The opinion
If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
REHAB & MOBILITY SYSTEMS, LLC, FOR PUBLICATION
May 18, 2026
Plaintiff-Appellant, 2:11 PM
v No. 370829
Court of Claims
DEPARTMENT OF TREASURY, LC No. 23-000012-MT
Defendant-Appellee.
Before: BORRELLO, P.J., and MARIANI and TREBILCOCK, JJ.
BORRELLO, P.J.
In this appeal by right involving a denial of a sales tax exemption after an audit, plaintiff,
Rehab & Mobility Systems, LLC, challenges the Court of Claims’ order granting partial summary
disposition under MCR 2.116(C)(10) in favor of defendant Department of Treasury (the
Department), ruling that (1) MCL 205.54a(1)(k) and MCL 205.51a(q) of the General Sales Tax
Act (GSTA), MCL 205.51 et seq., and not Mich Admin Code, R 205.139 (Rule 89), controls the
availability of a sales tax exemption for “prosthetic device[s]”; (2) the prescription medical items
at issue that plaintiff sold to disabled persons are not “prosthetic device[s]” eligible for statutory
sales tax exemptions; and (3) the Department properly applied plaintiff’s overpayment to
outstanding liabilities and plaintiff is not due a refund for a corrected negative 2017 Intent to
Assess. For the reasons set forth in this opinion, we affirm.
I. BACKGROUND
Plaintiff has outlined this appeal as centering around the statutory conflict between MCL
205.54a(1)(k) and Mich Admin Code, R 205.139 (Rule 89), involving the sales tax exemption for
certain medical items. The question at hand is whether certain medical items sold to individuals
with disabilities pursuant to written prescriptions issued by licensed health professionals qualify
for an exemption from sales tax under the General Sales Tax Act (GSTA). The parties do not
appear to be in disagreement over the material facts underlying this dispute.
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Plaintiff is in the business of selling prescribed medical devices to patients with various
severe conditions, broadly categorized as conditions resulting in neural impairments (such as
spinal cord and traumatic brain injuries), debilitating physical impairments (such as paralysis,
amputations, and serious wounds), and other catastrophic conditions leading to disability. The
Department conducted an audit regarding Michigan sales tax paid by the plaintiff for the tax years
2017 through 2020. It determined that certain sales during that period were subject to Michigan
sales tax. Specifically, the Department concluded that plaintiff owed sales tax for sales of items
generally categorized as prescription bandages, prescription incontinence devices/briefs,
prescription medical gauze, prescription medical tape, prescription medical gloves, prescription
wound dressing materials, prescription patient lubricants, prescription underpads, and prescription
patient body wipes. Plaintiff had treated these sales as exempt from sales tax under Mich Admin
Code, R 205.139 (Rule 89), MCL 205.54a(1)(k), and MCL 205.51a(q). The parties stipulated that
the sales at issue had all been made pursuant to written prescriptions by licensed health providers
and that the items had been sold to individuals with disabilities.
The Department issued final tax assessments indicating that plaintiff owed sales tax (with
penalties and interest) of $67,678.20 for 2018, $175,279.85 for 2019, and $133,878.63 for 2020.
The Department also issued a corrected intent to assess of $-107,275.18 for 2017, indicating an
overpayment by plaintiff. However, the Department subsequently cancelled the intent to assess
for the tax year 2017. Plaintiff made a payment of $143,487.41 to the Department on February 7,
2022. This payment was applied to plaintiff’s tax liability for the 2018 and 2019 assessments at
issue.
Plaintiff filed this action in the Court of Claims, challenging the tax assessed by the
Department under the authority of the GSTA specifically citing MCL 205.54a(1)(k) as the
statutory basis for the sales tax exemption. Plaintiff also disputes the Department’s decision to
cancel the intent to assess for the tax year 2017, which reflected overpayments made by plaintiff.
Plaintiff requests a refund or credit for these overpayments, as indicated in the 2017 intent to
assess. Additionally, plaintiff seeks the cancellation of the taxes, interest, and penalties assessed
by the Department for tax years 2018 through 2020, maintaining that the sales in dispute should
qualify for an exemption from sales tax.
