VHS HURON VALLEY SINAI HOSPITAL, doing business as DMC SURGERY HOSPITAL, Plaintiff-Appellee,
SENTINEL INSURANCE COMPANY, Defendant-Appellant.
Circuit Court LC No. 14-009084-NF
Before: Fort Hood, P.J., and Gleicher and O'Brien, JJ.
case is again before us following remand from the Michigan
Supreme Court. In our earlier opinion, we concluded that
the trial court properly determined that res judicata did not
operate to bar plaintiff's claims against defendant.
However, the Michigan Supreme Court has remanded this case to
our Court to reconsider our initial disposition of this case
in light of the Michigan Supreme Court's decision in
Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co,
500 Mich. 191; 895 N.W.2d 490 (2017). For the reasons set
forth below, we vacate the trial court's stipulated order
for dismissal and consent judgment, reverse the trial
court's order denying defendant's motion for summary
disposition and remand for entry of judgment in favor of
FACTS AND PROCEDURAL HISTORY
earlier opinion we recited the relevant facts, in pertinent
part, as follows:
On June 25, 2013, Charles Hendon, Jr. was involved in a motor
vehicle accident when his vehicle was allegedly rear-ended by
an unidentified hit and run driver, causing bodily injury.
Defendant Sentinel Insurance Company is Hendon's insurer.
From August 1, 2013, through October 7, 2013, plaintiff VHS
Huron Valley-Sinai Hospital, doing business as DMC Surgery
Hospital, provided medical services to Hendon for his care,
recovery, and rehabilitation related to his injuries
sustained in the automobile accident, at a cost totaling $68,
On September 9, 2013, Hendon commenced a cause of action
against Sentinel asserting a claim for uninsured motorist
benefits under his insurance policy and alleging negligence
on the part of the unidentified hit and run driver involved
in the accident. Hendon did not assert a claim for no-fault
PIP benefits as part of his lawsuit. Thereafter, on July 15,
2014, DMC, plaintiff in the instant case, commenced a cause
of action against Sentinel asserting a claim for no-fault PIP
benefits for the medical services DMC provided to Hendon for
injuries arising out of the accident. On October 21, 2014,
Hendon and Sentinel settled Hendon's lawsuit seeking
uninsured motorist benefits for $1, 500 and, on October 29,
2014, that suit was dismissed, with prejudice, per
stipulation of the parties.
After settling Hendon's case, Sentinel sought summary
disposition of DMC's action for PIP benefits under MCR
2.116(C)(7), asserting that it was barred by res judicata.
The trial court denied Sentinel's motion, concluding that
res judicata did not bar DMC's claim because it could not
have been resolved in Hendon's earlier action for
uninsured motorist benefits given the dissimilarity in the
two claims. The court then entered a stipulated order for
dismissal and consent agreement, which closed the case but
allowed Sentinel to appeal as of right the court's denial
of its motion for summary disposition. Sentinel
appeals. [VHS Huron Valley Sinai Hosp v Sentinel
Ins Co, unpublished opinion per curiam of the Court of
Appeals, issued October 13, 2016 (Docket No. 328005), pp 1-2
(footnotes omitted), vacated and remanded 501 Mich. 857; 900
N.W.2d 628 (2017).]
Court concluded that the trial court properly determined that
res judicata did not bar plaintiff's claim for personal
protection insurance [PIP] benefits, and that the trial court
did not err by denying defendant's motion for summary
disposition under MCR 2.116(C)(7). VHS Huron Valley Sinai
Hosp, unpub op at 2. With regard to the second element
of res judicata, this Court determined that the actions did
not involve the same parties or their privies because Hendon
and plaintiff were not in privity with one another.
Id. at 3-5. This Court reasoned that because Hendon
asserted only a claim for uninsured motorist benefits, and
plaintiff had no interest or right to those benefits, Hendon
and plaintiff "did not share a substantial identity of
interest" in those benefits, nor did plaintiff have
"a mutual or successive relationship in those
benefits." Id. at 4. According to this Court,
plaintiff's interest in or right to the recovery of PIP
benefits was not represented or protected in the earlier
litigation, and Hendon had no motivation in the earlier
litigation to protect plaintiff's interest in or right to
recover PIP benefits. Id. Thus, this Court affirmed
the trial court's decision. Id. at 5.
