Manufacturing Some businessownersdon’tful- Among themarket’sfirstorders The creationoftheTRAisjust The marketplanstocreatethe Ad Close: March 27 or313-446-6032.| Information:MarlaWiseat [email protected] Advertising APRIL 7 COMING could dub Advanced Advanced See Market,Page20 what dataanalysissuggestedwashundredsof Action Team Health CareFraudPreventionandEnforcement C came toDetroitin2009aspartofthenational crainsdetroit.com/medicaredata S STUDIES ASE fraud casesinSoutheastMichigan, It’s beenaslowbuildsincethestrikeforce On theWeb: characters, millions worthoffraudhere. but manyhavesimilarthemes,ingredientsand Anatomy offraud: ISTOCK PHOTO , referredtoasHEAT,ferretout A searchabledatabaseoftheMedicare Targeted RedevelopmentArea. and rundownbuildings,EasternMarketCorp.hopestocreatethe state’sfirst In asectionofDetroitwherethrivingcommercialcentercoexists withvacant Page 18 technology. materials andmanufacturing leading theway intheuseofnew ISSUE FOCUS: Each caseisitsownstory, See Fraud,Page18 Companies bution planstartingin2016. put allnewhiresintoacontri- and MacombCountyexpectsto employees about20yearsago, tribution pensionplanforits ple, convertedtoadefinedcon- bution planssincethe1990s. shifting towarddefinedcontri- cies, whichhavebeengenerally nesses andgovernmentagen- counter toatrendamongbusi- plan forcurrentemployeesruns other creditors. the newplanoverobjectionsby persuade retireestoapprove could betheleverageitneedsto it hasfordecades,andthat 9,300 currentcityemployees,as pension planformorethan will maintainadefinedbenefit change. shell maybewhatdoesn’t ruptcy —butthebiggestbomb- tion’s largestmunicipalbank- debt structureFridayinthena- of Detroit’splanstochangeits and hand-wringinginthefallout pension plan defined benefit Detroit tokeep Post-bankruptcy Oakland County,forexam- Keeping adefinedbenefit A post-bankruptcyDetroit There wereplentyofmoans NATHAN SKID/CRAIN’SDETROITBUSINESS CRAIN’S DETROITBUSINESS B Y C HAD $2 acopy;$59year See Pension,Page17 H ALCOM ® 20140224-NEWS--0002-NAT-CCI-CD_-- 2/21/2014 4:47 PM Page 1

Page 2 CRAIN’S DETROIT BUSINESS February 24, 2014

MICHIGAN BRIEFS Stryker to buy Berchtold Holding brewery and plans to begin construction of expanded beer produc- to meet hospitals’ supplier specs Battle Creek finds Kellogg’s GR plans hard to swallow tion operations this summer, Kalamazoo-based Stryker Corp. MLive.com reported. The company, News this month that Kellogg Co. would open a cor- limited: “This adds up to a community catastrophe, a said it will purchase health care which distributes only in the state, porate services center in Cascade Township near monumental failure in corporate leadership, a nu- equipment manufacturer Berchtold said it has grown 30 percent in vol- Grand Rapids — and in the process move jobs from its clear sneak attack on a ‘partnership’ and a stran- ume in each of the past five years. Holding for $172 million, Modern home in Battle Creek — was greeted by surprised Bat- gling of the infant downtown transformation in its That tells you something about Healthcare reported. The deal al- tle Creek leaders in much the way a 7-year-old would cradle.” Michigan beer drinkers. lows Stryker to broaden its prod- react upon learning that his Frosted Flakes box con- Ⅲ Joseph Stewart, Kellogg’s former senior vice Ⅲ Ada-based Amway Corp. is the uct offerings when hospitals are tained Brussels sprouts sauteed in Kaopectate. Which president of corporate affairs: “Kellogg’s hometown new title sponsor of the USA Today narrowing supplier networks to is to say, they were honked off. What follows is your is no longer good enough for the people who are Coaches Poll, which establishes gain more bargaining power by minimum daily adult requirement of outrage: privileged to lead this great institution now. … I feel the ranking of the top 25 college dealing with fewer suppliers offer- Ⅲ Former Battle Creek Mayor and former U.S. deceived and I feel disrespected and quite frankly, I football teams, MLive.com reporting a wider array of equipment. Rep. Joe Schwarz: “That’s not the way people in Bat- feel spoken down to.” ed. The rankings will be called Berchtold, with operations in tle Creek, especially those that have been here a Carlos Gutierrez, CEO from 1999 to 2004, lived in Amway Coaches Poll. Germany and Charleston, S.C., de- long time and worked with Kellogg on so many is- Battle Creek while running Kellogg. He said the Ⅲ Gerald R. Ford International Air- signs surgical infrastructure equip- sues like myself, that simply is not the type of behav- company did have issues recruiting young, single port in Grand Rapids was ranked ment that, in 2013, generated about ior we’ve come to expect from the company.” professionals because the small town didn’t offer the fifth-best airport of its size — $125 million in sales. Products in- Ⅲ Jim Hettinger, former CEO of Battle Creek Un- big-city amenities. 2 million to 5 million passengers — clude surgical tables and lighting in the world by Airports Council In- systems that will complement ternational, the Grand Rapids Busi- Stryker’s current equipment portfo- man Frank Guglielmi told the Mil- Affordable Health Care,” conduct- $2 billion for the first time in the ness Journal reported. The survey lio, the company said in a release. waukee Business Journal that Mei- ed by Livability.com, the Grand 2013 fiscal year, said the universi- collects passenger feedback. jer has an “investment interest” in Rapids Business Journal reports. ty, which credits strong invest- Ⅲ The March edition of Coastal New natural grocer with plans for Fresh Thyme but that the compa- The website points to the city’s low ment returns for helping boost its Living magazine reports nies won’t share resources. health care spending, accessibility value. The endowment passed Saugatuck is one of “America’s Midwest claims Meijer backing According to the website, the to hospitals and physicians and its $1 billion in 2004. Happiest Seaside Towns.” Consid- company “formed quietly last year,” quality of life. Grand Rapids resi- Ⅲ Grand Rapids-based Crystal ering Saugatuck is along Lake Crain’s Chicago Business report- dents spend 31 percent less on Flash has purchased Owens Petrole- ed last week that a new grocery the result of a merger between the Michigan in the heart of lake-effect former Sunflower Farmers Market, a health care than the average um Inc. and Owens Propane Service country, where more than 100 inch- chain, Fresh Thyme Farmers Markets, American. Inc. of Albion. The deal adds about chain of groceries based in Phoenix, es of snow has fallen this winter to plans to open more than 60 stores in Ⅲ The Flint-based Charles Stew- 400 commercial fuel customers and Sprouts Farmers Market, a group date, it’s safe to deduce that the the Midwest over the next five art Mott Foundation has given $9 and 800 residential home heating of more than 160 stores throughout survey was conducted a while ago. years. Besides Chicago, locations million for the expansion of the customers in Michigan and north- the West and Southwest. are planned for this year in Indiana Michigan State University College of ern Indiana to Crystal Flash, Find business news from and Ohio. Human Medicine in downtown which has acquired seven heating around the state at crainsdetroit Crain’s Chicago reported that Flint, the foundation said in a fuel suppliers in the past two .com/crainsmichiganbusiness. Fresh Thyme’s website says its in- MICH-CELLANEOUS news release. years. Sign up for Crain's Michigan vestors are leaders of Walker-based Ⅲ Grand Rapids is No. 9 in a na- Ⅲ The value of Michigan State Ⅲ Short’s Brewing Co. has pur- Business e-newsletter at crains retailer Meijer Inc. Meijer spokes- tional ranking of “Top 10 Cities for University’s endowment topped chased land next to its Elk Rapids detroit.com/emailsignup.

in Sterlingat VillaFeb. Heights Penna 27 Macomb Automotive Suppliers Forum What can you do today to stay ahead of the curve?

Thursday, February 27, 5:30-8:00 PM Villa Penna, 43985 Hayes Rd., Sterling Heights

• Michigan’s New Strategic Road Map to Promote, Retain and Speakers/Panelists Grow the Automotive Industry Keynote by Nigel Francis (MEDC)

• “Ahead of the Curve” Panel Discussion - Michigan- and Macomb-led initiatives for automotive parts suppliers - What you need to know about OEM expectations and contracting strategies - Maximizing your strategic business advantages Nigel Francis Mark Hackel Tom Manganello Glenn Stevens Mike Beck • Q&A and Networking with Macomb automotive supply executives and Sr. Automotive Macomb County Chair of the Vice President, Vice President of automotive-focused attorneys Adviser to the State Executive Automotive Industry MICHauto Global Operations, of Michigan and Group, Warner Fori Automation Sr. VP, Automotive Norcross & Judd LLP Industry Ofﬁce, MEDC

Who Should Attend? Presidents, CEOs, CFOs, Purchasing Directors, Sales Directors and other senior executives. Automotive suppliers and other manufacturers welcome. Register Now! Space is Limited. This is a complimentary event that includes cocktails and hors d’oeuvres. http://wnj.com/MacombAuto2014 [email protected] 248.784.5086

A BETTER PARTNERSHIP® Macomb County Southﬁeld Midland Lansing Grand Rapids Holland Muskegon WNJ.com 20140224-NEWS--0003-NAT-CCI-CD_-- 2/21/2014 6:43 PM Page 1

February 24, 2014 CRAIN’S DETROIT BUSINESS Page 3 Southfield’s Towne Inside Square complex ROBERT CHASE may get 3rd tower

BY KIRK PINHO space at a third Class A Towne CRAIN’S DETROIT BUSINESS Square tower, which would need a lead tenant lined up before Redi- Children’s Orchard resale Now might be the time for the co decided to move forward with 670,000-square-foot Towne Square the building, Watchowski said. chain prunes to grow, Page 6 office complex in Southfield to get He declined to say how much a its third building, which would new tower would cost, but said make it one of the largest office the company has “a very good complexes in metro Detroit. idea of what it would be.” Southfield-based Redico LLC — Paul Choukourian, managing Company index which manages and owns Towne director of the Southfield office of These companies have significant mention in this week’s Square, northeast of Northwest- Colliers International Inc., said con- Crain’s Detroit Business: ern Highway between Civic Cen- struction costs would depend on AmeriSure Mutual Insurance ...... 4 ter Drive and Lahser Road — is factors such as the number of sto- Are You a Human ...... 7 considering a 300,000- to 350,000- ries. AutoHarvest Foundation ...... 3 square-foot For a building with eight sto- Backstitch ...... 7 build-to-suit ries or fewer, it would be $125 per Beaumont Health System ...... 14 tower now square foot. That would make Blue Cross Blue Shield of Mich. . . . 5, 13, 18, 19 NAM Y. HUH/ASSOCIATED PRESS that the two building costs between $37.5 mil- Burns & Wilcox ...... 4 Thanks to a recently approved $10 million endowment, on March 1 the existing build- lion and $43.75 million, depending Butzel Long ...... 14 formal job title for the University of Michigan’s Brady Hoke will be the J. Ira ings in the on the size. Center for Healthcare Research ...... 5 and Nicki Harris Family Head Football Coach. complex have For a building with more than CHE Trinity Health ...... 14 occupancy eight stories, it would be $140 per Children’s Orchard ...... 6 Colliers International ...... 3 rates in the square foot. That would make Comerica Bank ...... 12 mid- to upper building costs between $42 mil- Crittenton Hospital Medical Center ...... 18 90 percents, lion and $49 million. Watchowski Detroit Medical Center ...... 5, 14 said Dale Towne Square, which sits on 27 Watchowski, CEO, COO and Eastern Market ...... 1 acres, has always been planned for Fielek Builders ...... 12 Put me in, president of Redico. three buildings, Watchowski said. Foodjunky ...... 7 “The leasing pace has picked “If they are in the high 90s (occu- GreenLancer Energy ...... 7 (THIS SPACE AVAILABLE FOR YOUR NAME) up, and it’s largely a reflection of pancy rate) in their current build- Harbor Health Plan ...... 5 an improving economy. Much of ings, then that’s a strong indicator Henry Ford Health System ...... 14 our leasing (at Towne Square) to build,” Choukourian said. Hi-Lex Controls ...... 13 was done recently,” he said. Howard and Howard Attorneys ...... 19 Redico has started marketing See Tower, Page 20 H.W. Kaufman Financial Group ...... 4 Immortal Investments ...... 13 iRule ...... 7 Coach! Jaffe Raitt Heuer & Weiss ...... 18 Lakeshore TolTest ...... 14 Mantese Honigman Rossman and Williamson . . 12 Matta Blair ...... 13 Endowment IP speed dating McLaren Health Plan ...... 5 McLaren Macomb ...... 14 Meadowbrook Insurance Group ...... 4 name game AutoHarvest gathers partners, buffs up website Meridian Health Plan of Michigan ...... 5 Michigan State University ...... 21 fice, and is up BY TOM HENDERSON Miller Law Firm ...... 12 AND DUSTIN WALSH to 204 organi- comes to UM Munder Capital Management ...... 12 CRAIN’S DETROIT BUSINESS zations that MyFab5 ...... 7 have put up in- New Economy Initiative for S.E. Michigan . . . . 19 Y ILL HEA Slower than planned, the Auto- B B S formation on NS International ...... 11 Harvest Foundation is gaining trac- CRAIN’S DETROIT BUSINESS their needs or Optimal ...... 19 tion in its goal of providing an capabilities at Power Play International ...... 13 Deep-pocketed alumni with online meeting place for au- the site, auto- Plunkett Cooney ...... 18 tomakers and auto suppliers, ad- generous school spirit have for COURTESY OF J. IRA HARRIS harvest.org. Redico ...... 3 vanced manufacturers, universi- years seen their donations J. Ira Harris, whose foundation made AutoHarvest Scripps Park Associates ...... 12 the $10 million gift to UM, is a 1959 ties and national labs to license Pankin is an IP mar- Shred-It Detroit ...... 13 commemorated by having graduate of the university. or find intellectual property. ketplace where Style Encore ...... 6 their names formally attached When the TechTown-based researchers and companies can Style Trader ...... 6 to college coaching positions, the “J. Ira and Nicki Harris 501(c)(3) nonprofit was announced offer their technology and Tecumseh Products ...... 15 especially in football. Family Head Football in August 2011, co-founder and patents for possible licensing Towne Square ...... 3 Coach.” CEO Jayson Pankin, who previ- deals. If there’s interest, the par- University of Michigan ...... 3, 18 That phenomenon arrived Vandeveer Barzia ...... 14 Brady Hoke’s job title gets ously spent seven years helping ties can make arrangements for in Michigan last week, and Delphi Corp. commercialize its in- further discussion. Pankin said VHS University Laboratories ...... 14 that formal moniker starting love or hate it, it’s not going tellectual property and spin off it’s designed to be an eBay for Wisely ...... 7 away. March 1. for-profit companies, hoped to go technology licensing. Approval The University of Michigan’s His colleagues’ jobs may from an alpha version to beta ver- is needed to use the site. Department index At least one new spinoff com- regents on Thursday ap- soon have similar names of sion to final version of the technology clearinghouse’s website by pany says it owes its existence, BANKRUPTCIES ...... 7 proved a deal in which a donors, following a common the end of 2012. and its first federal research BUSINESS DIARY ...... 16 $10 million endowment trend in the Ivy League and grant, to a successful search on The final version of the web- CALENDAR ...... 10 from an alumnus will in- at an increasing number of site is still several months away, the AutoHarvest website of avail- CLASSIFIED ADS ...... 17 other universities. but AutoHarvest has been adding able technologies. clude renaming the head KEITH CRAIN...... 8 football coach position as See Coach, Page 21 important partners, including the U.S. Patent and Trademark Of- See AutoHarvest, Page 19 OPINION ...... 8 OTHER VOICES ...... 9 A fine MEZ PEOPLE ...... 16 THIS WEEK @ Listen to students and instructors talk about how the Michigan RUMBLINGS ...... 22 Engineering Zone is building skills in the next generation. Watch WEEK ON THE WEB ...... 22 WWW.CRAINSDETROIT.COM “This Week in Crain’s” at crainsdetroit.com/video. 20140224-NEWS--0004-NAT-CCI-CD_-- 2/21/2014 2:20 PM Page 1

Page 4 CRAIN’S DETROIT BUSINESS February 24, 2014 Meadowbrook Insurance regroups while Kaufman and Amerisure charge ahead

BY JAY GREENE tially due to Meadowbrook’s deci- ners, Spectius Underwriting Solutions, CRAIN’S DETROIT BUSINESS sion in 2012 to drop unprofitable Ontario, Canada, and ISI Insurance long-haul trucking and L.A. work- Services in Uniontown, Pa. After turning around its finan- ers’ comp business. Last year, Kaufman strength- cial operations in 2002, Meadow- Cubbin said Meadowbrook has ened its brokerage business by hir- brook Insurance Group Inc.’s CEO struggled the past two years, pri- ing two well-known executives for Bob Cubbin faces another chal- marily because the company its growing New York office. lenge this year to right its ship af- didn’t increase premiums in work- Last June, Denis Brady was re- ter A.M. Best downgraded its rating ers’ comp as much as it needed to cruited as president of Burns & last August to B++ from A-. from 2009 to 2011. It also incurred Wilcox Brokerage after heading up While Meadowbrook is regroup- losses from higher than expected the San Francisco office of RT- ing, Southeast Michigan’s other tornado damage in the Midwest. Specialty LLC. two large property casualty insur- “You set premiums to earn you a In December, Evan Bull joined ers — H.W. Kaufman Financial Group small underwriting profit,” Cub- Burns & Wilcox after more than 20 and Amerisure Mutual Insurance Co. bins said. “Sometimes the actuari- years at the Marsh and McLennan — are steaming ahead with double- al team gets it wrong or something Agency. Bull will lead a New York - digit growth predictions this year. happens in the marketplace to based specialty Cubbin said the Farmington change your calculations.” wholesale prop- Hills-based property casualty in- In California, Cubbin said, sev- erty team. surer, which employs 1,000 work- eral court decisions led to an in- Kaufman said ers nationally with 250 in Michi- crease in paid claims. In addition, the company gan, has taken several steps to regulatory changes increased plans to hire ad- return to profitability. Changes in- workers’ comp benefits there. ditional employ- cluded increasing workers’ com- To begin covering those higher ees this year in pensation premiums by more than costs, Meadowbrook in 2010 began Michigan, 60 percent in California and dis- obtaining rate increases in work- adding to its 240- continuing a money-losing excess ers’ compensation and property employee work- workers’ compensation business casualty. In 2013, rate increases av- Kaufman force, a 19 per- venture in Los Angeles and a lia- eraged 11 percent across all lines. cent increase over 2012, he said. bility insurance The net result of Meadow- Kaufman also includes Burns & program for brook’s actions, said Cubbin, will Wilcox Brokerage, Burns & Wilcox Re, long-haul trucks be to improve profitability. For R.B. Jones; Royal Premium, a premi- in the South- 2014, Meadowbrook projects net um financing company; US- east. operating income to range be- Reports, an inspections, audits, and “We terminat- tween $25 million to $35 million, or risk-management company; Min- ed about $120 50 cents to 70 cents per share. uteman Adjusters; and the Chester- million in busi- field Group Ltd., a London-based in- ness. We are in a surance broker. period trying to Amerisure’s story retrench a little Cubbin Amerisure’s total direct written bit,” Cubbin premiums are expected to grow at Projected growth said. “Right now our goal is to sta- least 10 percent this year to about Despite analyst predictions, bilize our balance sheet and return $760 million from $690 million in Russell and Cubbin are predicting to profitability in 2014.” 2013, said CEO Richard Russell. strong years for their main lines of But Meadowbrook (NYSE: MIG) But more important, Russell workers’ compensation. Kaufman still must put together at least two said, the private stock company’s is predicting positive growth in straight quarters in which it does surplus grew $71 million, or 9.7 the excess and surplus insurance not take reserve charges before in- percent, to $803.9 million from lines along with its expanding bro- vestors regain confidence in the $732.9 million in 2013 and is expect- kerage business. company, said Ken Billingsley, se- ed to grow 6.2 percent this year. A new report from Standard & nior vice president and research “We focus on surplus accumula- Poor’s Ratings Services concludes analyst for Washington, D.C.- tion,” Russell said. “We are a long- that revenue for the workers’ com- based Compass Point Research & tail casualty writer. We make very pensation sector will likely decline Trading LLC. little money in underwriting. In- in 2014. For fiscal 2013 ended Dec. 31, vestment is critical for us. We hold “We think the workers’ compen- Meadowbrook had had a net oper- premium dollars for losses that go sation space and auto liability will ating loss of $117.9 million, or $2.36 out 30 years or more. When invest- be very positive in 2014,” Cubbin per share, compared with net oper- ment yield goes down a bit, it hurts said. “Property might not be as ating loss of $28.4 million, or 57 and we have to increase premiums strong because of the storms. But cents per share, for the same peri- when that happens.” od in 2012. our excess and surplus lines also Farmington Hills-based will be robust.” Strong. And ﬂexible. Billingsley said Meadowbrook Amerisure, which serves midsize has incurred about $112 million in Russell said premiums written commercial companies in manu- for workers’ compensation, which combined net reserve charges over facturing, construction and health has been the 102-year-old compa- the past eight financial quarters. care, operates agencies in 23 states ny’s primary product line, will The charges covered underwriting but does business in all 50. The grow this year with the help of losses for workers’ compensation company employs 706 workers na- sales to hospitals, assisted living and the long-haul trucking claims tionally with 370 in Michigan. in the Southeast. facilities and other health care or- “Investors were surprised by ganizations. the reserve charges and why the Kaufman Financial’s moves “We began writing health care in actuaries and auditors got it so At Kaufman Financial, CEO 2007, and it is our fastest-growing” wrong,” Billingsley said. “They Alan Jay Kaufman said his Farm- market, said Russell, adding that have taken a number of actions, ington Hills-based company’s con- health care now represents 6 percent of written premiums. When businesses face the changing the demands but we expect a slowdown. ...We es- tinued diversification into broker- Billingsley said low claims and of growth, purchasing goods, or making payroll, timate they will be writing 40 per- age, hiring key staff in New York cent less net premiums at the end premium increases for workers’ they require a strong, yet flexible solution. and its three acquisitions last year of 2014 as compared to the end of compensation have made it an at- Crestmark can help. bode well for continued growth. 2012.” Kaufman Financial, which also tractive business line for insurers Providing asset-based lending to small- and mid- Cubbin said Meadowbrook pro- owns the Burns & Wilcox insurance the past decade. sized businesses nationwide for over 17 years. jects a 25 percent to 30 percent brokerage, projects revenue to “Our workers’ compensation drop in premiums from about grow 15 percent this year to $1.6 line is our most profitable, and we Contact us today! 888.999.8050 $1.1 billion written in 2012 to be- billion. expect it will continue that way,” tween $775 million to $800 million Three acquisitions in 2013 added Russell said. Matt Dekutoski this year. In 2008, premiums writ- $25 million in annual revenue to Jay Greene: (313) 446-0325, Anntreal Hemmingway-Smith ten totaled $600 million. Kaufman Financial, he said: New [email protected]. Twitter: @jay- The decline in revenue was par- York City-based Global Excess Part- bgreene 20140224-NEWS--0005-NAT-CCI-CD_-- 2/21/2014 5:28 PM Page 1