The Court of Claims denied plaintiff’s motion for summary disposition and granted the
Department’s partial motion for summary disposition. The court first determined that the issue of
the claimed exemption from sales tax was controlled by MCL 205.54a(1)(k) rather than Rule 89
because an administrative rule could not broaden the scope of a statutory sales-tax exemption.
Noting that the statute exempted the “sale of a prosthetic device,” the court determined that the
items at issue were not prosthetic devices for purposes of the statute and thus were not exempt
from sales tax. Regarding the cancellation of the 2017 intent to assess, the Court of Claims ruled
that there was no overpayment to refund because plaintiff’s payment had been credited toward its
2018 and 2019 tax liability.
Following the Court of Claims’ ruling on the motions for summary disposition, the parties
stipulated to resolve the remaining outstanding count from plaintiff’s complaint, with the
Department agreeing to refund and cancel certain penalties that had been assessed against plaintiff.
This appeal followed.
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II. STANDARD OF REVIEW
We review de novo the grant or denial of a motion for summary disposition. Maiden v
Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999). The trial court’s summary disposition ruling
was made pursuant to MCR 2.116(C)(10), which provides that summary disposition is warranted
if “[e]xcept as to the amount of damages, there is no genuine issue as to any material fact, and the
moving party is entitled to judgment or partial judgment as a matter of law.” A genuine issue of
material fact exists if, after considering the record evidence in the light most favorable to the party
opposing the motion, the record “leaves open an issue upon which reasonable minds might differ.”
El-Khalil v Oakwood Healthcare, Inc, 504 Mich 152, 160; 934 NW2d 665 (2019) (quotation marks
and citation omitted). This Court “review[s] de novo the interpretation and application of
unambiguous statutes and administrative rules. City of Romulus v Mich Dep’t of Environmental
Quality, 260 Mich App 54, 64; 678 NW2d 444 (2003).
III. ANALYSIS
Under the GSTA, the “sale of a prosthetic device” is exempt from sales tax. MCL
205.54a(1)(k). As relevant to the present circumstances, “prosthetic device” means:
[A] replacement, corrective, or supportive device, other than contact lenses and
dental prosthesis, dispensed pursuant to a prescription, including repair or
replacement parts for that device, worn on or in the body to do 1 or more of the
following:
(i) Artificially replace a missing portion of the body.
(ii) Prevent or correct a physical deformity or malfunction of the body.
(iii) Support a weak or deformed portion of the body. [MCL 205.51a(q).]
Former Administrative Rule 89 provided in relevant part during the tax years at issue as
follows:
(1) Retail sales of hearing aids and replacement parts are exempt from tax.
(2) Retail sales of any apparatus, device, appliance, or equipment used to
replace or substitute for any part of the human body, or used to assist the disabled
person to lead a reasonably normal life, are exempt if purchased on a written
prescription or order issued by a licensed health professional. Repair and
replacement parts for such items are also exempt.
* * *
(5) Examples of the kind of medical appliances that may qualify for
exemption if sold pursuant to a written prescription or order are as follows:
Artificial eyes
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Oxygen equipment
Artificial limbs
Pacemakers
Braces
Post-surgical Bust forms
Canes
Pressure Pads
Corrective shoes
Specially built Hospital Beds
Crutches
Stoma appliances (colostomy, ileostomy, Dialysis machine, ureterostomy,
catheters)
Hydraulic (patient) lifts
Trusses
Hypodermic syringes & needles
Walkers Orthotic supports (bandages, belts, Wheelchairs, and similar supplies)
[Mich Admin Code, R 205.139.]
However, former Rule 89 has been rescinded, effective August 11, 2023. 2023 Mich Reg
15 (September 1, 2023), p 19. Former Rule 89 essentially mirrored a former version of MCL
205.54a(1)(h). See 1999 PA 116. In 2004, MCL 205.54a(1)(h) was amended, replacing the former
language with the more succinct language now found in MCL 205.54a(1)(k) simply exempting
from tax “[t]he sale of a prosthetic device, durable medical equipment, or mobility enhancing
equipment.” See 2004 PA 173.