February 24, 2014 CRAIN’S DETROIT BUSINESS Page 5

Harbor Health, other plans expect Medicaid numbers boost IS YOUR PLACE A COOL PLACE TO WORK? TIME TO NOMINATE BY JAY GREENE plans as part of health care reform. are considered commercial, and Crain’s biennial Cool Places to CRAIN’S DETROIT BUSINESS Blue Cross continues to cover the fees are lower than Medicaid.” Work in Michigan awards returns Chief medical about 6,000 MIChild members, said As part of its growth strategy, this year, and once again Crain’s is Detroit Medical Center’s Harbor Blue Cross. Harbor Health Plan will also add a working with Best Companies Group of Harrisburg, Pa. Health Plan Inc., the newly minted officer Greg Berger Harbor Health Plan also hopes Medicare Advantage product this name of the former ProCare to pick up about 6,000 enrollees in year and apply to the Michigan De- The competition has two parts: one Health Plan, expects to increase said the DMC’s name Wayne County this spring from partment of Community Health in 2015 its membership to 18,000 this year, questionnaire for the state-funded adult benefit to expand its Medicaid plan into employers, another up from 3,300 currently, primarily has helped Harbor waivers program, currently ad- Oakland County, Berger said. for employees. The as the state expands Medicaid this ministered through the Wayne “We have an incredibly big combined, weighted spring and nearly 100,000 people Health increase County Four State Health plan. (physician) network,” Berger results will determine 2014 with incomes below 133 percent of membership. Over the next few weeks, the es- said. “We have more than 400 pri- who qualifies for Cool Places the federal poverty level begin to timated 35,000 adult beneficiaries mary care physicians in Wayne designation. enroll in Wayne County. with incomes lower than 35 per- County and more than 3,000 spe- Best Companies supplies all “When we bought ProCare in land, Macomb and Washtenaw cent of the federal poverty level in cialty doctors.” participating companies — (October) 2012 (for $6 million), we counties, CHRT said. Wayne County are being shifted While some experts have ex- regardless of whether they win the felt at DMC that we wanted to have Cool Places recognition — with a Medicaid eligibility will now into the Medicaid program. pressed concern that the nearly 1 Best Companies Group employee a new brand name for a fresh cover a single adult with annual Those people will choose million newly insured people in feedback report based on employee start,” said Greg Berger, M.D., Har- income of $15,000 or less and fami- among eight Medicaid health Michigan might have problems responses to the 72-question bor’s chief medical officer. lies of four with annual income plans in Wayne County, including finding primary care providers, survey. The report can help Berger said DMC’s own name below $34,000. Harbor Health, Midwest Health Berger said medical access won’t company executives identify has helped Harbor Health increase Harbor expects to add members Plan, Meridian Health Plan, Molina be a problem. strengths and weaknesses in their membership the past year to 3,300 in several ways, said Berger, one Healthcare of Michigan, Blue Cross “Everybody is worried about it, company culture and practices. from 1,900 members. Harbor of which is adding Harbor Complete and three other plans. but I talk with a lot of physicians To be considered, companies must Health is only licensed in Wayne MIChild. Jon Cotton, president and COO and they would like to be busier register at coolplacestoworkmi.com by April 18. Other important dates, County. MIChild is Michigan’s program of Detroit-based Meridian Health than they are right now, especial- samples of the surveys and other Harbor Health this week plans to for children of low-income work- Plan of Michigan, said Meridian, ly at Medicare rates,” Berger said. information are on the website. begin a marketing and advertising ing families that is part of the 17- the state’s largest Medicaid HMO Under Medicaid expansion, Once registered, companies can campaign that primarily will be on year-old federal Children’s Health with 290,000 members, could add physicians have been promised to participate in the surveys. radio and cable television, said Insurance Program. up to 100,000 new members during be paid Medicare rates for at least Businesses and nonprofits can apply. Sarah Collica, DMC’s press secre- Some 37,500 children under age the next year. the first two years. Applicants must have a minimum of tary. 19 whose parents are not eligible Kathy Kendall, CEO of Flint- Harbor Health is managed by 15 employees in Michigan and have Nearly 100,000 of the state’s ex- for Medicaid receive health and based McLaren Health Plan, said DMC’s accountable-care organi- been in business at least one year, pected 470,000 uninsured people dental coverage for about $10 per McLaren plans to add about 10 per- zation, Michigan Pioneer ACO. DMC among other criteria. are expected to be eligible for Med- month per family. cent of newly eligible Medicaid en- has a contract with Medicare to Companies pay a fee based on icaid expansion in Wayne County, Since Oct. 1, the Michigan Depart- rollees in the 53 counties it oper- coordinate care for about 15,000 company size to Best Companies said the Ann Arbor-based Center for ment of Community Health has been ates in. Medicare fee-for-service patients. to cover survey costs. The cost ranges from $610 to $895 for Healthcare Research and Transforma- transitioning the MIChild pro- “We also started enrolling Jay Greene: (313) 446-0325, online surveying, and $765 to tion in a January 2013 report. An- gram from Blue Cross Blue Shield of MIChild and already have 3,500 [email protected]. Twitter: $1,660 for paper surveying. other 85,000 are expected in Oak- Michigan into Medicaid health children,” Kendall said. “They @jaybgreene

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Page 6 CRAIN’S DETROIT BUSINESS February 24, 2014 Children’s Orchard prunes 2014 franchises to spur growth

BY SHERRI WELCH UPCOMING After his 2004 CRAIN’S DETROIT BUSINESS acquisition of When Taylor Bond acquired re- Children’s Orchard, PARTNER EVENTS Taylor Bond’s sale clothing chain Children’s Or- growth plans began chard Inc. in 2004, he set out to grow with the closure of the company, oddly enough, by nearly half of the closing nearly half of the 80 fran- franchises. Then chises under agreements he’d in- came the recession. Coffee and Controversy - Super Utilizers herited from the previous owner. Now that banks are of the ED: A Successful Solution Some were struggling or not lending, the resale clothing chain The Greater Detroit Area Health Council paying the royalty fees they owed. Others were held by “hobbyist hopes to open 10 presents featured speaker R. Corey Midwest franchises owners” who weren’t focused on this year. Waller, MD, MS, FACEP, ASAM; Medical growing the business or whose vi- ROBERT CHASE Director for Spectrum Health Medical sion for the company didn’t dove- tail with his, Bond said. of time and money customers are them out, Bond said. Group Center for Integrative Medicine. For As a result, Children’s Orchard spending in the stores. It’s too early to make claims more information, contact Laurie Arora didn’t renew franchise agreements The company, which employs 20 about revenue for the Style Trader at (313) 965-4123 or [email protected]. for many, and other outlets closed at its Ann Arbor headquarters, franchises, he said. But most resale of their own accord. After a few also introduced tent sales and in- businesses have revenue of $250,000 Sponsored by Priority Health years, Bond was ready to expand stituted a guarantee that people to $500,000 per year, and the corpo- March 6 • 7:30 - 9:30 a.m. the Ann Arbor-based chain once coming in to sell items will have an rate-owned Style Trader location is Hospice of Michigan again. But then the recession hit. offer within 20 minutes or get a $5 operating within that range. So he spent the past five years store credit. That’s replaced pur- The total investment required to 400 Mack Ave, Detroit strengthening the Children’s Or- chases made by appointment only. launch one of the franchises is GDAHC members: $25 chard brand and operating model. “It’s been an enormous success. $330,000 to $450,000, according to Non-members: $35 With banks beginning to lend again, Walk-in buying drives inventory the company’s franchise disclo- the chain has set a goal to open 10 Registration: gdahc.org and grows sales, and customers sure statement. new Midwest franchises this year. love (it),” Bond said. When Children’s Orchard origi- Children’s Orchard is also ex- The 34 Children’s Orchard stores nally tested the Style Trader format Marketing & Sales Executives of Detroit panding into name-brand resale operating in 2012 reported average in Livonia, it offered items for chil- for teenagers, men and women. It (MSED) Spring Networking Event sales of just under $353,000, accord- dren at the location, too, Bond said. plans to open a second corporate- ing to the company’s franchise dis- “But one of the things we learned Join MSED members and friends owned location of a name-brand closure statement. is the shopping psychology when for professional networking at the resale store chain, Style Trader LLC, you’re shopping for children and Royal Oak’s premiere entertainment aimed at teenagers and adults, late women’s things is different. ... When this month or early in March. Franchisee changes mom is shopping for kids, she’s not complex. Bring your colleagues and The 2,500-square-foot store at Children’s Orchard also in- necessarily shopping for mom.” make new connections with some of Ann Arbor’s Colonnade Shopping creased the net worth require- Children’s Orchard is following the top marketing and sales executives Center will feature used clothing. ments for its owners to $500,000 the path of competitors like Win- The items stocked include brands from the earlier requirement of a mark Corp. (Nasdaq: WINA), which in Michigan. The evening includes like Banana Republic, GAP, DKNY, net worth of $250,000-$300,000. introduced women’s resale stores appetizers and free billiards. A cash bar Ralph Lauren, Aeropostale and There’s a relationship between a under the Style Encore banner last with happy hour specials and $2 bowling Abercrombie & Fitch. Bond expects person’s net worth and their busi- year. It also operates Plato’s Clos- four other Style Trader locations to ness experience, Bond said. et, Once Upon a Child, Play It Again will also be available. For questions, call open across the Midwest this year. Most of the company’s franchis- Sports and Music Go Round. Meeting Coordinators at (248) 643-6590. Children’s Orchard decided to es launched with financing se- Minneapolis-based Winmark op- March 19 • 5 - 7 p.m. launch the new stores after cus- cured through home equity loans, erates 12 Once Upon a Child fran- tomers repeatedly asked if the and that disappeared when home chises in Michigan and 14 Plato’s Star Lanes at Emagine Royal Oak chain would sell items for teens equity lines of credit began to dry Closet locations, said Pete First, di- 200 North Main Street, Royal Oak and adults, as well as children, up in 2007-08. rector of franchise development. On Members: $20 Bond said. Total startup costs for a Chil- average, its U.S. stores under those “Getting new customers is a lot dren’s Orchard franchise range brands generate $900,000 to more Non-members: $30 of work; you’re better off keeping from $146,200 to $297,000, accord- than $1 million in annual revenue, Registration: msedetroit.org the ones you’ve got,” he said. ing to its franchise disclosure doc- and sales have increased each of the Other organizations like Plato’s ument. past 10 to 12 years, he said. Closet have expanded in the same Bond said the Children’s Or- “The popularity of recycling and 7th Annual Opening Day Party at the way with good success, Bond said. chard stores that remained open sustainability today is increasing. Gem Theatre beneﬁting Winning Futures The recession strengthened the during the recession saw average You’ve got a younger generation, Get your limited ticket to this invite-only nation’s bargain-hunting mentali- sales growth of nearly 5 percent and that’s how they’ve grown up,” ty to an all-time high, and that has private party, and watch the game in per year compounded over the First said. remained intact even as the econo- past five years. Winmark launched Style Encore comfort on the theater screens while my steadily improves, he said. Gross margins for resale can be for women last year to capitalize on having beer, wine and food all day The National Association of Resale 65-70 percent, generally. So if an the growing segment and already (included). Have game tickets? Come Professionals estimates the resale item is priced for $1, the store paid has 40 franchise agreements industry is a $13 billion segment about 35 cents for it, he said. signed, including five in Michigan. and go all day. This is the place to be on that’s growing. For the past two Systemwide sales for the chain The first, in Utica, began buying Tiger’s Opening Day! Hosted by Bernard years, the industry has seen 7 per- are about $12 million, and the cor- used items in early February to bol- Financial, Farm Bureau Insurance, Fifth cent growth in the number of porate parent’s revenue is more ster its inventory and is expected to stores selling used items. than $1 million, Bond said. He pro- open in early April, First said. Third Bank, and O’Keefe Value-conscious consumers and jects that revenue will rise 5 per- By mid-to-late summer or early March 31 • 11 a.m. - 5 p.m. an increasing interest in recycling cent this year and even more as fall, Winmark expects additional The Gem Theatre are driving that growth, according new franchises come online. Style Encore stores to open in Sag- to the association. inaw, Portage and East Lansing. 333 Madison, Detroit Adult and teen stores Michigan has a good customer Tickets: $150; discounted packages New store model base and affordable retail spaces available for 10+ tickets Children’s Orchard launched that enable Winmark to set its During the past five years, Chil- Style Trader stores for teenagers franchisees up for success, he said. Tickets must be purchased in advance. dren’s Orchard has taken advan- and adults in June 2012, through a “Michigan is a good market for Registration: winningfutures.org tage of lower rents, relocating company-owned store at Middlebelt us, and the franchisees are great,” many of its franchises to larger, and Plymouth roads in Livonia. First said. more visible locations, said Bond, “In order to be a good fran- Sherri Welch: (313) 446-1694, 52. That has improved merchan- chisor, we need to be operating a [email protected]. Twitter: dising and increased the amounts store,” to test ideas before rolling @sherriwelch 20140224-NEWS--0007-NAT-CCI-CD_-- 2/21/2014 5:57 PM Page 1

Page 7 THE MILLER LAW FIRM 7 startups in Google Changing the Odds in our Clients’ Favor contest feel luckier

Seven local startups are one step closer to pitching their business plans to Google. Google Demo Day is part of the Google for Entrepreneurs Pro- gram, with competitions being held across the U.S. One winner from each city will advance to the finals. The local finalists are: Are You A Human, Detroit, creator of PlayThru, which replaces online annoyances with games. Backstitch Inc., Detroit, which lets people build their own view of the Web by bringing together content from their favorite sites. MyFab5 LLC, Ann Arbor, a community for sharing and discovering restaurants. Foodjunky LLC, Detroit, a website that helps groups place online orders to restaurants. GreenLancer Energy Inc., De- The Miller Law Firm is Recognized troit, a Web-based engineering firm that helps contractors devel- as a Leader in Complex Business Litigation op renewable-energy projects. iRule LLC, Detroit, creator of the iRule app that acts as a TV re- mote and controls other devices. Q Automotive Supplier Counseling Q Commercial and business lawsuits Wisely Inc., Ann Arbor, whose namesake app analyzes consumer Q transaction data to find the best Q Employment litigation Shareholder and partnership disputes places to eat and shop nearby. From 5:30-7:30 p.m. Wednesday, Referral fees honored on contingency fee cases finalists will make pitches to become the local winner at Grand Cir- cus, at 1570 Woodward Ave. in De- troit and is open to the public. 950 West University Drive, Suite 300 248-841-2200 millerlawpc.com Rochester, Michigan 48307 BANKRUPTCIES The following businesses filed for protection in U.S. Bankruptcy Court in Detroit Feb. 14-21. Le Chateau Art Gallery & Custom Framing LLC, 15001 Charlevoix St., Grosse Pointe Park, voluntary Chapter 11. Assets and liabilities not available. Diversified Excavating LLC, 7810 Whittaker Road, Ypsilanti, voluntary Chapter 7. Assets: $73; liabilities: $338,131. Fort & Vreeland Plaza LLC and Brown’s T Market Inc., 27000 Fort Plaza, Brownstown Township, voluntary Chapter 11. Assets and liabilities not available. — Bridget Vis

CRAIN’S AMERICAN DREAMERS: IMMIGRATION SUCCESS STORIES In many ways, metro Detroit was built by the hopes and dreams of people from other countries. And foreign-born entrepreneurs will be vital to the region’s future. Crain’s Detroit Business wants to tell those stories. We are seeking nominations of immigrants who have had business success for an American Dreamers feature to be published in the June 2 issue. Nominations for yourself or someone else are due March 3. Visit crainsdetroit.com/nominate for details. For questions, contact Senior Reporter Sherri Welch at [email protected] or (313) 446- 1694. For technical questions about the form, contact Ashley Henderson at [email protected] or (313) 446-1685. 20140224-NEWS--0008,0009-NAT-CCI-CD_-- 2/21/2014 5:42 PM Page 1

Page 8 CRAIN’S DETROIT BUSINESS February 24, 2014 OPINION Faculty must serve public needs, not own

akland Community College faculty sent a dramatic valentine to Chancellor Tim Meyer on Feb. 14 with a O vote of no-confidence. As Chad Halcom reported on Feb. 17, the turmoil at OCC is mirrored at other community colleges, where faculty members have resisted changes designed to invest resources to improve graduation rates and more closely connect to supply-and-demand needs in the job market. In particular, they resist the shifting of open teaching positions from one department to another. Employers and civic and elected leaders in Oakland need to weigh in and support Meyer and OCC’s elected board that has publicly supported the chancellor’s master plan. OCC, the state’s largest community college with 26,000 students, is uniquely positioned to make a positive difference in the region’s job market, but only if it can freely redeploy resources to best address chronic shortages of specifically skilled workers. That’s Michigan’s conundrum. Unemployment remains stubbornly high, yet employers are raiding one another because they can’t find newly minted talent to fill open jobs. Community colleges traditionally have been one of the shortest routes to landing a skilled job, whether it’s Web development and software or welding technology. Faculty members intent on preserving the status quo do not have the best interests of students, job seekers and employ- TALK ON THE WEB ers — most of them taxpayers — at heart. From www.crainsdetroit.com his way through the fractious and We all can fight health care fraud Re: Raising Michigan’s minimum wage Reader responses to stories and for tipped workers blogs that appeared on Crain’s incompetent past administrations website. Comments may be to make it to where he can now get Metro Detroit is among the leaders nationwide in Medicare If my server is making $9.50 an edited for length and clarity. the job done. Kudos to entrepre- fraud. But thanks to aggressive investigation and prosecution, hour, I won’t be tipping him or her neurs like him who face the odds fraud may be declining in Southeast Michigan. U.S. Attorney 20 percent. This plan makes no on their labor costs. This is espe- and beat through them with sheer sense. determination and grit. Barb McQuade and her office and members of a special task cially true in relation to restau- Linda in West Bloomfield rants that charge top dollar for Michael Hinsky force deserve special credit. their product. I wonder if Joe Vic- As we report on Page 1, since a federal crackdown began in Let’s consider the English food cul- ari could live and support his fami- I am cautiously optimistic, but ture as an option. No tips at restau- 2009, nearly 170 people have pleaded guilty, more than 30 have ly on a $2.65-an-hour wage. The this seems like progress. As a resi- rants and coffee shops; employees been convicted by juries and more than 100 await a judge or tips are paid for by the customer. dent of Windsor working in South- are generally paid a living wage. east Michigan, I’m excited to see The business owner contributes jury’s decision this year. Last year alone, federal prosecutors in- Dean P. Simmer what the future holds for Detroit. nothing in relation to tips. dicted 46 people in schemes that cost taxpayers $380 million. Auto Testing Carolyn Mazurkiewicz Fraud is “easy” when it’s other people’s (i.e., the govern- Everyone should make a living ment’s) money. But experts project that about 3 percent of all wage if it is your full-time job. Tip- ping is a way for business owners Here’s hoping that everyone in Re: Michigan House panel approves health care spending is fraudulent, or approximately $162 mil- not to pay their employees. It would this state is going to love eating out income tax cut at most restaurants cafeteria-style. lion in fraudulent Medicare reimbursements in Southeast make more sense just to pay the wait Since this “surplus” was funded Michigan alone. staff and not expect us to tip. Freedom Trinity by taxpaying citizens, it is only Consumers of health care are taking on more and more ac- Banner Sign Co. fair that they get their own money tive roles in managing their own care. But it pays for every- Re: After years of red-tape delays, back. These dollars do not belong It is unbelievable that a busi- one, from consumers to employers to health systems, to edu- Hantz Farms nears sprouting to the government. ness owner thinks that a wage of William J cate consumers about ways to monitor their own health care $2.65 an hour is appropriate. Busi- Luckily, Hantz had the tenacity records and bills to guard against fraud. nesses are getting a fantastic break and the wherewithal to marshal See Talk, Page 9 KEITH CRAIN: Celebrating the Newsmaker of the Year This week, Crain’s Detroit Busi- County prosecutor to jor urban city was cer- thousands to realize he was in- continues to surprise many who ness will honor our Newsmaker of mayor, with a short stop tainly unorthodox. Hos- deed a breath of fresh air in doing studied the campaign. the Year at the at the Detroit Medical pitals have traditional- what had to be done. He didn’t al- Of course, he was equally suc- MotorCity Casi- Center. Although I was ly been run by either ways use a velvet glove, but the cessful in the general election. no Hotel on aware of Duggan when doctors with business DMC often required strong medi- The challenges he faces as a Tuesday. he was prosecutor, it was training or specially ed- cine. His success there is well es- mayor operating under an emer- We are only when he became ucated executives tablished. gency manager are formidable, to pleased that our CEO of the DMC that I schooled in hospital ad- But I think his heart was al- say the least. But the excitement newly elected had a chance to get to ministration. ways in politics, and so he took and enthusiasm and well wishes of Detroit Mayor know him well. Mike certainly did steps that would lead him to the Mike Duggan I was on the DMC not fit in either of those mayor’s office. Who would have the citizens are overwhelming. will be honored, board of trustees, and categories. But the thought that after an initial mis- Duggan has overcome a rocky a day, as it hap- when it was suggested DMC was in dire straits step in filing documents, he would road to be elected mayor of Detroit. Duggan pens, before he that he be the new CEO there was, and needed to take a fresh ap- be able to continue his quest for Because of the challenges he over- gives his first state of the address. needless to say, a lot of debate. proach, which he brought. It did- victory in the primary. Duggan’s came, we are pleased and proud to It was a rather remarkable jour- The selection of a politician to n’t take long for the board of success in launching a write-in have named him Crain’s News- ney that took him from Wayne run a large medical center in a ma- trustees and the entire staff of campaign is well documented and maker of the Year. 20140224-NEWS--0008,0009-NAT-CCI-CD_-- 2/21/2014 10:39 AM Page 2

February 24, 2014 CRAIN’S DETROIT BUSINESS Page 9 OTHER VOICES: As Israel can revitalize, so can Detroit

I recently had the honor ation and hopelessness. It historic tributary. Through a te- too is a hopeless wasteland of Detroit is our Jordan River. of participating in a mis- was not a community di- dious effort of breaking away bar- blight and lawlessness, with no Once teeming with life and vitali- sion to Israel that focused vided without common vi- riers that will free flowing water, hope for a future. ty, our great city is in need of on enhancing the already sion. Rather, the Israel the river is experiencing rejuvena- However, we also know that reclamation after years of neglect strong economic ties be- discovered by our mission tion. Israel has overcome many ob- when we have the opportunity to and a lack of stewardship. The ef- tween Michigan and Is- participants is a land of stacles. Those on the mission now host first-timers to Detroit, forts underway today by elected, rael. inspiration where the appreciate both the spirit of Israel whether they’re from New York or business and community leaders As we progressed from spirit of innovation is and the fact that headlines don’t al- New Delhi, all are amazed at what are working to break the dams Tel Aviv to Jerusalem to grounded in deeply rooted ways tell the story. This is the tale our community has to offer. Like that have held back progress for the Galilee, one common commitments to economic of the State of Israel. Israel, Detroit is a community decades. theme followed us: the tale development, prosperity, The tale of our beloved city of with an evolving vision of what of two states, the State of Mark Davidoff social justice, education, Detroit is no different. How many can and should be. Like the spirit of those early Is- Israel and the state of Detroit. responsibility for the environ- times have we encountered an ex- Like Israel, Detroit has been raeli pioneers, we will persevere To the amazement of first- ment, and caring for all. pression of sympathy about De- through many difficult moments until the state of Detroit’s renewal timers, what they had read and On our last day, we viewed a troit from someone who has never but continues the struggle to re- is a tale recanted around the globe. viewed through the media about reclamation project for the Jordan taken the opportunity to visit our claim its rightful position as one of Mark Davidoff is managing Israel was not the reality on the River, an effort to infuse new life city? Certain media will have non- the top places in the country to partner of Deloitte LLP in Michi- ground. It was not a land of desper- into this once-flowing and thriving Detroiters believe that this land live, work and play. gan.

TALK CONTINUED

■ From Page 8 Re: Other Voices: Transit needs to be everyone’s business Couldn’t agree more. Regional transit needs to be a top priority if the entire Detroit region wants to succeed in the future. Jayelaudio Re: Mary Kramer: Find biz bashes on First Place Now proud our calendar This is a great idea. Having a one-stop site makes life easier for Bank. to be Talmer the business development officer and interested executives who don’t have the time to visit nu- While our name may be different, the merous websites to glean this in- Bank and Trust. names of the people who take care of formation. Thank you to Crain’s for taking the initiative. you, and the personalized service they James Schmitz provide, are still the same. So is our strong commitment to this community. Re: Editorial: Wring politics out of water authority plan In fact, the name “Talmer” is a tribute I agree that politics have ruined by the Bank’s two principals to their DWSD by giving out lucrative contracts to cronies and having no grandfathers (named Talmage and able technical management at the Merzon), who both dedicated their helm. This is the reason for sink- holes, eutrophication of Lake lives to community service. Erie, outdated 1940s technology, etc. The counties should agree to What’s more, Talmer Bank, just like new management by engineers and scientists. First Place, is a Midwest-based sauliussimoliunas community bank—and one with demonstrated ﬁnancial strength. So Re: Ficano’s State of Wayne County you can count on us to take care of highlights projects, new jobs your business needs for many years Detroit up to bat, Wayne Coun- ty on deck. Using the infamous to come. words of our illustrious former Governor Granholm, “In five Please stop by soon. You’ll quickly years, you’ll be blown away” — and we have! discover that we’re now an even greater Dukeoftralee asset to your community.

Re: New DDOT director will oversee security camera installation in buses This is great, but why weren’t the cameras purchased from a Detroit company, or a Michigan company, or a U.S. company? Church Lady

Having some of the management www.talmerbank.com | 855-882-8824 actually ride the buses would be an idea. Chester Marx 20140224-NEWS--0010-NAT-CCI-CD_-- 2/21/2014 10:47 AM Page 1

Page 10 CRAIN’S DETROIT BUSINESS February 24, 2014

CALENDAR WEDNESDAY with executives and members of the will discuss strategies for economic craft College VisTaTech Center, Livo- Legislature will follow the event. development, including the types of nia. $35 CREW member, $70 nonmem- BUSINESS LEADERS HOSTS FEB. 26 Lansing Center, Lansing. $125-$350. businesses they are attempting to at- ber. Contact: Norma Lee Beuter, (248) Contact: Edward Woods III, (517) 332- tract and how this will relate to oppor- 646-9629; email: beuter@ comcast.com; LEADERSHIP SUMMIT Annual Legislative & Public Policy 6723; email: [email protected]; web- tunities in commercial real estate. website: crewdetroit.org. Conference. 10 a.m.-6:30 p.m. Michi- site: msae.org. With Joan Gebhardt, chairman, South- Join Business Leaders for Michigan gan Society of Association Executives. east Michigan Council of Govern- 8 a.m.-1:30 p.m. March 10 for its With Gov. Rick Snyder. The state’s 2014 Southeast Michigan Economic ments; Valerie Hoag, senior vice presi- THURSDAY 2014 leadership summit, Building largest gathering of legislative, public a New Michigan, where industry policy and association leaders. Topics Development Outlook. 2:30-5 p.m. dent, business development, Michigan FEB. 27 Commercial Real Estate Women De- Economic Development Corp.; Gina leaders will address the progress include state budget and other public made on the Michigan Turnaround policy issues, November elections and troit. Representatives from the state Cavaliere, deputy director, Wayne 2014 Detroit Policy Conference. 7:30 the impact of the Affordable Care Act of Michigan; Wayne, Oakland and Ma- County Economic Development a.m.-4 p.m. Detroit Regional Chamber. Plan’s New Michigan strategy and on associations. A Capitol reception comb counties; and the city of Detroit Growth Engine; and others. School- The event reinforces the message that what more can be done to grow a healthy economy. Six moderated discussions will address Michigan as the gateway to the Midwest and its role as a life sciences hub, the state’s natural resources economy and other topics. The market is Doug Rothwell, the organization’s president and CEO, will present changing. opening remarks. Other speakers and moderators include Joseph Are you ready? Nardone, director of development, Wayne County Airport Authority; Maureen Krauss, vice president, ŶŐĂŐĞƚǁĞůů͛ƐƌĞƐŝĚĞŶƟĂů Detroit Regional Chamber; Jay ĚĞǀĞůŽƉŵĞŶƚƚĞĂŵĂŶĚ We are pleased to welcome Baron, chairman, president and ŐĂŝŶŐƌŽƵŶĚŝŶ^ŽƵƚŚĞĂƐƚ CEO, Center for Automotive DŝĐŚŝŐĂŶ͘tĞŚĞůƉ Research; Edward Krause, global ĚĞǀĞůŽƉĞƌƐĂŶĚďƵŝůĚĞƌƐ manager, external alliances, Ford ŐĞƚĂŚĞĂĚŽĨƚŚĞĐƵƌǀĞŝŶ James L. Carroll, CFA Motor Co.; Paul Krutko, president ƉůĂŶŶŝŶŐ͕ĚĞƐŝŐŶ͕ƉĞƌŵŝƫŶŐ and CEO, Ann Arbor Spark; Jean Redfield, president and CEO, ĂŶĚĚĞǀĞůŽƉŵĞŶƚĂĐƟǀŝƟĞƐ NextEnergy; David Munson Jr., ƚŚƌŽƵŐŚŽƵƌůŽĐĂůŬŶŽǁůĞĚŐĞ as Managing Director of our Firm dean, University of Michigan ĂŶĚĞǆƚĞŶƐŝǀĞĞǆƉĞƌŝĞŶĐĞ͘ College of Engineering; Sarah Ä¦®ÄÙ®Ä¦Ö½ÄÄ®Ä¦ÝçÙòù®Ä¦Äò®ÙÊÄÃÄã½ÊÄÝãÙçã®ÊÄÃÄ¦ÃÄã Webster, editor in chief, Society of Manufacturing Engineers; Kevin McLeod, managing director, Michigan Medical Device 63 Kercheval Avenue, Suite 222, Grosse Pointe Farms, MI 48236 p.313.882.7100 f. 313.882.8124 Accelerator; and others. The free pointecapital.com 248.447.2000 event takes place at the Kellogg Hotel & Conference Center, www.atwell-group.com Michigan State University, East Lansing. For more information and to register, call Jennifer Hayes, (313) 259-5400; email jenniferh@ businessleadersformichigan.com; or visit the website www.businessleadersfor CONGRATULATIONS TO michigan.com.

Detroit is “open for business” and pro- Varnum’s Health Care Litigation Team vides insight into what the next chapter for Detroit will look like. With keynote speakers Mayor Mike Duggan; Candy Chang, urban artist, ONE OF designer and planner; and Thomas 2013’S LARGEST JUDGMENTS Sugrue, a professor of history and so- ciology at the University of Pennsylva- nia and author of the 1996 book The IN MICHIGAN Origins of the Urban Crisis: Race and Inequality in Postwar Detroit. Fea- CASE Hi-Lex Controls, Inc. et al, v. Blue Cross and Blue Shield of Michigan tured presenters include Detroit Po- lice Chief James Craig, Macomb Coun- ACTION ERISA violation ty Executive Mark Hackel and others. MotorCity Casino Hotel, Detroit. $99 COURT U.S. District Court, Eastern District of Michigan members, $165 nonmembers. Contact: Evette Hollins, (313) 596-0441; email: AWARDED $6,025,672 plus costs and fees [email protected]; website: detroitchamber.com. ATTORNEYS FOR UPCOMING EVENTS PLAINTIFF Grow Your Business Through MBE Cer- tification and Minority Business Devel- opment Agency Services. 3-5 p.m. March 5. Asian Pacific American Chamber of Commerce, Michigan His- panic Chamber of Commerce. With Di- ane Lee, project director, Detroit Mi- nority Business Development Agency. Free. Register by March 4. Contact: Perrin Rynders Aaron Phelps Stephen MacGuidwin Christina Mui, (248) 430-5855; email: [email protected]; website: apacc.net.

A Taste of Leadership Oakland. 4:30- 7 p.m. March 20. Leadership Oakland. With Oakland County Executive L. Brooks Patterson, keynote speaker. First Tier Rankings in Meet Leadership Oakland graduates Eight Areas of Litigation and alumni and discover how the Cor- Legal Experience In Your Corner.® nerstone Program has helped them be- Ranked by Chambers USA come contributors to their businesses as a leading Michigan law fi rm 866/482-7686 and communities. Townsend Hotel, in Commercial Litigation Birmingham. $28. Contact: Chris Scharrer, (248) 952-6880, ext. 2; email: ■ Metro Detroit ■ Grand Rapids ■ Kalamazoo ■ Grand Haven ■ Lansing [email protected]; website: leadershipoakland.com. 20140224-NEWS--0011,0012,0013,0014,0015-NAT-CCI-CD_-- 2/21/2014 12:08 PM Page 1

February 24, 2014 CRAIN’S DETROIT BUSINESS Page 11

EDITOR’S NOTEBOOK

Amy Haimerl is entrepreneurship editor. She can be reached at (313) 446-0416 or at ahaimerl @crain.com law Amy Haimerl Rhodes keeps people in mind Detroit Emergency Manager Kevyn Orr filed the long-anticipated plan of Big cases of 2013 adjustment with U.S. Bankruptcy Judge Steven Rhodes on Friday. But that plan is hardly a done deal. While the goal is to create a pre- ach year, we comb our archives and compile this list of 10 significant cases from 2013. packaged bankruptcy, in which all the accept submissions from law firms The verdicts and settlements in this report creditors have agreed to the plan and and other sources to compile this re- range from price fixing in the automotive supply signed off before it ever hits a judge’s view of the big business cases of the chain (see story below) to coverage for autism desk, nobody expected that to be the E case in the largest municipal year. therapy and bank securities investments. bankruptcy in the country’s history. Litigation reporter Chad Halcom searched le- Case profiles, all written by Halcom, begin Especially not when things like gal records and talked with myriad sources to on this page and continue through Page 15. pensions are at stake. So now negotiations continue while Rhodes reviews the proposal and sets the timeline. That’s a lot of pressure Electric Co. Ltd. (Nov. 27: $1.44 million). Plea on Rhodes, who is essentially setting Supplier price fixing deals in Ohio courts netted more than $300 mil- precedents in a part of the law that is CASE FILE lion in 2013, and a total of 26 companies and 29 murky at best. In Re: Automotive Parts Antitrust Civil Litigation Autism therapy. State reimbursement for auto executives have been charged since 2011. “If there’s one thing certain about Instrument Panel Clusters, Dealership and End Medicaid families. Page 12 PayorActions re: Nippon Seiki Co. Ltd. et al Excavation site drowning. Good Samaritan’s the plan … it’s going to change many Ⅲ Venues: U.S. District Court, Detroit, Judges 14 U.S. Department of Justice cases against the family awarded $9.5 million. Page 12 things very substantially,” the city’s Marianne Battani and George Steeh; U.S. District primary bankruptcy attorney, Bruce following companies: Diamond Electric Mfg. Co. Securities lending loss. Comerica settles over Ltd., Panasonic Corp., Hitachi Automotive Court, Toledo, Judge Jack Zouhary; and U.S. Bennett, who works for Jones Day, investment gone bad. Page 12 District Court, Cincinnati, Judge Herman Weber said in court last Wednesday. Systems Ltd., Jtekt Corp., Mitsuba Corp., Mitsubishi Electric Corp., Mitsubishi Heavy Lost Howe treasures. “Mr. Hockey” wins court Ⅲ Settlements: $1.01 billion (across all 17 And Rhodes has proven to be Industries Ltd., NSK Ltd., Valeo Japan Co. Ltd., faceoff over destroyed property. Page 13 defendant companies in 2013) attentive to the human element of the Takata Corp., T.RAD Co. Ltd., Yamashita Rubber Hidden fees. Blues lose case over self-insured Ⅲ Date: July 16 through Dec. 23, 2013 bankruptcy, not just making the city’s Co. Ltd., Toyo Tire & Rubber Co. Ltd. and billings. Page 13 Ⅲ more than 100,000 creditors whole. Plaintiffs: U.S. Department of Justice, 14 Stanley Electric Co. Ltd. Nurses’ wages. Four firms agree to fork over cases. Automotive buyer plaintiffs Apex Motor He regularly invokes the pensioners $27 million. Page 14 Corp., Cannon Chevrolet-Oldsmobile-Cadillac- and the fate of the city’s 700,000 Lab van collision. Pastor prevails against Nissan Inc. et al for the proposed civil class of residents when questioning attorney’s About the case DMC, wins $3.7 million. Page 14 automotive dealerships affected by collusion, 1 arguments. The investigation of price fixing among au- Kilpatrick conspirators. Contractors settle case; end payer plaintiffs Tommy Wilson, Kim Last week, he took an attorney to Shannon et al for the class of car buyers tomotive suppliers is now the largest an- over role in ex-mayor’s scandal. Page 14 task, saying, “Every dollar (the city) affected by alleged collusion. titrust prosecution in U.S. history, with 17 Compressor collusion. $49 million settlement spends on you, it’s a dollar less for a Ⅲ Lead counsel: William Baer, assistant attorney different companies agreeing either to fines spans the globe. Page 15 police officer.” general for the Antitrust Division, Department of or civil lawsuit settlements in 2013. That attention to the impact on Justice; E. Powell Miller, partner, The Miller Law people, not just bondholders or How do the fines stack up? In 2009, the U.S. ed more than 30 products worth $5 billion sold Firm PC, Rochester; Robins, Kaplan, Miller & bankers, is to be expected from Department of Justice for the first time crested to U.S. car manufacturers in the past decade, Ciresi LLP, New York City; and Cotchett Pitre & Rhodes, said David Tawil, who was a $1 billion in total antitrust fines across every and more than 25 million cars purchased by McCarthy LLP, San Francisco, for the indirect student of Rhodes’ at the University of U.S. industry where it had pending enforce- American consumers. purchasers. Gerard Mantese, partner, Mantese Michigan law school. ment actions. Just in the last half of 2013, it The fines, almost universally reached in Honigman Rossman and Williamson PC, Troy; and amassed that same sum against automotive negotiations with companies before bringing the Barrett Law Group PA, Nashville, Tenn., for “He is an extremely thoughtful and the dealer plaintiffs. thorough and understanding man,” suppliers alone. charges in a process similar to civil settle- said Tawil, who is a former bankruptcy Fourteen suppliers — mostly Asian compa- ments, totaled about $808 million when 2013 Ⅲ Defendants: Panasonic Corp. and Diamond Electric Manufacturing Co. Ltd., both of Osaka, attorney who founded New York City- nies with U.S. subsidiaries or operations in began and had topped $1.8 billion since the in- Japan (U.S. headquarters for Diamond Electric in based Maglan Capital LP, a hedge metro Detroit but a few in Ohio, as well — ception of the case as of Dec. 31 (it’s now about Dundee); Hitachi Automotive Systems Ltd. (U.S. fund oriented on distressed assets. agreed to more than $1 billion combined in $2.3 billion, after a set of deals reached in Jan- location in Farmington Hills); Jtekt Corp. (U.S. “He’s an absolute gentleman.” criminal fines and guilty pleas on collusion uary and February with Koito Manufacturing location in Plymouth); Mitsuba Corp. (U.S. Tawil pointed out a commonality charges, between July 16 and late November. Co. Ltd. and Bridgestone Corp., both of Tokyo, location in Mt. Pleasant); Mitsubishi Electric that he has seen in most of Rhodes’ Nagaoka, Japan-based Nippon Seiki Co. Ltd., and Aisan Industry Co. Ltd. of Obu, Japan). Corp. and Mitsubishi Heavy Industries; NSK (U.S. cases: a desire to move things along which houses its NS International Ltd. head- That pushed automotive ahead of air cargo location in Ann Arbor); T.RAD Co., Valeo Japan expeditiously. quarters in Troy, agreed separately to pay $6 transportation (at $1.9 billion total fines be- Co. (U.S. location in Troy); Yamashita Rubber Co.; “He never wants the professionals million in two settlements that resolve civil tween 2007 and late 2013) and made automo- Toyo Tire & Rubber Co. Ltd.; Stanley Electric Co. Ltd.; Nippon Seiki Co. Ltd.; New Sabina Industries to go ahead and tick the clock for the lawsuits by auto dealerships and consumers tive officially the biggest single-industry an- Inc.; and NS International Ltd. sake of generating fees,” he said in a related multi-district litigation case. titrust prosecution in history. Ⅲ Lead counsel: Winston & Strawn LLP, New York Tawil has been surprised by a few That company agrees to a cash payout of Pleading guilty and agreeing to fines in De- City, for Nippon Seiki and affiliate companies and of his former professor’s rulings. $4.56 million to a class of car buyers and $1.44 troit’s federal court during 2013 were Diamond Panasonic; Williams & Connolly LLP, Washington, Primarily, he was stunned to see million to auto dealership plaintiffs, to resolve Electric Mfg. Co. Ltd. (July 16: $19 million); Pana- D.C., for Takata; Vinson & Elkins LLP, Washington, Rhodes reject a deal the city made to claims of price fixing on automotive instru- sonic Corp. (July 18: $45.8 million); Hitachi Auto- D.C., for Hitachi Automotive; Gibson Dunn & settle a costly pension-debt deal — a ment panel components for itself, NS Interna- motive Systems Ltd. (Sept. 26: $195 million); Mitsu- Crutcher LLP, San Francisco, for Mitsuba; Jenner & deal that was negotiated by the tional and Ohio-based New Sabina Industries Inc. ba Corp. (Sept. 26: $135 million); Mitsubishi Block, Chicago, for Mitsubishi Electric; Hogan case’s lead mediator, Gerald Rosen, That settlement was submitted for ap- Electric Corp. and Mitsubishi Heavy Industries Ltd. Lovells US LLP, San Francisco, for Mitsubishi chief judge for the U.S. District Court proval Dec. 23 to civil court Judge Marianne (both Sept. 26: $190 million and $14.5 million, re- Heavy Industries; Fried, Frank, Harris, Shriver & for the Eastern District of Michigan. Battani, who has yet to finalize it. The deal is spectively); T.RAD Co. Ltd. (Sept. 26: $13.75 mil- Jacobson LLP, New York, for T.Rad; Cleary Gottlieb Steen & Hamilton LLP, Washington, D.C., for Valeo “To be publicly lambasted for the first in the far-reaching civil litigation lion); Valeo Japan Co. Ltd. (Sept. 26: $13.6 million); negotiating at all is a very strange Japan; and Simpson Thacher & Bartlett LLP, naming companies tied to the massive global Takata Corp. (Oct. 9: $71.3 million); and Stanley thing,” he said. Washington, D.C., for Stanley Electric. prosecution of suppliers. Still, Tawil expects Rhodes to fight for Justice officials believe the conspiracy affect- the average citizen first and foremost. And if that means rejecting a deal that a fellow judge endorsed, so be it. After all, how Detroit emerges from bankruptcy will be Rhodes’ legacy. He won’t want just a body of law to refer to; he’s a man who will want to see the city become a thriving, viable metropolis.