Nonetheless, although Rule 89 technically remained in effect until 2023, “interpretative
rules are invalid when they conflict with the governing statute, extend or modify the statute, or
have no reasonable relationship to a statutory purpose,” and “[c]ourts are not bound by an agency’s
interpretation.” Guardian Indus Corp v Dep’t of Treasury, 243 Mich App 244, 254; 621 NW2d
450 (2000). Moreover,
[t]he provisions of the rule must, of course, be construed in connection with the
statute itself. In case of conflict, the latter governs. It is not within the power of
the department of revenue to extend the scope of the act. For equally cogent reasons
the rules and regulations of the department may not grant exemptions not
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authorized by the legislature. [Mich Sportservice v Nims, 319 Mich 561, 566; 30
NW2d 281 (1948) (citation omitted).]
Hence, in this case, our analytical focus is on the controlling language of the statutory
definition of a prosthetic device because, as the Court of Claims aptly pointed out, an
administrative rule cannot broaden the scope of the statutory exemption. Id.; Guardian Indus, 243
Mich App at 254. Thus, resolution of the matter before us presents a question of statutory
interpretation. “The primary objective in construing a statute is to ascertain and give effect to the
Legislature’s intent.” McLean v McElhaney, 289 Mich App 592, 597-598; 798 NW2d 29 (2010).
“The first step in that determination is to review the language of the statute itself.” In re MCI
Telecom Complaint, 460 Mich 396, 411; 596 NW2d 164 (1999). “If the language of the statute is
clear and unambiguous, this Court must presume that the Legislature intended the meaning clearly
expressed and enforce it as written; further judicial construction is neither permitted nor required.”
McLean, 289 Mich App at 598.
Furthermore, in Guardian Indus, 243 Mich App at 249-250, this Court explained in detail
the general concept that “taxation is the rule” and exemptions are the “exception” and thus must
be strictly construed:
Tax exemptions are disfavored, and the burden of proving an entitlement to an
exemption is on the party claiming the right to the exemption. Elias Bros
Restaurants, Inc v Treasury Dep’t, 452 Mich 144, 150; 549 NW2d 837 (1996). Tax
exemptions are strictly construed against the taxpayer because they represent the
“antithesis of tax equality . . . .” Id. Indeed, these rules were adopted in Detroit v
Detroit Commercial College, 322 Mich 142, 148-149; 33 NW2d 737 (1948), when
the Supreme Court, quoting 2 Cooley, Taxation (4th ed), § 672, p 1403, set forth
the rules and underlying rationale of the statutory construction of tax exemptions:
“An intention on the part of the legislature to grant an exemption
from the taxing power of the State will never be implied from
language which will admit of any other reasonable construction.
Such an intention must be expressed in clear and unmistakable
terms, or must appear by necessary implication from the language
used, for it is a well-settled principle that, when a specific privilege
or exemption is claimed under a statute, charter or act of
incorporation, it is to be construed strictly against the property
owner and in favor of the public. This principle applies with
peculiar force to a claim of exemption from taxation. Exemptions
are never presumed, the burden is on a claimant to establish clearly
his right to exemption, and an alleged grant of exemption will be
strictly construed and cannot be made out by inference or
implication but must be beyond reasonable doubt. In other words,
since taxation is the rule, and exemption the exception, the intention
to make an exemption ought to be expressed in clear and
unambiguous terms; it cannot be taken to have been intended when
the language of the statute on which it depends is doubtful or
uncertain; and the burden of establishing it is upon him who claims
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it. Moreover, if an exemption is found to exist, it must not be
enlarged by construction, since the reasonable presumption is that
the State has granted in express terms all it intended to grant at all,
and that unless the privilege is limited to the very terms of the statute
the favor would be extended beyond what was meant.” [Ellipsis in
original.]
Beginning our statutory interpretation with the language of the statute, as previously quoted
above, the term “prosthetic device” means:
[A] replacement, corrective, or supportive device, other than contact lenses and
dental prosthesis, dispensed pursuant to a prescription, including repair or
replacement parts for that device, worn on or in the body to do 1 or more of the
following:
(i) Artificially replace a missing portion of the body.
(ii) Prevent or correct a physical deformity or malfunction of the body.
(iii) Support a weak or deformed portion of the body. [MCL 205.51a(q).]
Thus, to satisfy the statutory definition of a “prosthetic device,” the item at issue must be:
(A) a “device”;
(B) that is a “replacement, corrective, or supportive,” but excluding contact
lenses and dental prostheses;
(C) dispensed pursuant to a prescription;
(D) and “worn on or in the body” to accomplish one or more of the following
purposes:
(1) “Artificially replace a missing portion of the body”;
(2) “Prevent or correct a physical deformity or malfunction of the body”;
(3) or “Support a weak or deformed portion of the body.” [See MCL
205.51a(q) (emphasis added).