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Page 12 CRAIN’S DETROIT BUSINESS February 24, 2014 Law

applied behavior analysis treat- Autism therapy ment for young children with Securities lending loss Deanna Caver and Arlena Minter autism. City of Birmingham Employees’ et al v. Janet Olszewski, James The state Department of Communi- Retirement System, Road Haveman ty Health reached an agreement in Commission for Oakland County et Ⅲ Venue: U.S. District Court, January and obtained a dismissal al v. Comerica Bank, Munder Detroit, Judge Stephen Murphy in June of the 2010 lawsuit by two Capital Management Ⅲ Case filed: Dec. 16, 2010 Detroit mothers on behalf of a Ⅲ Venue: U.S. District Court, Detroit, Ⅲ Settlement: $52 million, based class of Medicaid beneficiaries. Judge Stephen Murphy on 2012 state budget U.S. District Judge Stephen Mur- Ⅲ Case filed: Aug. 14, 2009 appropriation phy certified that case as a class Ⅲ Settlement: $11 million Ⅲ Date: June 13, 2013 action in late 2011. Ⅲ Date: Dec. 27, 2013 Ⅲ Plaintiffs: Deanna Caver and Terms of the settlement call for Ⅲ Plaintiffs: The boards of trustees Arlena Minter on behalf of a class the state Medicaid program to for the City of Birmingham Employees’ of families of children with autism fund ABA therapy treatments Retirement System, the Road spectrum disorder. among eligible Michigan children Commission for Oakland County, Iron Ⅲ Lead counsel: David Honigman age 18 months to 6 years of age. Workers Local 25 Pension Fund, Iron and Gerard Mantese, partners, Gov. Rick Snyder signed a 2012 Workers Health Fund of Eastern Michigan, City of Monroe Employees Mantese Honigman Rossman and appropriations bill that allocates Retirement System, Waterford Williamson PC, Troy about $17.5 million toward autism Ⅲ Co-counsel: John Conway, Township General Employees’ services, and the allocation is ref- Retirement System, Carpenters president, John J. Conway PC, Royal erenced in the settlement agree- Oak Pension Fund Trust-Detroit & Vicinity, ment. Based on a 66.4 percent fed- and other members of a class of Ⅲ Defendants: Janet Olszewski, as eral Medicaid match to Michigan funds in the Comerica Bank former director of the Michigan in fiscal 2013, it could mean total securities lending program Department of Community Health Ⅲ (later Olga Dazzo, then current Medicaid funding for ABA thera- Lead counsel: E. Powell Miller and health director James Haveman, in py in the state exceeds $52 million. Marc Newman, partners, The Miller the same capacity) Several insurers nationwide Law Firm PC, Rochester, for the fund boards Ⅲ Lead counsel: William Morris, have denied claims for ABA reim- Ⅲ assistant attorney general, bursement in years past on the ba- Co-counsel: Sharon Almonrode, Lansing, for Community Health sis that it was experimental, but partner, The Miller Law Firm Michigan insurers have been re- Ⅲ Defendants: Comerica Bank, a subsidiary of Comerica Inc., Dallas; quired to cover ABA for fully in- About the case and Munder Capital Management, sured companies since fall 2012. Birmingham, intervening/third-party Michigan could spend more State officials have said a plan for defendant than $52 million to reimburse fam- Medicaid to offer ABA reimburse- Ⅲ Lead counsel: Thomas Bruetsch, ilies enrolled in the state’s Medic- ments was already in develop- partner, Bodman PLC, Detroit, for aid program, under the terms of a ment; attorneys requested a bud- Comerica; Lisa Goldstein, partner, recent court settlement covering get allocation. Dechert LLP, New York City, for Munder Capital

Estates, a project in Detroit that About the case Excavation site drowning has encompassed new mixed-in- Municipal and multi-employer Shirley Conerly and Marsha Webb, come housing built in phases. retirement and benefit plans that for estate of Garrett Townsend Jr. v. A man living near the site, Gar- took part in a Comerica Bank lend- Scripps Park Associates LLC, rett Townsend Jr., went to the ing program will take an $11 mil- Woodbridge Estates Condominium child’s aid and fell in the same lion settlement for their losses Homeowners Association, et al from an investment vehicle that Niya Townsend, minor, by Shirley hole. He helped EMTs lift the child to safety, but then drowned. went into receivership amid the Conerly v. Scripps Park Associates market collapse of 2008. LLC, The Slavik Co., Fielek Builders His family alleged wrongful Between 1997 and 2006, various LLC, et al death, negligence, liability for Ⅲ Southeast Michigan public- and Venue: Wayne County Circuit dangerous premises, negligent in- private-sector employee plans Court, Judge David Allen fliction of emotional distress, pre- agreed to participate in the Securi- Ⅲ Cases filed: Nov. 20, 2009, and death mental anguish and by- ties Lending Program at Comeri- Nov. 22, 2010 stander claims in two lawsuits ca. Under the program, the bank Ⅲ Verdict: $9.5 million (combined). filed in 2010 and 2011 against would lend to third parties securi- Settled in 2014. Woodbridge developer Scripps ties they owned — usually for Ⅲ Date: May 9, 2013 Park Associates LLC, South Lyon- short sales, arbitrage or other mar- Ⅲ Plaintiffs: Niya Townsend, based Fielek Builders LLC and two ket trading gains. daughter of the late Garrett related companies, the Woodbridge Borrowers in the lending pro- Townsend Jr., Detroit; her mother, gram were required to deposit Shirley Conerly, and Marsha Webb, Estates Condominium Homeowners as co-representatives of the late Association, Novi-based Exspec Con- cash or assets as collateral with Garrett Townsend’s estate. tracting LLC and others. the bank, worth 102 percent of the securities’ value. The bank could, Ⅲ Lead counsel: David Christensen Scripps Park Associates is made in turn, invest that collateral and and Mary Pat Rosen, partners, up of Detroit developer Herbert split the returns with the lenders Charfoos & Christensen PC, Detroit, Strather, Bingham Farms-based for Conerly and Webb; Robin Kyle, of those securities. The Slavik Co., New York City- Kyle Law Firm, Detroit, for Niya Comerica hired Munder Capital based Rosenberg Housing Group Inc. Townsend Management to oversee those collat- and Washington, D.C.-based Pre- Ⅲ Defendants: Scripps Park eral investments, and Munder mier Property Management. The Associates LLC, developer of placed some in medium-term notes Woodbridge Estates housing in company has completed more issued by Sigma Finance Inc. The Detroit, and The Slavik Co., both of than 280 housing units at the for- notes are described as a structured Bingham Farms; Fielek Builders LLC mer Jeffries West public housing and related companies Fielek investment vehicle which invests development in Detroit and ex- Enterprises LLC and Fielek capital in longer-term and riskier Construction Services LLC, all of pects to finish more this year. investments, such as mortgage- South Lyon; Woodbridge Estates The two lawsuits, one on behalf backed securities. Condominium Homeowners of Garrett Townsend’s daughter Sigma Finance went into re- Association, Detroit; Exspec and one on behalf of his estate, ceivership in 2008, creating major Contracting LLC, Novi. (Exspec paid no damages.) were consolidated into one trial. losses on the collateral invest- Jurors in May awarded a comments that Comerica then sought GUARANTEE YOUR OPENING DAY TICKETS Ⅲ Lead counsel: John Mitchell, Secrest, Wardle, Lynch, Hampton, bined $9.5 million — $7 million to to recover from the pensions and FULL, 41 AND 27-GAME PLANS STARTING AS LOW AS $15 PER GAME Truex & Morley PC, for the Fielek the estate and $2.5 million to health funds themselves. companies; Paul Johnson and Andrew daughter Niya Townsend — and “We were not saying the bank * Elder, attorneys, Staff Counsel, Troy, found the Fielek building compa- acted in any kind of bad faith,” GREAT BENEFITS INCLUDING: for Scripps Park and Slavik nies were 80 percent liable for the said E. Powell Miller, lead counsel Season Ticketholder discount • Postseason ticket priority • Plus many more! damages, while Scripps Park was for the class of investors. “We just *Some restrictions apply About the case 20 percent liable. An appeal fol- don’t think they practiced enough In May 2009, a 7-year-old boy fell lowed in July, but the companies oversight or didn’t review the in- into muddy water that had filled reached a settlement out of court vestments enough to know how an excavation site at Woodbridge with the family. risky some of them were.” 20140224-NEWS--0011,0012,0013,0014,0015-NAT-CCI-CD_-- 2/21/2014 12:08 PM Page 3

February 24, 2014 CRAIN’S DETROIT BUSINESS Page 13 Law

Michael Reddy; and Immortal In- Lost Howe treasures vestments Inc., a merchandising Power Play International Inc., company Michael owns. Gordie Howe v. Immortal That suit had alleged Immortal Investments LLC, Del Reddy et al Investments kept about $338,000 Ⅲ Venue: Oakland County Circuit that Howe had earned in appear- Court, Judge Leo Bowman ances from 2004 to 2006. Ⅲ Case filed: Dec. 8, 2011 The settlement in November Ⅲ Verdict: $3 million 2008 called for the Reddys and Ⅲ Date: June 18, 2013 Howard to return any property in Ⅲ Plaintiffs: Power Play International their possession connected to Inc., Rochester Hills; and Gordie Howe Howe or his family, said Steven Ⅲ Lead counsel: Steven Matta, partner, Matta, partner at Bloomfield Hills- Matta Blair PLC, Bloomfield Hills based Matta Blair PLC. Ⅲ Defendants: Immortal Investments However, a truck that delivered LLC, Westland; Del Reddy; Michael much of that property three weeks Reddy; and Aaron Howard later also came with an invoice Ⅲ Lead counsel: Anthony Alfred from Troy-based Shred-It Detroit Inc. Randazzo, partner, Secrest, Wardle, indicating it had destroyed some 17 Lynch, Hampton, Truex and Morley PC, Troy boxes of documents and eight boxes of nearly 1,400 tapes and CDs for Im- mortal Investments, days earlier. About the case The Reddys and Howard did not dispute during trial that Immortal Detroit Red Wings luminary Gordie hired Shred-It Detroit to destroy Howe and the marketing/appear- the tapes and documents. The dis- ances company managed by his sons won a $3 million jury verdict last pute in court was about whether year against Howe’s former business the destroyed material had any manager, a Westland company and value, and whether they had to two other men for destroying proper- turn over the material or simply ty they were supposed to return un- retain nothing belonging to Howe der a prior settlement. and his family, per the language of Howe and Rochester Hills-based a previous court injunction. Power Play International Inc. in No- Howe and Power Play sued for vember 2008 settled a 2007 lawsuit breach of the settlement agreement against former Howe business in 2011, and in June a civil court manager Del Reddy; his assistant, jury awarded them $3 million dam- Aaron Howard; Reddy’s father, ages against all the defendants.

fee” that Blue Cross charged cus- Hidden fees tomers to help subsidize its Medigap Hi-Lex Controls Inc. et al v. Blue coverage plan for senior citizens. Cross Blue Shield of Michigan At issue in this case and dozens Ⅲ Venue: U.S. District Court, Detroit, of others in Detroit are adminis- Judge Victoria Roberts trative services contracts that al- Ⅲ Case filed: July 18, 2011 low self-insured employers, re- Ⅲ Judgment: $6 million (with tirement funds, unions and other interest); under appeal organizations to use Blue Cross’ Ⅲ Date: June 13, 2011 network and administrative ser- Ⅲ Plaintiffs: Hi-Lex Controls Inc., vices to process insurance Litchfield; Hi-Lex America Inc. and Hi- claims. Lex Corp. Health and Welfare Plan, Roberts found that the Blues Our candidates have specific training. the company’s self-administered were losing thousands of cus- Have a specific need? benefits program tomers in the early 1990s when Ⅲ Lead counsel: Aaron Phelps, proposing the various fees, until it partner, Varnum LLP, Grand Rapids adopted a practice in late 1993 of Ⅲ Co-counsel: Perrin Rynders, rolling them into the category of partner, Varnum LLP, Grand Rapids hospital charges and not detailing Ⅲ Defendant: Blue Cross Blue Shield them in those contracts. of Michigan, Detroit Evidence in the bench trial indi- Ⅲ Lead counsel: Thomas Van Dusen, cated the Blues’ own account rep- partner, Bodman PLC, Troy resentative for Hi-Lex didn’t know Ⅲ Co-counsel: G. Christopher about the fees between 1999 and Bernard, Bodman PLC, Ann Arbor 2005, and the Blues had responded to a request for proposals from Hi- Lex in 2003 stating that its network About the case access fees were “N/A” and there Detroit-based Blue Cross Blue were no other fees. Blue Cross has Shield of Michigan may have to pay appealed the judgment to the 6th more than $5.1 million, plus Circuit U.S. Court of Appeals in $914,000 in pre-judgment interest, Cincinnati, but that court has not after a federal judge found the in- set a date to hear the case. Grand Rapids-based Varnum LLP Business Computers Health Engineering/ Education & surer used a deceptive practice to Technology Human Services hide fees and surcharges that were has brought more than 30 lawsuits rolled into claims billed to self-in- at the Detroit federal court on behalf sured employers since the 1990s. of various self-insureds, including When you have a position to fill, you want someone U.S. District Judge Victoria Hi-Lex, but the other cases are un- who’s qualified and ready to hit the ground running. Roberts made the award to Hi-Lex der a stay until the Hi-Lex appeal is Baker College’s HireQualified® can help. Our candidates Controls Inc., a Litchfield-based mak- heard. are highly trained in very specific areas by instructors er of window regulators with an au- Judge Arthur Tarnow in Detroit who are working professionals. They know what’s tomotive design center in Rochester had previously certified a class ac- needed in their industries and teach practical experience Hills. The company has been self-in- tion on behalf of self-insured busi- — sured and used the Blues as a third- nesses, retirement funds and other over theory. The service is free the result is just the party administrator since 1991. customers who use the Blues net- person you are looking for. Roberts found that Blue Cross work in a 2004 lawsuit bof the To learn more about how we can help you find the best had concealed four fees in billing Pipefitters Local 636 Insurance Fund. candidate for your needs, or to schedule a meeting at statements to Hi-Lex for employee But the 6th Circuit decertified your place of business, visit HireQualified.com. claims — a network access fee, a the class in 2011. In September, the Free recruiting services from contribution to the Blues’ contin- Blues paid a reduced $285,000 judg- America’s leading career college. gency reserve, a retiree coverage ment to resolve the Pipefitters X6461HQ surcharge and an “other-than-group suit. 20140224-NEWS--0011,0012,0013,0014,0015-NAT-CCI-CD_-- 2/21/2014 12:08 PM Page 4

Page 14 CRAIN’S DETROIT BUSINESS February 24, 2014 Law

Ⅲ Defendants: Detroit Medical About the case time totaling more than $48 million. tinues to fight the lawsuit and ob- Nurses’ wages Center, Beaumont Health System, Of these, four deals were approved tained an order in January over- Pat Cason-Merenda and Jeffrey Henry Ford Health System, CHE Four companies agreed to near- in 2013, on behalf of Royal Oak- turning the class certification — Suhre et al v. Detroit Medical Trinity Health, Mt. Clemens General ly $27 million in combined settle- based Beaumont Health System ($11.34 which could directly impact one of Center, Beaumont Health System, Hospital Inc. (now McLaren ments with nurses who provided million), Detroit-based Henry Ford the largest single-hospital settle- Henry Ford Health System, CHE Macomb), Oakwood Healthcare Inc., direct patient care at Detroit-area Health System ($8.44 million), the for- ments from previous years. St. Trinity Health et al St. John Providence Health System acute care hospitals and alleged mer Mt. Clemens General Hospital (just John Providence Health System Ⅲ Venue: U.S. District Court, Detroit, and the former Bon Secours Cottage those hospitals conspired to keep above $2 million), now a part of signed a previous deal in which Chief Judge Gerald Rosen Health Services their pay artificially low. McLaren Health Corp., and Livonia- $10 million of its $13.6 million set- Ⅲ Case filed: Dec. 15, 2006 Ⅲ Lead counsel: Sheldon Klein, Chief Judge Gerald Rosen in based CHE Trinity Health ($5.14 mil- tlement was contingent on the Ⅲ Settlement: $26.9 million (as to four shareholder, Butzel Long PC, September certified a class action lion), totaling about $27 million. nurses winning the certification. Bloomfield Hills, for Beaumont; hospitals; $48 million accrued to date) on behalf of more than 20,000 regis- The hospitals had denied that any Rosen in late October also ap- David Marx and David Hanselman, tered nurses, in a 2006 lawsuit al- collusion took place and made no proved an award of just over $12 Ⅲ Date: Oct. 24, 2013 McDermott Will & Emery LLP, leging eight hospital systems col- admission of liability or wrongdo- Ⅲ Plaintiffs: Pat Cason-Merenda, an Chicago, for Henry Ford; Thomas million in attorney fees for Keller luded to keep pay scales lower ing in the settlements, said Sheldon RN at DMC, and Jeffrey Suhre, an RN Demitrack, partner, Jones Day, Rohrback LLP and various other at Providence Hospital, on behalf of a Cleveland, for St. John Providence; than market forces dictate. Klein, lead counsel for Beaumont firms representing the nurses, class of direct patient care nurses. and David Ettinger, Honigman Miller All but one of those hospitals, De- and shareholder at Butzel Long PC. plus nearly $400,000 to go in a re- Ⅲ Lead counsel: Mark Griffin, Schwartz and Cohn LLP, Detroit, for troit Medical Center, have settled over All of those settlements were fi- tention fund to pay plaintiff attor- partner, Keller Rohrback LLP, Seattle Mt. Clemens General time in various agreements over nalized in October, but DMC con- ney costs in a trial against DMC.