The statute’s plain language requires that a prosthetic device replace, correct, or support a
specific body part. Crucial to our resolution of the present appeal is the statutory requirement that
a prosthetic device must be a “replacement, corrective, or supportive device.” These terms are not
specifically defined by the statute, and we therefore may consult a dictionary to assist us in
ascertaining their plain meaning. Griffith v State Farm Mut Auto Ins Co, 472 Mich 521, 526; 697
NW2d 895 (2005).
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Merriam-Webster’s Collegiate Dictionary defines “device” most relevantly as “a piece of
equipment or a mechanism designed to serve a special purpose or perform a special function.”
Merriam-Webster’s Collegiate Dictionary (11th ed). Significantly, MCL 205.51a(q) qualifies
“device” with the terms “replacement, corrective, or supportive.” “Replacement” means “the
action or process of replacing: the state of being replaced” and “one that replaces another, esp. in
a job or function.” Merriam-Webster’s Collegiate Dictionary (11th ed). In turn, “replace” means
“to take the place of, esp. as a substitute or successor” and “to put something new in the place of.”
Merriam-Webster’s Collegiate Dictionary (11th ed). “Corrective” means “intended to correct,”
and “correct,” in this context, means “to alter or adjust so as to bring to some standard or required
condition.” Merriam-Webster’s Collegiate Dictionary (11th ed). Finally, “supportive” means
“ASSIST, HELP,” as well as “to keep (something) going. Merriam-Webster’s Collegiate
Dictionary (11th ed).
Accordingly, a “replacement, corrective, or supportive device” is a piece of equipment or
mechanism designed to serve the special purpose or perform the special function of taking the
place of something, altering or adjusting something to bring it to standard condition, or assisting
in keeping something going. However, to determine the nature of the “something” that the device
must be designed to replace, correct, or support, it is necessary to consider the three purposes
supplied by the statutory definition of “prosthetic device,” which provide specific meaning to the
terms “replacement, corrective or supportive” under the doctrine of noscitur a sociis.
Understanding the statutory purpose, the Legislature limits exemptions to chronic conditions to
ensure that the tax exemptions are applied to necessary and continuous medical needs rather than
temporary or minor ailments. This approach ensures that only substantial, ongoing conditions are
accommodated under the statute.
“Contextual understanding of statutes is generally grounded in the doctrine of noscitur a
sociis: ‘[i]t is known from its associates.’ ” Koontz v Ameritech Servs, Inc, 466 Mich 304, 318;
645 NW2d 34 (2002) (citations omitted; alteration in original). ”This doctrine stands for the
principle that a word or phrase is given meaning by its context or setting.” Id. (quotation marks
and citations omitted). ”As a general matter, words and clauses will not be divorced from those
which precede and those which follow.” Griffith v State Farm Mut Auto Ins, 472 Mich 521, 533;
697 NW2d 895 (2005) (quotation marks and citation omitted). ”When construing a series of
terms,” this Court is “guided by the principle that words grouped in a list should be given related
meaning.” Id. (quotation marks and citation omitted).
Under the statute’s three-part test, MCL 205.51a(q) requires the device to be “worn on or
in the body” to either “(i) Artificially replace a missing portion of the body”; or “(ii) Prevent or
correct a physical deformity or malfunction of the body”; or “(iii) Support a weak or deformed
portion of the body.” (emphasis added). Thus, a “prosthetic device,” for purposes of the statute, is
a piece of equipment or mechanism, designed to serve the special purpose or perform the special
function of taking the place of a “missing portion of the body,” altering or adjusting a “physical
deformity or malfunction of the body” to bring it to standard condition, or assisting in keeping a
“weak or deformed portion of the body” going.
“Missing” means “ABSENT” or “LOST.” Merriam-Webster’s Collegiate Dictionary
(11th ed). ”Malfunction” means “to function imperfectly or badly: fail to operate normally.”
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Merriam-Webster’s Collegiate Dictionary (11th ed). “Deformity” means “the state of being
deformed,” and “deformed” means “distorted or unshapely in form: MISSHAPEN.” Merriam-
Webster’s Collegiate Dictionary (11th ed). “Weak” means “lacking strength.” Merriam-
Webster’s Collegiate Dictionary (11th ed). Considering these definitions together, and in striving
to give these terms a related meaning in light of their context, Griffith, 472 Mich at 533; Koontz,
466 Mich at 318, it is apparent that something in the nature of an ongoing, chronic problem or
condition involving a body part is implicated. The condition could range from a merely weak
body part, i.e., “lacking strength,” to an entirely absent body part. Moreover, the condition must
be more than a temporary injury or malfunction that heals in time. The device must do more than
merely treat the symptoms of the condition; it must operate as a substitute or restore the affected
body part to something approaching ordinary functionality.
With this definition in mind, we may now consider the items that the plaintiff contends are
exempt from sales tax because they satisfy the definition of a prosthetic device. First, in the
category of “wound-covering materials,” we include items such as prescription bandages,
prescription medical gauze, prescription medical tape, and prescription wound dressing materials.
Second, under the “absorbent products” category, we classify prescription incontinence
devices/briefs and prescription underpads. Lastly, “patient care necessities” comprises
prescription medical gloves, prescription patient lubricants, and prescription patient body wipes.
By grouping these items into functional categories, it becomes clearer why they do not align with
the statute’s replacement-corrective-supportive triad.
Plaintiff in this case has failed to demonstrate that any of these items were designed to
accomplish any of the purposes listed above. Plaintiff actually contends that it is not necessary to
do so. However, plaintiff’s argument ignores the plain meaning of the word “device,” which
requires that the mechanism be “designed to serve a special purpose or perform a special function.”
Merriam-Webster’s Collegiate Dictionary (11th ed) (emphasis added). Considering the items at
issue, all of them undoubtedly may conceivably serve a wide variety of purposes but plaintiff has
not demonstrated how they were each designed to serve the special purpose or perform the special
function of taking the place of a “missing portion of the body,” altering or adjusting a “physical
deformity or malfunction of the body” to bring it to standard condition, or assisting in keeping a
“weak or deformed portion of the body” going. If a disposable glove is deemed a prosthetic, what
item would not fall under such a definition? By framing the argument in this way, it becomes clear
that plaintiff’s definition stretches the statutory meaning of prosthetic devices to the point of
absurdity.
Plaintiff argues that the items at issue qualify as prosthetic devices because they were
medically prescribed, deemed medically necessary, and generally “support” the functioning and
treatment of the affected patients. Even accepting plaintiff’s claims as true, if we were to read the
statutory definition as broadly as plaintiff requests, then virtually any prescribed medical item
could qualify as a “prosthetic device.” As previously stated, “since taxation is the rule, and
exemption the exception, the intention to make an exemption ought to be expressed in clear and
unambiguous terms; it cannot be taken to have been intended when the language of the statute on
which it depends is doubtful or uncertain; and the burden of establishing it is upon him who claims
it.” Guardian Indus, 243 Mich App at 250. Here, plaintiff has failed to satisfy that burden of
demonstrating that the items at issue clearly fall within the language of the tax exemption, and the
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Court of Claims did not err by concluding that the items at issue were not exempt from tax because
they were not prosthetic devices for purposes of the statute.
Finally, plaintiff asserts in a single paragraph containing no citations to legal authority that
the Department committed an unlawful taking by cancelling the negative corrected assessment for
tax year 2017. Because the plaintiff offers no supporting authority, this contention is forfeited. It
is not sufficient for a party simply to announce a position or assert an error and then leave it up to
this Court to discover and rationalize the basis for his claims, or unravel and elaborate for him his
arguments, and then search for authority either to sustain or reject his position. Wilson v Taylor,
457 Mich 232, 243; 577 NW2d 100 (1998) (quotation marks and citation omitted). This issue is
therefore abandoned on appeal, and we decline to address it.
Affirmed. No costs are awarded to either party, a public question being involved. MCR
7.216(A)(7) and MCR 7.219(A). City of Bay City v Bay Cnty Treasurer, 292 Mich App 156, 172,
807 NW2d 892 (2011).
/s/ Stephen L. Borrello
/s/ Christopher M. Trebilcock
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