About the case his lower spine, carpal tunnel syn- Lab van collision drome and misaligned eyes. Norman and Debra Cress v. VHS A Shelby Township pastor and The laboratory did not dispute University Laboratories Inc., Sandra his wife won a combined $3.7 mil- that its van had caused the crash. At Faye Willhite lion jury verdict in March after a issue at trial was the extent of Cress’ Ⅲ Venue: Oakland County Circuit 2011 auto collision with a Detroit injuries — particularly whether the Court, Judge Daniel O’Brien Medical Center laboratory van cost accident could have caused a closed Ⅲ Case filed: Aug. 2, 2011 him his parish and livelihood. head injury, since Cress testified he Offering more ﬁ nancing Ⅲ Verdict: $3.7 million Sandra Willhite, an employee of could not recall his head striking VHS University Laboratories Inc. who Ⅲ Date: March 20, 2013 any part of the vehicle. Ⅲ was en route to Beaumont Health Sys- Other damages claims such as Plaintiffs: Norman Cress, senior tem in Royal Oak, allegedly changed pastor of Heritage Baptist Church, loss of income were also in dis- SOLUTIONS Shelby Township, and wife Debra lanes to avoid a vehicle ahead of her pute, said William Kiriazis, man- Cress and struck the driver’s side of a aging shareholder at Troy-based than ever before. Ⅲ Lead counsel: Bryan Schefman, Buick Enclave driven by Norman Vandeveer Garzia PC and lead coun- Hennessey Capital is now Hitachi Business Finance attorney, Law Offices of Bryan Cress, 54, of Shelby Township. sel for Willhite and the lab. VHS Schefman PC, Bloomfield Hills; Shelby Township-based Heritage University Laboratories is a sub- We successfully partner with businesses Norman Lippitt, Lippitt O’Keefe PC, Baptist Church continued to support sidiary of former DMC owner Van- Birmingham Cress for more than a year after guard Health Systems Inc. looking for new opportunities to grow with a Ⅲ Defendants: VHS University the crash in hopes he would recov- Bryan Schefman, Bloomfield new world of creative financing options. Laboratories Inc., a research er, according to a facilitation sum- Hills-based attorney for Cress, said laboratory network of the Detroit mary. But the board of elders even- head injury victims frequently do 248.658.1100 ZZZ.+LWDFKL%XVLQHVV)LQDQFH.FRP Medical Center, and employee tually determined he could not Sandra Faye Willhite not recall a moment of impact. return to work and let him go. Jurors awarded about $3 million Ⅲ Lead counsel: William Kiriazis and He alleged multiple injuries in a to Cress and another $700,000 in Anthony Kostello, shareholders, negligence lawsuit at Oakland Coun- Vandeveer Garzia PC, Troy damages to his wife, Debra. The ty Circuit Court, including a traumat- parties settled the lawsuit out of ic brain injury, a herniated disc in court.

Kilpatrick conspirators About the case Mccomb Interceptor Drain Drainage Detroit-based Lakeshore TolTest District, City of Detroit and Detroit Corp. and the Michigan subsidiary Water and Sewerage Department v. of DLZ Corp. in Columbus, Ohio, en- Kame Kilpatrick, Lakeshore tered settlement deals worth a com- Engineering Services Inc. etc al bined $5.3 million to end pending (and related litigation claims) and prospective litigation as con- Ⅲ Venue: U.S. District Court, Detroit, tractors involved in the far-flung Judge Robert Cleland Kilpatrick corruption scandal. Ⅲ Case filed: July 18, 2011 Lakeshore, originally named Ⅲ Settlement: $5.3 million (as to “Company L” in a December 2010 Lakeshore and DLZ Michigan Inc. indictment of former Detroit May- only). or Kame Kilpatrick and four oth- Ⅲ Date: Feb. 13, 2013 ers, in February agreed to pay Ⅲ Plaintiffs: Mccomb Interceptor $2.57 million cash and give the city Drain Drainage District, a about 24 acres of land one of its corporation of 11 Mccomb County companies owns near the waste- municipalities chaired by county water treatment plant on Jefferson Public Works Commissioner Anthony Avenue. Marrocco. Intervening plaintiffs DLZ entered a settlement of its Detroit and Detroit Water and Sewerage joined in January 2012. own for about $200,000 around the same time, over and above the Ⅲ Lead counsel: Jerome Watson, W. Mack Faison, principals, Miller Lakeshore deal valued at nearly Canfield Paddock and Stone PLC, $5.1 million. The two deals supple- Detroit, for the city and DWSD ment a 2012 agreement for Detroit- Ⅲ Defendants: Kame Kilpatrick; based Inland Waters Pollution Control Bobby Ferguson; Bernard Kilpatrick; Inc. and two other Inland companies Derrick Miller; Lakeshore Engineering to settle their portion of the case for Services Inc. (now Lakeshore TolTest $4.5 million; that brings total settle- Corp.), Detroit; Superior Engineering ments to date to about $9.8 million. Associates Inc. of Southfield; The settlements are with the city Mersino Dewatering Inc. of Davison; and its Detroit Water and Sewerage and 32 other individual and Department, and they resolve both corporate defendants, most of them already dismissed potential litigation the city planned to file through Miller Canfield Pad- Ⅲ Lead counsel: Walter Piszczatowski, partner, Hertz Schram PC, Bloomfield dock and Stone PLC, and some of De- Hills, for Lakeshore Engineering and troit’s claims as an intervening Chairman Avinash Rachmale. Barry plaintiff in the Mccomb Interceptor Lubow, vice president and general counsel, DLZ Corp., Ohio See Next Page 20140224-NEWS--0011,0012,0013,0014,0015-NAT-CCI-CD_-- 2/21/2014 12:09 PM Page 5

February 24, 2014 CRAIN’S DETROIT BUSINESS Page 15 Law

Skirnick PC, Philadelphia, for sor sales have been consolidated be- Compressor collusion Tecumseh; Clement Glynn, partner, fore Judge Sean Cox, on behalf of di- In Re: Refrigerant Compressors Glynn & Finley LLP, Walnut Grove, rect purchasers, who bought com- Antitrust Litigation Calif., and Howard Iwrey, Dykema pressors from the manufacturer, Gossett PLLC, Detroit, for Whirlpool Ⅲ Venue: U.S. District Court, Detroit, and indirect purchasers, who Judge Sean Cox bought them from retailers or other Ⅲ Case filed: June 9, 2009 About the case third parties. The settlements affect direct purchasers only. Ⅲ Settlement: $49 million (as to four Ann Arbor-based Tecumseh Prod- groups of companies) Whirlpool subsidiaries Whirlpool ucts Co. and two business units of SA in Brazil and Embraco North Ameri- Ⅲ Dates: May 8 and Dec. 27, 2013 Whirlpool Corp. in Benton Harbor FINANCIAL SOLUTIONS (order of preliminary approval Jan. 9, ca Inc. will pay $30 million, or about joined with competitors in Den- 2014) 5.1 percent of sales, of “fractional BUILT ON GENERATIONS OF TRUST mark and Japan in a $49 million Ⅲ Plaintiffs: B&B Appliance Parts of compressors” using less than one deal to settle allegations of price fix- Mobile Inc., Alabama, Appliance horsepower, between February 2005 ing in global sales of compressors. Parts Distributors Inc., Pennsylvania, and December 2008, plus $500,000 in Executives at Tecumseh, two • Insurance and Sanden Vendo America Inc., notice and administrative costs. Whirlpool subsidiaries, a division Texas, on behalf of a class of Danfoss company Danfoss Flens- Employee Benefits machine parts companies, soft drink of Danish parts supplier Danfoss • burg GmbH, formerly Danfoss Com- vending machine makers, A/S, Japan-based Panasonic Corp. pressors GmbH, will pay $3.5 million • Retirement Planning refrigeration companies and others and Italy-based Appliances Compo- or “a percentage of sales substan- who purchased compressors from nents Companies SpA allegedly met alleged colluder companies between tially greater” than the others, in secret at a hotel in Nuremberg, February 2005-December 2008 plus $100,000 costs, under the Germany, in 2004 as part of a plan to 535 Griswold Street, Suite 1600 • Detroit, MI 48226 • www.lovascogroup.com • 313.394.1700 Ⅲ Lead counsel: David Fink and terms of the same deal first pro- inflate compressor prices in the re- A Member Firm of M Financial Group. Darryl Bressack, partners, Fink + posed in court last spring. frigeration markets. Registered Representative with M Securities: Associates Law PC, Bloomfield Hills; Tecumseh, along with sub- Machine parts companies B&B Ap- Securities offered through M Holdings Securities, Inc., A Registered Broker/Dealer, Member FINRA/SIPC. E. Powell Miller and Marc Newman, sidiaries Tecumseh Compressor Co. LoVasco Consulting Group is independently owned and operated. pliance Parts of Mobile Inc. of Alabama partners, The Miller Law Firm PC, and Tecumseh do Brasil Ltda, will pay Rochester and Appliance Parts Distributors Inc. of $7 million, or 2.7 percent of its sales, Ⅲ Defendants: Tecumseh Products Pennsylvania, along with vending over the same period, plus $150,000 Co., Tecumseh Compressor Co. and machine maker Sanden Vendo Ameri- in costs. Panasonic entered a subse- Tecumseh do Brasil Ltda; Embraco ca Inc. of Dallas, have sued about 20 quent deal to settle its claims in the North America Inc. and Whirlpool SA, companies around the world — 12 of same civil lawsuit for $7.9 million. Panasonic Corp. and Danfoss them units of Tecumseh, Danfoss, Flensburg GmbH. Tecumseh acknowledged in Feb- Panasonic and Whirlpool. Ⅲ ruary 2009 it had received a sub- Lead counsel: Robert Sherwood, Various civil suits over compres- Meredith Cohen Greenfogel & poena from the U.S. Department of Justice and a request for information from the Secretariat of Eco- nomic Law of the Ministry of Jus- tice of Brazil in a criminal investigation of compressors sup- PLATINUM STANDARD plier price fixing. FRACTIONALCTIONAL AND MANAGEDMANAGED BBUSINESSUSINESS AAVIATIONVIATION PPROGRAMS.ROGR The company, which manufac- SERVING ALL SOUTHEASTERN MICHIGAN. tures compressors and related products for refrigeration and cooling SPEED systems, had obtained a leniency deal with U.S. prosecutors for cooperating early with the investigation. Panasonic and Embraco North America pleaded guilty to criminal charges and agreed to pay $140.9 LIMIT million in fines in late 2010.

From Previous Page Drain Drainage District lawsuit. The district, made up of several Mccomb County communities, sued in 2011 over some debt it picked up CORPORATEEAGLE.COM from DWSD in purchasing several pump stations and interceptors — including a Sterling Heights interceptor where the city was over- charged on some repairs. The city later joined in that lawsuit. Kilpatrick; his father, Bernard Kilpatrick; and water department Exceptional Leadership. 186,232 contractor Bobby Ferguson were MILES PER SECOND convicted by jury in March after a Delivered. racketeering trial involving various contracts awarded during Kil- patrick’s administration. Lakeshore allegedly was extort- ed by Ferguson into steering more OUR ONLY LIMIT IS than $12 million worth of work to Ferguson’s company on an improvement to water mains on the THE SPEED OF LIGHT city’s east side. Then-CEO Avinash Rachmale was a prosecution witness against FIBER TO YOUR BUSINESS | DATA CENTERS Kilpatrick and his co-defendants, as was DLZ’s former COO, Pratap FIXED METRO WIRELESS | MPLS | SIP | PRI Rajadhyaksha. DLZ allegedly dealt Michigan’s Premier Retained in Ferguson as a subcontractor on a Executive Search Firm 2004 bid to replace a downtown water main, despite having lower bid- ders. Kilpatrick and Ferguson received federal prison sentences of

28 years and 21 years, respectively, LLC in the criminal case. The city plans www.123.net | 866.603.4774 to file motions for summary judg- International Executive Search ment within weeks, seeking civil Tel: +1.248.645.1551 • www.huntergroup.com damages. 20140224-NEWS--0016-NAT-CCI-CD_-- 2/21/2014 10:50 AM Page 1

Page 16 CRAIN’S DETROIT BUSINESS February 24, 2014

PEOPLE CONSTRUCTION Asmar Cos. Farmington Hills. Also, Christina DiBartolomeo to vice presi- Carmen Jaeger to tax manager, from dent of client solutions, from asset Don Greenwell Jr. to executive vice N THE SPOTLIGHT N THE SPOTLIGHT vice president, senior wealth planner, I I manager. president, commercial unit, Wal- Fifth Third’s Private Bank, Fifth Meritor Inc., Troy, has named United Road Services Inc., bridge Aldinger Co., Detroit, from senior vice president, commercial unit. Third, Southfield. Sandra Quick senior vice president, Romulus, has named Mark RETAIL general Anderson its first COO. He had Also, Mark McClelland to vice presi- Austin Martin to counsel and dent, new business development, from LAW been president mall manager, executive director, new business de- corporate and CEO of Briarwood Mall, velopment; John Rakolta III to execu- secretary. She Inland Ann Arbor, from tive director, strategic market plan- succeeds Industrial mall manager, ning and development, from director, Vernon Baker, Services Group, University Park new business development; and who resigned Detroit. Mall and Univer- George Dobrowitsky to assistant vice Feb. 15. Quick, Anderson, 48, sity Center, president, technical estimator, from 47, had been Mishawaka, Ind. director, technical estimating. earned a group vice bachelor’s Botond Nemeth to president and FINANCE degree in director of opera- Quick general business tions, Hiller’s Mar- counsel for the Martin kets, Southfield, Anderson administration electronics and interiors division at from Notre from assistant director of operations. Douglas Miller Johnson Controls Inc., Plymouth. Dame University, Notre Dame, Ind., Also, Pam Cole to director of marketing, from vice president/regional Stephanie Douglas to partner, Bush She will be in charge of legal and an MBA from the University of matters and serve as the co- Michigan’s Stephen M. Ross School brand leader, Doner Partners LLC, Seyferth & Paige PLLC, Troy, from as- Southfield. sociate. executive sponsor of Meritor’s of Business. women’s resource group, which Vanessa Miller to partner, Foley & SERVICES Lardner LLP, Detroit, from senior seeks to advance the careers of cer, Easter Seals Michigan, Auburn counsel. women at the company. Hills, from deputy executive director, Larisa Walega to Quick earned a bachelor’s degree The Leukemia & Lymphoma Society, director of mar- MANUFACTURING in political science and French Madison Heights. keting, Ziebart In- from Duke University, Durham, to chief philanthrop- ternational Corp., Krone Light Dave Prater to Jeffrey Beachum N.C., and a juris doctorate from ic director, Troy, from direc- president and Salvation Army Eastern Debbie Krone to Michigan Division, Southfield, from tor of field mar- CEO, SRG Global Notre Dame University, Notre principal, Reh- executive director, Raybourn Group keting. Inc., Warren, Dame, Ind. mann, Ann Arbor, International, Indianapolis, Ind. Also, Jeffrey Anderson from vice presi- from senior man- John Hale to chief operations director to director of mar- dent of engineer- ager. Also, Greg Mindshare, Team Detroit, Dearborn. of development, from executive direc- ing, commercial ket reporting so- Light to principal, Kate MacNevin to executive director tor of development. lutions, IHS Auto- Rehmann Finan- and program management. of global operations, from managing motive Inc., cial, Farmington director, North America, Common- REAL ESTATE Walega Southfield, from Hills, from senior wealth, Detroit. Also, Sharon Wacker Kelly Kuc to senior controller, NAI director, consulting and analytics, Ex- manager; and MARKETING to managing director, North America, Farbman/Farbman Group, Southfield, perian Automotive Inc., Farmington David Tang to Chi- Prater Mike Eckstein to from managing director, Team De- from senior director of property man- Hills. na business man- director of busi- troit, Dearborn. agement accounting, Signature Asso- Hans Guilbeaux to director of informa- Tang ager, from senior ness insights and analytics, Duffey ciates Inc., Southfield. Also, Kristin tion security and compliance, As- associate, tax services. Petrosky & Co., Farmington Hills, NONPROFITS Smolinski to vice president, from gen- sure360, Farmington Hills, from secu- April Colvin to tax manager, Gordon from senior vice president, group eral manager; Betty Drapinski to vice rity governance manager, Ally Advisors PC, Troy, from controller, communications planning director, Norb Promo to chief development offi- president, from director of taxes; and Financial Services, Detroit.

BUSINESS DIARY CALL FOR NOMINATIONS and Services Administration awarded opened an office at 1595 Eisenhower the Detroit Wayne County Health Au- Place, Ann Arbor. Telephone: (734) The Engineering Society of Detroit thority, Detroit, a $1.8 million grant to 390-9330. Website: g2consulting seeks entries for its Alpha Awards allow for the expansion of an ad- group.com. for Innovation in Engineering and vanced education in general dentistry Technology to recognize members MJR Digital Cinemas, Bloomfield residency with the of those professions who develop inno- University of De- Hills, is investing $2.5 million in up- School of Dentistry and vative solutions to benefit the needs of troit Mercy grades to its Southgate Digital Cinema the general public, business or acade- Clinic, Detroit, beginning July 1. The 20. Renovations include a wrap- mia. For specifics, see ww2.esd.org/ one-year residency will include fund- around screen more than three stories awards/alpha_awards.htm. Submit ing for 12 primary care dental resi- high, new seats, 39-speaker sound sys- entries to Leslie Smith, dents. Websites: dwcha.org, hrsa.gov, tem and lounge. Improvements are [email protected]. ESD also invites en- dental.udmercy.edu. scheduled to be completed in summer. tries for its Construction and Design U.S. Army TACOM Lifecycle Manage- Website: mjrtheatres.com. Awards, honoring owners, designers ment Command awarded General Dy- and builders, and recognizing team namics Land Systems, Sterling NEW PRODUCTS achievement and innovative use of Heights, $72.7 million under an exist- technology. At least one of the prima- ing contract to upgrade 12 M1A1 ProQuest LLC, Ann Arbor, added the ry members of the project team must Abrams tanks to the M1A2 Systems South China Morning Post to its His- be an ESD member. Submit entries Enhancement Package V2 configura- torical Newspapers collection, giving at ww2.esd.org/awards/construction- tion. Production will be performed by researchers access to the publica- design.htm. Nominations deadline for existing employees in Sterling tion’s digital archive from the paper’s both events is Feb. 28. Heights, as well as Anniston, Ala.; Tal- origin in 1903 through 1991. Website: lahassee, Fla.; Lima, Ohio; and Scran- proquest.com. ton, Pa., and is expected to be complet- BorgWarner Inc., Auburn Hills, plans ed by Dec. 31, 2015. CONTRACTS to introduce its Supplier Performance Brogan & Partners Advertising & Con- Monitor System of proprietary soft- Gale Group Inc., Farmington Hills, sultancy Inc., Birmingham, was select- part of Cengage Learning Inc. and a ware to track its supply base in North ed as the lead marketing communica- America. BorgWarner intends to im- publisher of research and reference tions agency for Michigan First Credit plement the software, launched in resources, launched Career Online Union, Lathrup Village. Websites: Germany and Ireland in 2012, in the High School to its public library part- brogan.com, michiganfirst.com. ners, allowing library patrons to earn United States and other parts of Eu- , Farmington an accredited high school diploma and Near Perfect Media LLC rope beginning early this year, fol- Hills, a public relations and market- credentialed career certificate. Web- lowed by India and China later in the ing firm, has added clients site: gale.cengage.com. Socialight year. Website: borgwarner.com. Cigar Lounge & Bistro and Planterra Health Management Systems of Amer- Conservatory, both in West Bloomfield 1-800-LAW-FIRM PLLC, Southfield, ica, Detroit, was awarded a three-year Township; Tomkiw Mackewich launched the property tax widget, a contract for the Michigan Department PLC, Royal Oak; and Elizabeth’s free online tool that helps Michigan of Community Health’s Problem Gam- Bridal Manor, Northville. Website: property owners determine if they are bling Program, which includes a 24/7 nearperfectmedia.com. overpaying their property taxes. help line. Websites: hmsanet.com, Website: 1800lawfirm.com. michigan.gov/mdchgambling. DBA Worldwide, Rochester, an advertising and marketing agency, is now Qualitech, Bingham Farms, a technol- the agency of record for Mercy Med- ogy integrator and software re-seller, ical Center, Des Moines, Iowa. Web- was selected by law firm Erman, Teich- STARTUPS site: dbaworldwide.com. er, Miller, Zucker and Freedman PC, MPM Consulting, specializing in busi- and CPA firm Mathews, Reich, Perna ness intelligence, Six Sigma consult- & Rottermond, both in Southfield, to EXPANSIONS ing and predictive analytics, was upgrade computer networks. Website: G2 Consulting Group, Troy, an engi- launched by Marc Voorhees Jr. at 950 qualitech.net. neering services firm specializing in Cobblers Road, Waterford Township. The U.S. Department of Health and geotechnical, environmental and con- Telephone: (248) 622-4088. Website: Human Services’ Health Resources struction engineering services, mpm-consult.com. 20140224-NEWS--0017-NAT-CCI-CD_-- 2/21/2014 7:17 PM Page 1

February 24, 2014 CRAIN’S DETROIT BUSINESS Page 17 Pension: Detroit bankruptcy model modifies defined benefit plan ■ From Page 1 Detroit Emergency Manager scenes, and I sure don’t know, but it cram-down, which is a request to ations move forward.” Kevyn Orr’s communications di- may very well be that asking for confirm the plan over the objec- President Al Garrett of the Ameri- rector, Bill Nowling, said Friday that (a plan conversion) was just too It may very well tions of some creditors if at least can Federation of State, County and Mu- that other modifications to the de- much. Too much for the union to “ one class of impaired creditors ac- nicipal Employees Council 25 also defined benefit plan should keep its swallow, or too hard to execute. But be that asking for that cepts it. Impaired creditors are cried the plan as a “gut punch” to costs under control, without a more I’m still surprised they didn’t go to a those who won’t be fully repaid past and present employees. drastic change. (contribution) plan.” (a pension plan what they’re owed. “The plan essentially eliminates “Generally, the city is confident Andrews said it’s possible the health care benefits for retirees and that, with more conservative actu- conversion) was just pensioners could make up two drastically cuts earned pension arial assumptions and management Assumed assistance classes of impaired creditors that benefits. Retires cannot survive and no addition of new employees The pension plan still requires too much ... for the vote to accept that plan. these huge cuts to the pensions they or continued COLA adjustments, funding from the state to meet the union to swallow, or “I think that is a very real possi- earned,” he said in a statement. the (plan) funds can perform at a $820 million needed to fund pension bility, despite what you’re hearing “The plan is unfair and unaccept- level that will not increase unfund- obligations to an acceptable level. too hard to execute. right now from unions that are able. Every step of the way, Gov. ed liability,” he said. Orr said Friday that he is hopeful ” feigning outrage,” he said. (Rick) Snyder has put his political For example, the plan calls for state officials will provide the miss- “Whether it’s this week, or shortly agenda ahead of the folks that that Kriss Andrews, former Detroit CFO the Police and Fire Retirement System ing $350 million piece of the fund- afterward, one of the creditors who worked hard for the city.” to assume returns of no more than ing puzzle to help cover pension has a lot more to lose is going to If members of the pension funds 6.5 percent and the General Retire- fund liability for roughly 22,000 re- sions not to pursue any claim raise some strong objections. And approve the adjustment plan in a ment System that covers other city tirees — over and above the $370 against the DIA artwork as a city as- the city is going to want to pick off a timely manner, pension benefits employees to assume a return of no million to come from private foun- set. consent class to sign off and consent would be about 74 percent funded more than 6.25 percent. Pension dations and $100 million that a pri- Orr told reporters Friday that to this deal.” for General Retirement System plan terms also cannot be changed vately managed Detroit Institute of the funding bargain requires a and more than 94 percent in the for 10 years under the city’s plan of Arts expects to raise from donors “global agreement by all sides,” Police and Fire fund. Orr said Fri- adjustment, if it is confirmed. over the next 20 years. and if retirees choose to go after Far from ready day that, without the state funding Nowling in an email said the city The DIA will ultimately con- the artwork as a city asset then City unions and retirees, for or the early approvals, general re- expects to stop new employees from tribute $175 million to help cover that money is off the table. their part, did not yet sound recep- tirement system enrollees would joining the defined benefit plan or unfunded liabilities for the police “That money (for pensions) has tive Friday. be less than 67 percent funded and vesting into it at some future point, and fire pension plan and $50 mil- to come from somewhere, and “We are greatly disappointed police and fire benefits would be at but did not elaborate. lion to the general employees’ plan hopefully when the parties get a that the (adjustment plan) contains or slightly under 90 percent of cur- Kriss Andrews, a former CFO for by the end of June 2023, out of funds chance to talk further about it, they debilitating and unnecessary cuts rent payouts. the city during the Bing adminis- pledged by various foundations and (retirees) will consider the alterna- to accrued pension benefits and Foundations that have pledged tration who went on to co-found from donor contributions. tives,” Orr said. “I would certainly know the city can afford much bet- to support the funding plan in- Southfield-based Alderney Advisors It would contribute at least an- expect, if we reach agreement with ter treatment to the people who clude the $10.9 billion Ford Founda- LLC last year, said he did not expect other $195 million to the general either of the funds, they would then have dedicated years of their lives tion, New York; $8.2 billion W.K. the continued support for a defined employees sometime after that, ac- recommend to their constituencies in service of the city,” the General Kellogg Foundation, Battle Creek; benefit plan. cording to provisions of the plan of that they approve it.” Retirement System said in a state- and the $3.3 billion Kresge Founda- “That was the most surprising adjustment submitted Friday be- But a draft disclosure statement ment Friday. tion, Troy. thing I saw so far in the plan today,” fore U.S. Bankruptcy Court Judge filed Friday along with the adjust- “Fortunately, the (plan) is a dy- Chad Halcom: (313) 446-6796, he said Friday. “You don’t ever Steven Rhodes. ment plan also details how the city’s namic document that can be [email protected]. Twitter: know what happened behind the The plan also calls for the pen- plan meets the requirements for a amended as mediation and negoti- @chadhalcom MARKET PLACE JOB FRONT

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Page 18 CRAIN’S DETROIT BUSINESS February 24, 2014 Culprits change, but health care fraud follows familiar patterns

BY CHAD HALCOM Michigan Hematology Oncology Cen- gan pharmacies owned or con- restitution, and serve 17 years in 12 trial on a 14-count indictment. CRAIN’S DETROIT BUSINESS ters PC and founder of the nonprofit trolled by Patel were used to fill prison. Medicare usually pays only a Swan for Life Cancer Foundation, who prescriptions that were sold or dis- Federal Medicare fraud indict- fraction of claims in each alleged Each health care fraud case is its leased office space at Crittenton Hos- tributed illegally, or stored in ments quite commonly allege about conspiracy by the time it is inves- own unique story, but many deal in pital Medical Center. basements and returned to whole- the same ratio of billings to actual tigated and indicted by Justice of- some of the same themes, or have The U.S. Department of Justice salers. Doctors were also paid to reimbursements, in other cases. ficials. For example: similar ingredients and characters. contends Medicare actually paid at sign prescription orders and re- But federal officials in the Patel Ⅲ A 2012 indictment of social A ringleader dreams up a plan to least $91 million to Fata’s company cruiters offered $100 to people in case have obtained restitution or- worker Louisa Thompson and co- bill for unnecessary or bogus over the past six years, including Detroit homeless shelters and ders of more than $1.7 million for defendant Checarol Robinson for health care services in a health $48 million for chemotherapy and soup kitchens for their Medicare Blue Cross Blue Shield of Michigan this alleged bogus billing for mental care field where he or she expects other cancer drugs. or Medicaid patient numbers. year alone, as a private insurer health services, for example, al- to find little oversight. Patients Christopher Andreoff, partner Patel, 51, of Canton Township, fraudulently billed along with leges that Medicare paid out about who need a meal or extra cash of- at Southfield-based Jaffe Raitt Heuer owned or operated pharmacies at Medicare in that scheme. Prosecu- $4 million on $20 million in claims ten meet one of the ringleader’s re- & Weiss PC and defense attorney six locations in Detroit, three in tors allege more than 35 pharma- through Detroit-based TGW Medical cruiters and turn over their for Fata, said the doctor maintains Warren, nine in Oakland County, cists, doctors, patient recruiters and Inc., Caldwell Thompson Manor Inc. Medicare or insurance account his innocence and has sought re- two in Bay City and elsewhere, ac- others conspired to bill Medicare and P&C Adult Day Center LLC. numbers for purposes unknown. lease on bond but remains in cus- cording to federal officials. and Medicaid more than $70 million. Ⅲ A 2012 prosecution of Ray- And in some cases, a doctor, tody awaiting trial. More than $70 million of the In the Fata prosecution, federal mond and Emelitza Arias alleges pharmacist or other medical profes- In another case, Babubhai Patel $143.3 million of billings outlined by officials allege tens of thousands of that Westland-based Elite Wellness sional gets involved in the crime. owned or controlled most of a net- Justice in various 2011 court cases dollars were also unnecessarily LLC submitted $12.5 million in Of the $380.2 million-plus in work of 20 Southeast Michigan was tied to the Patel scheme. The in- billed to Blue Cross, along with Medicare claims for infusion and Medicare billings pegged as fraud pharmacies and was the alleged dictment doesn’t break out how Aetna Inc. and Health Alliance Plan of injection therapy for treating pa- regionally in 2013, $225 million is ringleader in some home health much money Medicare paid out in Michigan over and above his tients with HIV, of which the pro- attributed to oncologist Farid Fata, care fraud and prescription fraud. that case, but he was ordered in Medicare billings. Fata awaits a gram paid out about $3.8 million owner of Rochester Hills-based More than 20 Southeast Michi- February 2013 to pay $19 million in July conference date and an Aug. from 2009 through last year.

Fraud: Increased federal efforts find more health care cheats ■ From Page 1 The effort is gaining traction, ac- industry group private health insurers and regula- cording to both investigators and a MEDICARE INDICTMENTS at Bloomfield tors, estimates 3 percent of total Crain’s analysis of local casework Below are Medicare indictments since the U.S. Department of Justice’s Hills-based Plun- health care spending, or more than and Justice data. Detroit Medicare Fraud Strike Force began assisting the local U.S. kett Cooney PC. $60 billion per year nationwide, is In 2013, federal prosecutors ob- attorney’s office with Medicare fraud investigations. “But unfortu- misspent on fraud. That includes tained 18 local indictments against The U.S. attorney’s local Health Care Fraud Unit has collaborated with the nately, while Medicare, Medicaid and all private 46 defendants in national task force since 2010. These figures represent the combined there will al- insurance reimbursement. fraud schemes caseloads of both teams. ways be an ele- According to the Dartmouth At- totaling $380.2 The first full year of the task force was 2009. Indictments for that year ment out there las, Medicare alone reimbursed a million — fueled cover billings over several previous years. willing to ex- total of $5.39 billion in claims for by $225 million Kopson ploit any weak- 496,760 Medicare plan enrollees in in unnecessary Year Billings Cases Defendants ness imagin- Southeast Michigan in 2010, which medical treat- 2009 $75.6 million 11 88 able, and it’s always changing is the most recent year available. ment attributed 2010 $24.5 million 3 25 tactics, it really only represents If the 3 percent spending esti- to oncologist 2011 $143.3 million 11 147 one end of the spectrum of behav- mate by the Anti-Fraud Associa- Farid Fata — but 2012 $121.5 million 11 35 iors in the industry.” tion is correct and can be applied to Fata even without 2013 $380.2 million 18 46 Kopson and other attorneys Medicare alone, that would mean that, higher than said increased Medicare fraud en- $161.7 million of Medicare reim- the previous record of $143.3 mil- forcement has triggered compli- bursements from Southeast Michi- lion in billings charged in 2011. defendants in Health Care, a program of the Dart- ance work among health care gan each year are fraudulent. But more significantly, that fig- $745 million of mouth Institute for Health Policy and providers to help develop new poli- Medicare fraud becomes a crime ure approaches for the first time alleged fraudu- Clinical Practice. cies and controls or increased in- at the moment the provider sub- the billing volume that experts be- lent Medicare Since January 2011, McQuade ternal audits. mits a claim — not when or if it gets lieve is likely fraudulent within the billing schemes said, the amount billed to Medicare For example, Crittenton Hospital reimbursed — but defendants are $5 billion-plus in annual Medicare to date. for psychotherapy locally has gone Medical Center in Rochester Hills charged with the amount of the to- expenditures in Southeast Michi- “Based on down by 70 percent, and home stopped charging patients fees for tal billings. gan. Since the first indictments Medicare spend- health care has seen reduced releasing their medical records af- A review of indictments by from the increased enforcement ing data, we see billings, although billings are still ter the August indictment of Fata, Crain’s suggests Medicare general- presence came down in June 2009, per-beneficiary generally high. who is accused of billing for hun- ly pays out 25 to 40 cents on the dol- nearly 170 people have pleaded McQuade spending is go- “We do have a recently intercept- dreds of chemotherapy sessions lar it is billed on a fraud scheme guilty and nearly three dozen were ing down in this ed conversation on wiretap, where that were medically unnecessary. before participants are arrested convicted by juries. Another 110 market. One possible conclusion two individuals were recorded say- (See story, this page.) and charged. from that is we are indeed making “Ideally, you do want the payer, await a finding by a jury or judge ing they need to be more careful So if fraudulent spending is headway,” McQuade said. which is Medicare here, to be care- this year, including three who are now because they’re really crack- more than $160 million in South- “That’s consistent with what we ful about the money it spends. And on trial this week before U.S. Dis- ing down in this area. That’s en- east Michigan, then local fraudu- see, but a lot of the law enforce- you’d want them to be sensitive to trict Judge Arthur Tarnow. couraging,” McQuade said. lent billing claims may well exceed Investigators said the success is ment community will tell you “Does that mean criminals stop, the treatment cost it pays for,” $400 million a year. about the balloon effect, where said Nicholas Bagley, an assistant due to a mix of cutting-edge surveil- or do they go elsewhere? That’s That’s assuming, of course, that squeezing one area (of fraud) professor of health law and policy lance and witness interviews that hard to know. But when you do Detroit’s fraud rate is commensu- makes another expand.” at the University of Michigan Law establish crossover points between bring down some of the actors, you rate with the nation as a whole — The decline in per-beneficiary School and a former appellate at- one bad billing scheme and another. do seem to bring down at least some the 2009 Strike Force assignment spending is tentative — the most torney in Justice’s civil division. Over time, Justice has begun to of the fraud occurring along with to Detroit is based in part on a “But the program has been hob- catch criminals before they close recent year available is 2010, but it them.” finding of outsized billing amounts bled since its inception by the com- shop and change markets as in shows that reimbursements from Nationwide, more than 1,500 peo- detected here by HHS Fraud Pre- years past, and the trickle of closed Medicare fell anywhere from $50 ple have been charged since March peting desire to make sure that vention System software. to $400 per enrollee in five South- Medicare doesn’t meddle in treat- cases has become a verifiable 2007 in connection with more than Peter Orszag, former U.S. Office of east Michigan hospital referral re- ment decisions. Still, the fact that stream. $5.1 billion in Medicare billings, by Management and Budget director, it’s really easy to find Medicare gions from 2009, which was the the strike force in nine cities where has said in past reports to Congress Feeling the HEAT first year of strike force prosecu- software operated by HHS found fraud and deter it suggests that it’s that up to 30 percent of Medicare tion. The regions saw nothing but disproportionate Medicare billing also very easy to defraud the sys- costs could be saved by bringing Local prosecutions from the na- increases the preceding five years. volumes believed to be due to fraud. tem, and perhaps we are only high-cost hospital regions into line tional HEAT program, a collabora- Even so, the $10,944 average ex- “The majority of the HEAT task scratching the surface.” with lower-cost areas of the coun- tion between Justice and the U.S. penditure per Medicare enrollee force prosecutions have dealt with try, without negatively affecting Department of Health and Human Ser- across the region is more than the the worst of the worst, and blatant, A question of traction health outcomes. So fraud may be vices, and by the local Health Care average payout in 90 percent of the egregious violations — and more only one factor behind inflated Fraud Unit, formed by U.S. Attor- 306 regions tracked nationwide. power to them, because that’s my The National Health Care Anti-Fraud spending in Michigan. ney Barbara McQuade in Detroit The per-beneficiary data is com- tax dollars, too,” said Mark Kop- Association, a Washington, D.C.- in 2010, have together roped in 341 piled by the Dartmouth Atlas of son, chairman of the health care based organization of public and See Next Page 20140224-NEWS--0018,0019-NAT-CCI-CD_-- 2/21/2014 5:08 PM Page 2

February 24, 2014 CRAIN’S DETROIT BUSINESS Page 19

From Previous Page eas of health fraud, although local investigators said it is hard to “The bigger problem here is oth- measure how much correlation AutoHarvest: Online meeting for IP er forms of claim abuse, such as exists. ■ From Page 3 discretionary calls by providers, Blue Cross Blue Shield of Michi- that can lead to overtreatment,” gan, for example, tracked 132 ar- A match made online Bagley said. “In the scope of all rests stemming from allegations AUTOHARVEST PROGRESS Song Young is CEO of Optimal spending, fraud is sort of the lead- of fraud against the insurer total- Inc., a Plymouth-based provider of In January, U.S. Commerce Secretary Penny Pritzker told the Detroit ing edge of the problem.” ing $13.5 million, as of late 2013. engineering services and staffing Economic Club that the Patent Office had signed a memorandum of That’s compared with 77 arrests understanding to share patent information on the AutoHarvest website. to the auto sector. He is negotiat- in fraudulent claims totaling ‘A regional issue’ ing a license agreement for two The U.S. Department of Defense recently entered information on 70 of $13.1 million in 2012 and about its research labs nationwide into the AutoHarvest database. Andrew Arena, executive di- patents with the University of Michi- just $8 million in fraud allega- Ann Arbor-based InfoReady Corp. has gathered data, including contact rector of the Detroit Crime Commis- gan for his new company, Optimal tions in 2007, before the federal information for researchers, from 83,000 Small Business Innovation Process Technologies LLC, which sion, said strike force arrived. Research grants and Small Business Technology Transfer grants made by Southeast was founded in Plymouth in 2012. Greg Anderson, vice president 12 federal agencies in the past 13 years. InfoReady is developing the Michigan was Young said he did a search on the of corporate and financial inves- upgraded version of AutoHarvest’s members-only marketplace portal, due one of the top AutoHarvest site for something tigations at Blue Cross, told to go live by the end of summer. three regions called “dissimilar material join- Crain’s that investigations of What AutoHarvest calls the Innovation Hub was launched on the site last in the country ing,” which, he said, “led to my dis- Medicare and Blue Cross insur- year. It includes the data on the federal grants; access to a searchable for health care covery of the outstanding work database of import-export trade of more than 50 companies, including U.S. ance fraud often overlap, and his fraud while he done by Professor Jack Hu and his trade with the world; access to a database listing capabilities for North department has a good relation- was special team at the University of Michi- American manufacturers and distributors; a link to a patent brokerage; and ship with the FBI, including agent in charge gan.” contact information for area patent attorneys. sharing information on overlap- at the FBI in While negotiating the license, ping cases. Arena Detroit. Single- Young formed Optimal Process and operation for Genivi and others, AutoHarvest is entering a com- But sometimes, Anderson said, market fraud often has to signifi- began applying for federal re- like AutoHarvest. petitive landscape between IP mar- the government’s own complex cantly exceed national norms to search grants, the first of which “(The auto industry) doesn’t ketplaces, but may carve out its Medicare fraud cases consume be detected by HHS investigators, began in January, a National Sci- have a lot of trust between com- own niche, said Jeff Sadowski, tremendous time and effort, he said. ence Foundation phase-one Small petitors,” Crumb said. “We’ve cre- partner and IP attorney at Royal which can mean less time for About six years ago, some Business Innovative Research ated an atmosphere of competi- Oak-based law firm Howard and Justice to follow up on case refer- fraud scheme operators were grant of $149,226 to investigate tion; we’d have a hard time as a Howard Attorneys PLLC. rals from his company or others, moving to metro Detroit from “joining of dissimilar materials for-profit member organization.” Sadowski said patent brokerage he said. Florida, a previous fraud hotbed using rivet-weld technology.” Pankin said the IP site requires firms, such as Los Altos, Calif.- Blue Cross’ fraud-flagging ef- that was facing pressure from Despite taking nearly two years a budget of less than $1 million a based IP Venture Inc., have stomped forts have included hiring recent Justice, Arena said. longer than planned to implement year to operate at full capacity. By out smaller IP deals by only look- veterans of the law enforcement “Health care fraud enforcement and the ongoing struggles with a comparison, operating Genivi re- ing for home runs. community, offering basic and is certainly a regional issue. Some fundraising structure, Pankin and quires a budget of at least $1 mil- “In the beginning, firms like IP advanced investigative training, of the schemes and practices mi- others say the site fills a need and lion to $2 million, Crumb said. Venture covered the spectrum of and tracking case outcomes and is living up to expectations, if not a AutoHarvest raised more than all deals; now they are only look- grate, and concentrate in certain restitution payments over time, timetable. $450,000 from grants and member ing at patent portfolios in the hun- local areas,” said Leigh McKenna, Anderson said. director of government and public “We have come up with a better fees and had $247,000 in revenue in dreds of millions of dollars,” Sad- Blue Cross also said it was diffi- affairs for the Anti-Fraud Associa- mousetrap of open innovation,” 2012, according to its 990 tax form. owski said. “If AutoHarvest can cult to break out its annual arrest said Pankin. His co-founder and Members are asked to pay fees carve a niche for smaller compa- tion. “South Florida is a perennial and fraudulent billings totals into AutoHarvest chairman is David voluntarily, Pankin said, and the nies looking to sell two or three area because of the large volume federal cases versus state law vio- Cole, former chairman of the Ann organization hasn’t determined a patents, they are definitely going of beneficiaries, but you get lations, which are less likely to in- Arbor-based Center for Automotive tiered-fee structure. to fill a need.” upticks in other markets for peri- volve Justice officials. ods of time.” Research. The Michigan Economic Develop- One member of AutoHarvest’s In 2013, the inspector general’s It is hard for Pankin to track ment Corp. provided $50,000 to Au- Innovation Hub is a competitor, Prison sentences help, officials office also reported reaching cor- successful matchups between com- toHarvest in 2011 to develop the Chicago-based Intellectual Property said, but they aren’t the answer. porate integrity agreements with panies that have technology and concept of online collaboration for Exchange International Inc., or IPXI, “It’s not a problem you arrest two Michigan companies to your way out of. It’s going to have those seeking it. “Members volun- advanced manufacturing. The which acts as a financial exchange change their practices and dis- tarily report success. We’ve had New Economy Initiative for South- to be solved with regulation, but close more to the federal govern- for licensing and trading IP rights. it’s a question of what kind of regu- some deals close. Not a lot, because east Michigan provided $875,000 in The for-profit exchange per- ment — W.A. Foote Memorial we’re still in beta,” he said. lations would be effective,” Arena funding divided between two forms due diligence, negotiates le- Hospital, or Allegiance Health, in “We’re a matchmaker, not a fil- grants in 2012 and 2013. said. gal documents creates a public of- Jackson; and Jackson Cardiology ter. It’s technology speed dating,” The foundation also received “You’ve (also) got to police and fering-like pricing for licensing Associates PC, owned by cardiolo- he said. AutoHarvest offers a plat- $300,000 from the Flint-based C.S. enforce smarter. That’s where mature technology. gist Jashu Patel — compared with form for parties to get together. Af- Mott Foundation to help launch oper- software solutions and algorithm Ian McClure, director of IPXI, one such agreement each in 2011 ter that, they negotiate on their ations and begin building a rudi- expertise come in. From an effec- said AutoHarvest has created a and 2012 and none in 2010. own without AutoHarvest involve- mentary alpha version of a website. tiveness standpoint, that’s what niche for earlier-stage tech collab- Those companies were also part ment. “We offer a collaboration Pledging support, and in some you’ve got to invest in — the tech- oration and will create a funnel to of a civil action in Detroit, where room on the site where people can cases cash, at the time of launch nical ability to enforce.” IPXI as the technology advances. McQuade’s health care fraud unit talk. But they do their formal deal- were more than 60 organizations, The Centers for Medicare & Medic- “For every R&D stage, there’s a intervened as a plaintiff and re- making off the website.” including Ford; Chrysler Group LLC; aid Services in 2012 launched a Pro- need; companies are asking, ‘Do I solved the matter in July 2013. Pa- “Early on, we weren’t sure you’d General Motors; Ohio State University; gram Integrity Command Center, spend R&D on developing this tel and Jackson Cardiology agreed get the level of engagement you’d Kettering University; Visteon Corp.; a digital prevention and crime de- technology or look for what’s al- to pay $2.2 million in a civil settle- need from an online site, but we Delphi; 3M Corp.; TARDEC; Sandia tection center for CMS to coordi- ready out there?’ ” McClure said. ment while Allegiance Health felt that what they were doing in National Laboratories in Albu- nate with law enforcement agen- IPXI closed its first licensing agreed to $1.8 million, to settle civ- the ecosystem was important querque, N.M.; Michigan State Uni- cies that uses the Fraud il claims that Patel and his cardiol- enough to fund,” said Pam Lewis, versity; Wayne State University; Nex- deal recently, involving 600 Prevention Systems software’s ogists performed medically inap- senior program manager for the tEnergy; and Automation Alley. patents associated with organic predictive analytics to spot fraud propriate cardiac procedures, New Economy Initiative for Southeast Despite a tight budget, the site is light-emitting diode technologies and respond quickly to it, said including invasive catheteriza- Michigan, which granted AutoHar- progressing and will culminate for display screens from Koninklijke Tony Salters, public affairs spe- tions at Allegiance Health. vest $475,000 in 2012 and $400,000 with the rollout of a fully function- Philips N.V. The licenses are being cialist at CMS. McQuade said her office gets last year. al website. The site would include sold as five square meters of OLED The result is that investiga- data episodically that suggests the “We’re pleased with their user in- an alert system, so someone look- panels per license, which is tions that used to take days and local fraud picture is improving, teraction, with their number of ing for something specific doesn’t enough for 700 smartphones, Mc- weeks can now be done in a mat- but it is too soon to tell if the task users and members,” she said, have to keep checking but can be Clure said. ter of hours, Salters said. force’s work in Detroit is nearly adding that AutoHarvest won’t be a notified when data is added he or Pankin said one advantage of be- Kopson agreed that new track- done. success as just a website. “An online she might be interested in. ing a nonprofit is that companies ing technology seems to bring the “At some point we fully expect a tool is important, but it needs to ... “In terms of being globally live, like IPXI aren’t seen as the enemy. hammer down faster on scams. decision to come down that anoth- accelerate in-person interactions.” which is the big event, we’re get- “It’s collaborative. There are “Real-time billing monitoring er market needs the task force ting close,” Pankin said. “Summer many ways to drive innovation,” by the government has been very more than Detroit does, and they would be nice. I don’t think there he said. successful at discovering real-time will move on. So in the meantime, Profit or not will be snow on the ground.” “Because we’re a nonprofit, we fraud, and that by the time you they have been doing a lot of train- AutoHarvest is limited in its In addition to its small office in can be trusted. We don’t have fa- catch up on it, the bad guy hasn’t ing and cooperating with our own ability to raise funds like a tradi- Detroit’s TechTown, AutoHar- vorite clients. We can be an open already packed up and moved to staff to carry on,” she said. tional startup, which would seek vest, which employs five, also has tent for everybody. We’re in the another state, which used to be “Because the work (of fighting investors, but operating as a non- an office in the North Campus Re- sweet spot of what innovation is more common,” he said. fraud) is here to stay, whether profit is the only way to get the research Complex at the University of supposed to mean.” the national task force is here to gion’s automotive industry to buy Michigan. Eric Stief, the former di- Tom Henderson: (313) 446-0337, Complex cases be a part of it or they go their into the concept, Pankin said. rector of venture development in [email protected]. Twitter: own way.” Steven Crumb, executive direc- the technology commercialization @tomhenderson2 The increased federal presence Chad Halcom: (313) 446-6796, tor of automotive open-source soft- office at Wayne State University, is Dustin Walsh: (313) 446-6042, and Medicare fraud crackdown [email protected]. Twitter: ware nonprofit Genivi Alliance, said AutoHarvest’s senior vice presi- [email protected]. Twitter: seem to have benefits in other ar- @chadhalcom operating as a nonprofit fuels co- dent. @dustinpwalsh 20140224-NEWS--0020-NAT-CCI-CD_-- 2/21/2014 7:25 PM Page 1

Page 20 CRAIN’S DETROIT BUSINESS February 24, 2014 Market: Biz district turns to tax law for upgrades Tower: ■ From Page 1 ■ From Page 3 ly understand the plans and are has been in the making for a cou- Towne Square is also per- worried about extra costs or busi- Proposed boundary of Targeted ple of years. forming better than much of the ness disruption during construc- Redevelopment Area In December 2012, the state 6.1 million-square-foot South- tion. Others are worried about Wilkins St. Aubin passed legislation allowing for the field Class A office market. The maintaining the integrity of a creation of targeted redevelopment vacancy rate in the fourth quar- Dequindre Cut ter last year was 25.5 percent, ac- working neighborhood where Orleans areas as a way to spur development meat-packing plants, specialty in heavily blighted areas with clus- cording to data from the South- Alfred Newmark Grubb stores and restaurants coexist. Riopelle ters of 40 to 500 dilapidated parcels. field office of Pushing new development to the There can be no more than five Knight Frank. The average asking outlying areas will allow the core Division targeted redevelopment areas cre- rent was $20.13 per square foot, of the market to ated in the state per year and a according to NGKF. keep its authen- maximum of two per jurisdiction The first tower, built in 1992, ticity as a func- per year. is 470,000 square feet. Its largest tioning food Ernie Zachary, vice president of tenants are Southfield-based hub, said Car- Detroit-based economic develop- Signature Associates LLC (32,000 Adelaide mody, Eastern ment consultant firm Zachary & Asso- square feet), which handles Market presi- ciates, said the TRA legislation was leasing for the buildings; South- Division Winder dent. Rivard created with the market in mind. field-based consulting firm “The west Katharine Czarnecki, director Gabriel Roeder Smith & Co. (25,000 side, and heart of of community development for the square feet); and the Sommers Schwartz PC law firm (25,000 the market, will Gratiot Michigan Economic Development Carmody stay focused on Corp., said Eastern Market made square feet), according to re- businesses that are dirty and loud Service Drive search firm CoStar Group Inc. Russell sense as the pilot for the program and make food, which might not because it had a high density of The second tower, built in make for a great place to live,” he blighted buildings in a relatively 2002, is 200,000 square feet. Its said. “Our focus is to ramp up devel- small footprint. largest tenants are FirstMerit opment along Gratiot Avenue and “We always tossed around ideas Bank (38,000 square feet); South- the Dequindre Cut corridor to build about fixing areas that have multi- field-based Telemus Capital Part- more diverse uses around general ple parcels and big spaces,” Czar- ners LLC (27,500 square feet); and retail, housing and the creative necki said. the land development, survey- class.” more days of operation, created 10 he said. Zachary said one of the biggest ing and engineering firm Atwell TRAs are similar to TIFs, except new positions to bring the number Campbell said she holds regular benefits to the TRA is that it all but LLC (22,000 square feet), accord- that they’re intended for brown- of employees to 17 and plans to add meetings at 4 p.m. the second eliminates the need to conduct sep- ing to CoStar. field improvements, including re- three more. Thursday of every month at East- arate environmental surveys on Terry Croad, director of the development of blighted properties “There were good pieces in place ern Market Corp.’s headquarters, each individual parcel. Southfield Planning Department, but she said turnout is low. Other and overall district improvements. when I got here. We just needed to “This streamlines the process,” said site plans have not been outreach includes sending pre- The Eastern Market capital pro- build organizational capacity as the he said. “Environmental analysis submitted. Redico would need recorded voicemail updates on jects would include improvements market grew,” he said. “Now we on a parcel can cost as much as Planning Commission and City things like parking lot construc- like streetscape beautification, need to leverage the market to $10,000 and many of these buildings Council approval before it tion. She said she’ll also send email stormwater management, the re- strengthen the neighborhood.” are over a century old, so who could apply for construction or text message updates, depending moval of crumbling bridges and ex- knows what’s going on underneath permits, Croad said. on merchant preferences. tensive sidewalk and street im- them?” “We could be under construc- Communication breakdown “There are about 150 merchants provements. The boundaries of Eastern Mar- tion relatively quick, given that Change isn’t easy. in the district, and I might get 15 The TRA does not mean higher ket’s proposed TRA are roughly the site was originally planned people to show up (to a meeting),” property tax rates. Like TIF dis- Bert Dearing, 69, said there’s no from Wilkins Street to the north, for this use,” Watchowski said. denying that the free-wheeling cul- she said. tricts, the taxes generated by in- Rivard Street to the west, St. “The construction period would ture of the neighborhood has McCarthy said he has never creases in property value over the Aubin Street to the east and the be typically 12 to 18 months.” changed. Things were a lot differ- been to one of the meetings. “I next 25 years in the TRA area will go service street behind Gratiot Av- Redico is also the developer of ent when he opened Bert’s Market- have to work,” he said. “It’s just into a pool held by the Detroit Brown- enue to the south. the $72 million Gateway Market- place in 1987. me and my wife here.” place project in Detroit, which field Redevelopment Authority and be The hope is to connect Eastern That’s long before the market be- features the first Meijer Inc. store used to reimburse property owners Market to the Midtown Loop came the regional destination it is in the city; and the planned $150 in the district for rehabilitating di- Greenway bike path that runs today, drawing thousands each Financial projections million redevelopment of the for- lapidated property, Carmody said. from John R Road to Wilkins week. Then, rules enforcement was Carmody said he can empathize mer Michigan State Fairgrounds Terry Campbell, COO for Eastern Street, and the second phase of the lax and permit compliance was ca- with the differing points of view of site into more than 1 million Market Corp., said the goal is to bol- Dequindre Cut, which runs from sual, if not overlooked. longtime business owners in the square feet of mixed-use space. ster investor confidence by provid- Gratiot to Mack Avenue. Over the years, Dearing, a self- district, and that the new financial At 5.5 million square feet, the ing long-term revenue streams for The plans aren’t a done deal. pronounced capitalist, said he has plan, including the TRA, is meant Renaissance Center in downtown costly improvement projects. Eastern Market Corp. is in the thrown hundreds of raves, dance to give stakeholders in the district Detroit is the region’s largest “The TRA would allow us to fo- midst of finalizing its proposal be- parties, karaoke sessions, con- more stability and a roadmap for office complex. The Southfield cus on improvements to opera- fore sending it to the city’s brown- certs, boxing matches and just its future. Town Center is the second- tions and creating new programs field board for review. It will still about anything else that would fill If all goes well, Carmody said, largest at 2.2 million square instead of fundraising for capital need to be submitted to the City his 22,000-square-foot complex. the fund could generate up to $50 feet, followed by the Galleria Offi- improvement projects,” she said. Council and then get signoff from His outdoor barbecue and par- million over 25 years — but that centre in Southfield at 1 million the state. ties still draw hundreds of people depends on how much is invested. square feet. Carmody said Eastern Market Market makeover every weekend. He said he was Eastern Market Corp. will still Depending on the size of the Corp. has identified eight vacant shut down in 2012 and 2013 be- need to raise funds for its projects third building, Towne Square The market wants to improve properties for development, seven the aesthetics of the neighborhood cause he didn’t work with Eastern but will be reimbursed through the could become the third- or increments collected in the TRA. of which are located along the sec- as part of its expanded lineup of Market Corp. on proper permits. fourth-largest office complex in But Dearing said, overall, he In 2009, the organization re- ond phase of expansion along the sheds and support services for en- the region. likes the direction Eastern Market ceived $1.85 million in contribu- Dequindre Cut. trepreneurs. Kirk Pinho: (313) 446-0412, is headed. tions and grants and reported total “We need to have our first major Separate from the TRA planning, [email protected]. Twitter: “This whole thing is gonna revenue of $2.84 million. In 2012, project ready to go because we Eastern Market coordinates pooled @kirkpinhoCDB grow, and I will fit right in and do the market received $2.95 million don’t want to start the clock on the resources for security, provides great,” Dearing said. “Ain’t no- in grants, part of a reported $4 mil- TRA too early,” he said. “When we community kitchen space for food body stopping me.” lion in total revenue. get our first major project shovel- businesses and offers courses for Dan McCarthy, owner of Cost The TRA, for its part, will offer ready, we will start the TRA. entrepreneurs in training. Plus Eastern Market Wine, said the the property owners the difference Jay Bonahoom, co-owner of It plans to open the district on biggest problem is a lack of com- between the precompletion taxes Wolverine Packing Co., which takes Sundays starting in June, contin- munication between Eastern Mar- and the post-completion taxes col- up about 200,000 square feet of ue its Tuesday market days in ket Corp. and the merchants. lected on the property. space over five buildings on the warm-weather months (along with “People have been here a long “Creating a TRA gives confidence east side of the market, said he is its regular Saturday market time and operated a certain way,” so that more people will invest in happy with the direction of Eastern hours) and, long-term, offer year- McCarthy said. “All of a sudden a the area because it shows continu- Market, and the plans for the TRA. round sales of foods and other management company comes in ous improvement,” said COO Camp- “There is nothing worse than products in heated sheds. and starts telling you what to do. bell. “There is a dedicated pool of stagnation and the crime that hap- Carmody has expanded the size Just talk to us. Become a part of funds for infrastructure projects pens when there is no develop- and scope of the market since he the neighborhood. Don’t do things and improvements. ment,” he said. “We like to see our took over as president in Novem- behind closed doors.” real estate in a thriving market.” ber 2007. Dearing agrees. Case study Nathan Skid: (313) 446-1654, COSTAR GROUP INC. He expanded the programming “It seems like certain business [email protected]. Twitter: The first tower of Towne Square, built and foundation support, added owners are in the inner circle,” Eastern Market’s use of a TRA @nateskid in 1992, is 470,000 square feet. 20140224-NEWS--0021-NAT-CCI-CD_-- 2/21/2014 5:17 PM Page 1

February 24, 2014 CRAIN’S DETROIT BUSINESS Page 21 Coach: Not just a title; it’s also a revenue stream www.crainsdetroit.com EDITOR-IN-CHIEF Keith E. Crain ■ From Page 3 GROUP PUBLISHER Mary Kramer, (313) 446-0399 or [email protected] “We likely will be doing this A few good donors ASSOCIATE PUBLISHER Marla Wise, (313) 446- with other coaching positions,” 6032 or [email protected] EXECUTIVE EDITOR Cindy Goodaker, (313) 446- said UM athletics director David Brandon is seeking more donors 0460 or [email protected] like Harris because of the need for MANAGING EDITOR Jennette Smith, (313) 446- Brandon. 1622 or [email protected] “I anticipate you’ll see more and money. Coaching naming rights MANAGER, DIGITAL STRATEGY Nancy Hanus, are another way for athletics de- (313) 446-1621 or [email protected] more of this throughout college MANAGING EDITOR/CUSTOM AND SPECIAL sports as a logical way to provide partments to generate cash, he PROJECTS Daniel Duggan, (313) 446-0414 or said. [email protected] recognition (to major donors).” SENIOR EDITOR/DESIGN Bob Allen, (313) 446- He declined to disclose details, “What’s taking off is the need for 0344 or [email protected] SENIOR EDITOR Gary Piatek, (313) 446-0357 or but Brandon did confirm that he’s fundraising. All of our (Big Ten ath- [email protected] been contacted about other possi- letics) departments crave capital WEB EDITOR Kristin Bull, (313) 446-1608 or to build facilities to compete at the [email protected] ble endowments and coaching job WEST MICHIGAN EDITOR Matt Gryczan, (616) 916- names since the Harris family deal highest level,” Brandon said. “All 8158 or [email protected] DATA EDITOR Brianna Reilly, (313) 446-0418, was announced Feb. 17. of these departments are out try- [email protected] Earnings from the endowment ing to maximize the opportunity to WEB PRODUCER Norman Witte III, (313) 446- raise funding support. As you’re 6059, [email protected] will cover at least a portion of EDITORIAL SUPPORT (313) 446-0419; YahNica Hoke’s $300,000 base salary. His to- thinking about the inventory of Crawford, (313) 446-0329 NEWSROOM (313) 446-0329, FAX (313) 446- tal compensation topped $4.1 mil- recognition opportunities, it’s 1687 TIP LINE (313) 446-6766 lion last season, including bonus- only natural to think about endow- REPORTERS es, media appearance fees and ing positions.” UM’s budget for its 31 sports pro- Jay Greene, senior reporter: Covers health care, other money, according to USA To- insurance, energy utilities and the environment. day’s annual college football grams in the current fiscal year (313) 446-0325 or [email protected] ending June 30 is estimated at Amy Haimerl, entrepreneurship editor: Covers salary database. Not all is paid by entrepreneurship and city of Detroit. (313) 446- the university. BLOOMBERG $146.4 million in revenue and 0416 or [email protected] Endowed coaching positions are common in the Ivy League, where Yale’s The $10 million comes from the $137.5 million in spending, for a Chad Halcom: Covers litigation and the defense program is directed by the “Joel E. Smilow ’54 Head Coach of Yale Football.” industry. (313) 446-6796 or [email protected] J. Ira and Nicki Harris Foundation. projected $8.9 million surplus. Tom Henderson: Covers banking, finance, The Harris endowment will be technology and biotechnology. (313) 446-0337 or Ira Harris, 75, graduated from [email protected] UM in 1959, and the football team’s invested as part of the university’s Kirk Pinho: Covers real estate, higher education, wider $8.4 billion endowment, Oakland and Macomb counties. (313) 446-0412 or locker room and a suite at Michi- Coach insignias no passing fancy [email protected] gan Stadium are named for his which is a pool of about 7,800 sepa- Bill Shea, enterprise editor: Covers media, rate endowments known as the advertising and marketing, the business of sports, family because of past donations. Endowed coaching positions man was Paulson’s head coach at and transportation. (313) 446-1626 or University Endowment Fund. [email protected] Harris, who amassed his fortune named after the donor are com- Dartmouth in 1965-67. Endowment distributions in fis- Nathan Skid, multimedia editor: Also covers the as an investment banker specializ- mon in the Ivy League and in- More recently, an unnamed food industry and entertainment. (313) 446-1654, ing in corporate mergers and ac- cal 2013 were about $276 million. [email protected] creasing at colleges elsewhere. donor gave Stanford University an Dustin Walsh: Covers the business of law, auto quisitions, today is chairman of In an August 2012 story about undisclosed amount to name the suppliers, manufacturing and steel. (313) 446- Palm Beach, Fla.-based financial 6042 or [email protected] the trend of endowed coaching offensive coordinator position the Raising revenue Sherri Welch, senior reporter: Covers nonprofits, consultancy J.I. Harris & Associates. jobs, The New York Times noted “Andrew Luck Directorship of Of- services, retail and hospitality. (313) 446-1694 or Since Brandon’s hiring as ath- [email protected] Brandon and his staff first sug- that former Playtex Chairman fense.” LANSING BUREAU letics director in 2010, the depart- gested the idea of endowing and and CEO Joel Smilow was among Luck, who played for the Car- Chris Gautz: Covers business issues at the Capitol ment has sought to modernize it- and utilities. (517) 403-4403 or [email protected] naming the coaching job a couple the first donors with his name on dinals from 2009 to 2011, is quar- self in a corporate fashion as it ADVERTISING of years ago, Harris said. a position at his alma mater. terback of the Indianapolis Colts. looks to raise money in the face of SALES INQUIRIES (313) 446-6052; FAX (313) “This seemed like an intriguing Thanks to the $1 million en- Among other major colleges increasing operational expenses. 393-0997 thing,” Harris said. dowment he provided in 1988, the with coaching jobs named for SALES MANAGER Tammy Rokowski Brandon said he and Chrissi “Joel E. Smilow ’54 Head Coach donors are Vanderbilt University, The department, which has SENIOR ACCOUNT EXECUTIVE: Matthew J. Rawak, senior associate athletic drawn criticism for raising ticket Langan of Yale Football” roams the Yale Boston College and Northwestern Uni- ADVERTISING SALES Christine Galasso, Jeff director for development, came up Bowl’s sideline on fall Saturdays. versity. prices and creating other revenue Lasser, Dale Smolinski, Sarah Stachowicz with the naming convention. Before Smilow, Cornell Universi- Small schools have gotten in streams from fans, has received CLASSIFIED SALES Angela Schutte, manager, very high-profile donations and (313)-446-6051 “When we were talking to them ty’s top football job became the on the coaching job endowment DIRECTOR OF MARKETING AND EVENTS about the magnitude of a gift of $10 “Roger J. Weiss ’61 Head Coach action, too. engaged in some of Michigan’s Elizabeth Buscher DIGITAL MARKETING MANAGER million, we wanted to come up of Football” because of a 1982 en- In August, Lafayette College in largest capital projects. The athletics department and Jennifer Chinn with a special, meaningful way to dowment of $750,000 from alum- Easton, Pa., got $2 million from AUDIENCE DEVELOPMENT DIRECTOR Eric Cedo recognize (their support),” Bran- nus Roger Weiss, an investment the F.M. Kirby Foundation to endow business school are splitting $200 EVENTS MANAGER Kacey Anderson don said. “(The position naming) banker, The Times reported. the head football coaching posi- million pledged to the university SENIOR PRODUCER FOR DIGITAL/ONLINE in September by Stephen Ross, a PRODUCTS Pierrette Dagg seemed to resonate with them.” Harvard University has 17 endowed tion as the “Fred M. Kirby II ’42 SENIOR ART DIRECTOR Sylvia Kolaski The idea wasn’t radical. Bran- coaching jobs along with an en- Head Football Coach” after a 1940s 1962 UM graduate whose cumula- SALES SUPPORT Suzanne Janik, YahNica Crawford don’s own formal job title is the dowed athletic director position. football alumnus who died in 2011. tive $313 million given is the most PRODUCTION MANAGER Wendy Kobylarz Donald R. Shepherd Director of from anyone in school history. PRODUCTION SUPERVISOR Andrew Spanos Former Crimson player Thomas Michigan State University doesn’t CUSTOMER SERVICE Athletics. Stephenson, a venture capitalist have any endowed coaches — yet. The money will be used to pay MAIN NUMBER: Call (877) 824-9374 or write Harris said he has been on UM’s and investment banker, endowed The university’s Spartan Fund for capital projects on what’s now [email protected] endowments investment commit- known as the Stephen M. Ross Ath- SUBSCRIPTIONS $59 one year, $98 two years. $2 million in 1994 to create the advertises online the contribution Out of state, $79 one year, $138 for two years. tee for more than two decades, and “Thomas Stephenson Family Head level for each job, ranging from letic Campus. Outside U.S.A., add $48 per year to out-of-state rate for surface mail. Call (313) 446-0450 or serves the university in other ad- Coach for Harvard Football.” $500,000 for an assistant coach to The regents in November ap- (877) 824-9374. visory roles. He and his wife are on Not every endowment is in the $5 million for the head football or proved a $6 million plan to build SINGLE COPIES: (877) 824-9374 the steering committee for the uni- an 18,000-square-foot operations REPRINTS: (800) 290-5460, ext. 125; donor’s own name. men’s basketball coach. (717) 505-9701, ext. 125; or lindsay.wilson versity’s $4 billion Victors for Former U.S. Treasury Secre- One’s name can be put on center to move into one building @theygsgroup.com Michigan fundraising campaign. most of the athletic department’s TO FIND A DATE A STORY WAS PUBLISHED: tary and Goldman Sachs Chairman MSU’s head hockey and women’s (313) 446-0406 or e-mail [email protected] “We’ve always had the belief a Henry Paulson gave $2 million to basketball coaching jobs for behind-the-scenes support work, CRAIN’S DETROIT BUSINESS IS PUBLISHED BY strong athletics program leverages Dartmouth College in 2000 to create $2 million. All other head coach- such as maintenance shops, of- CRAIN COMMUNICATIONS INC. CHAIRMAN Keith E. Crain the great academic strengths of the the “Robert L. Blackman En- es are $1 million. fices, laundry, shipping and re- PRESIDENT Rance Crain university. It really keeps the dowed Coaching Position.” Black- — Bill Shea ceiving and equipment storage. TREASURER Mary Kay Crain Executive Vice President/Operations alumni involved,” he said. “I hope The regents in May approved a William A. Morrow it leads to more support in this $13.5 million field hockey stadium Executive Vice President/Director of Strategic trying to put a sort of better public based Blair and Co., in 1961 as a se- Operations Chris Crain capital campaign, and we can get and team center, along with small- Vice President/Production & Manufacturing other people to step up for other relations banner on it,” he said. curities salesman. er projects such as $2.55 million to Dave Kamis Vice President/Chief Human Resources Officer coaching positions.” He was hired by Salomon Bros. in replace grass at the baseball and Margee Kaczmarek Sports economists say athletic 1968, and in 1988 became a senior softball fields with synthetic turf. Chief Information Officer A Michigan man Anthony DiPonio directors closely watch each other partner at New Orleans-based In March, the regents approved G.D. Crain Jr. Founder (1885-1973) for revenue-generating ideas. Harris said he returns to Ann Lazard Freres & Co. He launched his $5.3 million to build the three- Mrs. G.D. Crain Jr. Chairman (1911-1996) Arbor for games and investment financial consulting firm in 1998. EDITORIAL & BUSINESS OFFICES: “Once it gets started, then every- story, 10,200-square-foot Donald R. 1155 Gratiot Ave., Detroit MI 48207-2732; body starts doing it. Managers are committee meetings. While Harris will get his fami- Shepherd Softball Center. (313) 446-6000 He and his family’s donations Cable address: TWX 248-221-5122 AUTNEW DET great imitators,” said Brian Goff, an ly’s name on the coaching position Other projects green-lighted by CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 over the years have funded stu- is published weekly, except for a special issue the economics professor specializing in — a formal name realistically ex- in recent years include $72 million third week of August, and no issue the third week sports at Western Kentucky University. dent scholarships, professorships, pected to be used only in official in improvements, repairs and ex- of December by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Endowments also are a way to named chairs, buildings, facilities, university communications — his pansion of Crisler Center; $16 mil- Periodicals postage paid at Detroit, MI and medical research, a sports journal- additional mailing offices. POSTMASTER: Send offset departmental spending that money doesn’t buy influence: lion in renovations for Yost Ice address changes to CRAIN’S DETROIT BUSINESS, otherwise might be criticized, he ism fellowship and a center for the Whenever there’s a coaching Arena; and a $226 million renova- Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in said, because large football and study of corporate finance. change, he doesn’t get a say in the tion of Michigan Stadium that was U.S.A. The Bronx-born Harris, who en- new hire because of the donation. Entire contents copyright 2014 by Crain basketball programs are essential- completed in 2011. Communications Inc. All rights reserved. ly “marrying a professional sports tered UM at age 16 and graduated It “does not provide any access Bill Shea: (313) 446-1626, Reproduction or use of editorial content in any manner without permission is strictly entity to a university.” at 20, joined Granbery Marache and or influence as it related to person- [email protected]. Twitter: prohibited. “Endowments are a means of Co., the predecessor of Chicago- nel decisions,” Brandon said. @bill_shea19 20140224-NEWS--0022-NAT-CCI-CD_-- 2/21/2014 5:18 PM Page 1

Page 22 CRAIN’S DETROIT BUSINESS February 24, 2014 RUMBLINGS WEEK ON THE WEB FROM WWW.CRAINSDETROIT.COM, WEEK OF FEB. 15-21

Georgia resident seeks it has leased in Troy at 600 of Business campus and a Kroger opens 1st Wilshire Drive, where it renovation of the Kresge Gary Peters’ senate seat will move 100 employees Business Administration Li- Olympians’ and could add 150 more. brary are part of a $135 mil- It may be easier to run for new marketplace a Michigan seat in Congress Milwaukee-based John- lion construction project from 600 miles away in son Controls Inc., which has approved by University of its Automotive Experience Michigan regents. Georgia than it was for format in state medals come Mayor Mike Duggan to get unit in Plymouth, plans to The University of Michi- on Detroit’s mayoral prima- roger Co. was to open sell its headliner and sun vi- gan Kidney Epidemiology and ry ballot. its first new Michi- sor business to an affiliate of Cost Center in Ann Arbor While Duggan ended up K gan “marketplace” Greenwich, Conn.-based At- was given a five-year, $8.5 waging a store in Shelby Township las Holdings LLC, Automotive million federal contract to serve as the coordinating with a price write-in Feb. 23. The 114,000-square- News reported. center for the United States candidacy foot store and fuel center on A former Denso Corp. ichigan’s own 1.225 percent nonresident Renal Data System. after resi- 23 Mile Road near Hayes executive is expected to Meryl Davis and income tax. Miller has a Satisfaction with on- dency sna- Road is Kroger’s largest lo- serve one year and one day M Charlie White won $6.25 million salary this sea- line shopping fell by 4 per- fus, Georgia cation in the state. in a federal prison after the first Winter Games ice son with Buffalo, putting centage points to a 78 on a resident Al- In addition to groceries, agreeing to plead guilty to dancing gold medal for the him in the top federal tax 100-point scale in 2013, a 12- lan Levene the store will offer toys; one charge of obstruction United States on Feb. 17. bracket. year low, in the annual Uni- intends to home essentials; men’s, of justice, Automotive News Their victory will come Some national Olympic versity of Michigan-based run for women’s and children’s ap- reported. Kazuaki Fujitani with a price. committees, such as Russia Levene American Customer Satisfac- Michigan’s parel; and shoes from deleted numerous electron- Davis, of Canton Town- and Italy, pay gold medal tion Index of retail and e- 14th District — the seat now brands including Skechers, ic documents after learning ship, and White, of Bloom- winners more than $100,000. commerce. held by Gary Peters, who is Champion, Signature by Levi that the FBI executed a field Hills, will also receive Then there’s Great Britain, State Schools Superin- running for the U.S. Senate Strauss & Co., Gloria Vander- search warrant on the auto $25,000 each from the U.S. which pays them nothing — tendent Mike Flanagan ter- — from his home near At- bilt and Carhartt; baby items supplier’s U.S. subsidiary Olympic Committee for win- so it also doesn’t tax them. minated the contract giving lanta. from Baby World; Fred Meyer in Southfield, the U.S. De- On Feb. 5, legislation was the Education Achievement ning gold medals. That’s not all. He’s run- Jewelers; an in-store location partment of Justice said. introduced in Congress to Authority, which runs 15 The skaters, who attend ning for Congress in the for New York-based Murray’s Detroit-based P & B In- exempt U.S. Olympic ath- low-performing schools in the University of Michigan Peach State, as well as in Cheese; and Starbucks. vestments Inc. sold the va- letes from paying taxes on Detroit, exclusive functions and train at Arctic Edge Ice Hawaii and Minnesota. Kroger has a marketplace cant Park Apartments build- their winnings. A similar of a turnaround district Arena in Canton Township, Huh? How? outlet in Lambertville, but ing in downtown Detroit will be required to pay in- bill was introduced during for $3.25 million in an off- that could take over more It seems the only residen- that was converted from an failing schools across the come tax on their cash win- the 2012 Summer Olympics market deal to Joe Barbat, cy requirement for congres- existing store. state, AP reported. nings because it’s consid- in London, but it died. CEO and chairman of sional seats is that a candi- The Michigan Public Ser- ered earned income by the The new bill remains in Southfield-based Wireless date resides in the state he vice Commission’s fourth an- Internal Revenue Service. committee. Toyz. Barbat said he plans or she would represent at ON THE MOVE nual report confirmed that Depending on their tax $6 million in renovations the time of election. Levene The Detroit City FC the state’s utility compa- bracket, they’ll pay up to and to rename it Briggs The Henry Ford featured doesn’t have to call Michi- semipro soccer team hired nies met their renewable- $9,900 each in federal tax on House Residence. gan home during the pri- Donovan Powell as general energy production goals for their gold medal winnings, in redesigned travel mag The genetic research maries — at least that’s manager. Powell, 30, most 2012 and hit 6.9 percent in based on the top tax rate of startup Genomenon, devel- The Henry Ford graces the what he’s arguing. recently worked in sales 2013. Utilities must reach 10 39.6 percent. The lowest oped by University of Michi- inside pages of the first re- Georgia has its primary with the Columbus Blue percent by 2015. rate would have them pay- gan pathologists Mark Kiel, designed Condé Nast Trav- on May 20, and Levene told Jackets of the National Hock- The Board of State Can- ing $2,500 each. Megan Lim and Kojo Elenito- eler magazine, now on CNN that if he doesn’t win ey League. vassers agreed to allow They also will pay Michi- newsstands. the GOP nomination there, ba-Johnson, won the $40,000 Raise Michigan to begin col- gan’s 4.25 percent income The luxury and lifestyle he’ll start campaigning in first prize in the Michigan lecting signatures to place tax. travel magazine said it Michigan, which holds its COMPANY NEWS Collegiate Innovation Prize a question on the Novem- Davis and White will also competition organized by asked staffers to share ideas primaries Aug. 5. Shinola/Detroit LLC ber ballot to raise the mini- get $10,000 each for their the UM College of Engi- mum wage in Michigan to and snapshots from their Why Michigan? Levene plans to install four city bronze medals in the team neering’s Center for Entre- $10.10 an hour, higher than personal trips, and photog- lived in West Bloomfield clocks — including one at figure skating event. preneurship. the $9.50 previously dis- rapher Dewey Nicks’ visit to and Troy in the 1980s after Cobo Center — based on its Olympians can some- cussed, from the current the museum in Dearborn he was recruited to work iconic pocket watch design. times write off the cost of $7.40 by January 2017. It last summer was included for Sperry Univac, he said. Shinola President Jacques training and other expenses OTHER NEWS needs 258,088 valid signa- in the March issue. “I didn’t like driving in Panis did not say how much to lower or eliminate their Troy-based Automation tures by May 28. With the redesign, the blizzards, but I did like the the clocks would cost, but tax liability. Alley opened its Product Life- Michigan lawmakers magazine says it wants to people a lot,” he wrote on he indicated they will be in- East Lansing’s Ryan cycle Management Center at are considering a bill to pro- give readers the inside his website. stalled before daylight sav- Miller, Team USA’s backup Oakland University to provide an extra $100 million scoop on the best places to Still, that doesn’t fill the ing time starts March 9. ice hockey goalie and the campaign coffers. Accord- vide affordable training for state and local road visit from well-traveled, in- The Detroit Free Press starter for the Buffalo ing to the nonpartisan Cen- and certification. maintenance, AP reported. the-know “friends,” its edi- and The Detroit News will Sabres, will pay taxes for ter for Responsive Politics’ The Detroit City Council Also, a panel voted to cut the tor said in an open letter on relocate to the old Federal website OpenSecrets.org, privatized trash pickup, ap- state’s income tax rate from medaling. cntraveler.com. Reserve building at 160 W. When the Sabres play the he’s raised a mere $476 for proving a five-year, $120 4.25 percent to 4.05 percent Condé Nast Traveler, Fort St. this summer. Joyce Red Wings at Joe Louis Arena, launched in 1987, has more his Georgia race and noth- million trash-hauling con- by 2016, and House Republi- Jenereaux, president of the Miller has to pay Detroit’s than 800,000 subscribers. ing for his Detroit run. tract with Sterling Heights- cans proposed an end to un- Detroit Media Partnership, based Rizzo Environmental limited medical benefits for said in an email to employ- Services Inc. and Advanced people in catastrophic vehi- ees that a long-term lease Disposal Inc. The city an- cle accidents. The proposal was expected to be signed nounced that its $18,000- would allow most drivers to in four to five weeks. The per-month contract with buy $10 million in personal newspapers’ current build- Recycle Here for drop-off re- injury protection and guar- BEST FROM THE BLOGS ing is at 615 W. Lafayette. antee a 10 percent cut in pre- cycling would be retained READ THESE POSTS AND MORE AT WWW.CRAINSDETROIT.COM/BLOGS Ann Arbor-based Ox- at least through July 2015. miums for two years. ford Cos. LLC bought the Oakland Community Col- Can restaurants pay servers? Casino taps Forbes for key role 223,000-square-foot North- lege trustees adopted a res- east Corporate Center office olution supporting Chan- OBITUARIES Ensuring that a Forbes Co. complex in Ann Arbor on cellor Timothy Meyer, who E. Delbert Gray, former server“ won’t make less Managing“ Partner Nate Auction.com for $21.5 mil- received a vote of no-confi- president and CEO of the than $10.10 an hour in Forbes, who has made a lion, according to a news dence from the college’s Michigan Minority Supplier Michigan is one thing; mark on the architectural release. Key tenants are full-time faculty. Development Council, died paying them $10.10 an design of Rock Gaming ForeSee Results Inc., the Uni- Metro Detroit median Feb. 13. He was 69. hour plus tips is quite LLC’s Ohio casinos, is versity of Michigan Health home sale prices rose from Angelo Henderson, a another. getting positioned to do System and Chicago-based Pulitzer Prize-winning the same with $80,000 in January 2013 to Cole Taylor Bank. journalist who worked at ” Greektown Casino- $110,000 in January 2014, but Hotel. Troy-based auto sup- sales fell by 13.8 percent, Re- the Wall Street Journal and plier NS International Ltd. alcomp Ltd. reported. The Detroit News and host- Nathan Skid’s “Table Talk” Detroit-area restaurant blog Sherri Welch’s “What’s in Store”” blog on Southeast could invest up to $6 mil- A new 104,000-square- ed the “Your Voice” pro- can be found at www.crainsdetroit.com/skid Michigan retail is at www.crainsdetroit.com/welch lion ito renovate former foot academic building on gram on WCHB AM 1200, Magna International offices the Stephen M. Ross School died Feb. 15. He was 51. PN Full pg_PN 2/21/2014 3:44 PM Page 1

MEDICAID: PROGNOSIS FOR PROVIDERS

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