November 9, 2016, this Court denied defendant's motion
for reconsideration. VHS Huron Valley Sinai Hosp v
Sentinel Ins Co, unpublished order of the Court of
Appeals, entered November 9, 2016 (Docket No. 328005). On
December 20, 2016, defendant filed an application for leave
to appeal to the Michigan Supreme Court. On September 12,
2017, the Michigan Supreme Court vacated this Court's
judgment and remanded to this Court for reconsideration in
light of Covenant. VHS Huron Valley Sinai Hosp v
Sentinel Ins Co, 501 Mich. 857; 900 N.W.2d 628');">900 N.W.2d 628 (2017).
On remand to this Court, defendant filed a motion for
peremptory reversal, arguing that Covenant compels
the dismissal of plaintiff's claims. In its answer to the
motion, plaintiff argued that Covenant is
inapplicable because defendant waived the issue of standing
by entering into the stipulated order and consent judgment,
which permitted it to appeal the issue of res judicata only.
On October 26, 2017, this Court denied defendant's motion
for peremptory reversal "for failure to persuade the
Court of the existence of manifest error requiring reversal
and warranting peremptory relief without argument or formal
submission." VHS Huron Valley Sinai Hosp v Sentinel
Ins Co, unpublished order of the Court of Appeals,
entered October 26, 2017 (Docket No. 328005). After receiving
leave from this Court to do so, defendant filed a
supplemental brief, and plaintiff filed a brief in response.
remand, the pivotal question is whether the Michigan Supreme
Court's decision in Covenant impacts this
Court's prior decision concluding that summary
disposition in favor of defendant was not warranted.
initial matter, in Covenant, the Michigan Supreme
Court held "that healthcare providers do not possess a
statutory cause of action against no-fault insurers for
recovery of personal protection insurance benefits under the
no-fault act." Covenant, 500 Mich. at 196. In
so ruling, the Covenant Court declined to
"follow the long line of cases from the Court of Appeals
recognizing that a healthcare provider may sue a no-fault
insurer to recover PIP benefits under the no-fault act."
Id. at 200. Instead, it relied "on the language
of the no-fault act to conclude that a healthcare provider
possesses no statutory cause of action against a no-fault
insurer for recovery of PIP benefits." Id. at
this Court has recognized that a healthcare provider,
"cannot pursue a statutory cause of action for PIP
benefits directly from an insurer." W A Foote Mem
Hosp v Mich. Assigned Claims Plan, ___Mich App___, ___;
___N.W.2d ___(2017) (Docket No. 333360); slip op at 6. In
W A Foote Mem Hosp, ___Mich App at ___; slip op at
6, this Court considered whether Covenant should
apply retroactively to cases pending on appeal when it was
decided, or apply prospectively only. This Court concluded
that it was required to apply the Michigan Supreme
Court's decision in Spectrum Health Hosps v Farm
Bureau Mut Ins Co of Mich, 492 Mich. 503; 821 N.W.2d 117
(2012), which "essentially adopted the rationale"
of the United States Supreme Court's decision in
Harper v Virginia Dep't of Taxation, 509 U.S.
86, 97; 113 S.Ct. 2510; 125 L.Ed.2d 74 (1993), holding that
judicial decisions concerning statutory interpretation apply
retroactively to all cases pending on direct review when the
rule is announced. W A Foote Mem Hosp, ___Mich App
at ___; slip op at 14-17.
W A Foote Mem Hosp, ___Mich App at ___; slip op at
3, 6-7, 19, this Court applied Covenant
retroactively where the issue whether the plaintiff possessed
a statutory cause of action was preserved and the case was
pending on direct review when Covenant was issued.
Because the issue whether the plaintiff possessed a statutory
cause of action was preserved, this Court stated that it was
not necessary to decide whether full or limited retroactivity
should apply. Id. at ___; slip op at 7 n 9. As this
Court explained, "a judicial decision with full
retroactivity would apply to all cases then pending, whereas
with limited retroactivity it would apply in pending cases in
which the issued [sic] had been raised or preserved."
Id. at ___; slip op at 7 n 9 (citation omitted).
Finally, this Court concluded that, even if it were to
consider the "threshold question" and the
"three-factor test" that are often stated in
Michigan caselaw, it would not "find a level of exigency
that would justify contravening the general rule of full
retroactivity." Id. at; slip op at 17-19.
W A Foote Mem Hosp, the question of whether
Covenant should be given full or limited retroactive
effect is not determinative in this case, given that
defendant raised plaintiff's lack of standing as an
affirmative defense. Additionally, in its motion for summary
disposition, defendant stated that it was "[a]ssuming
for purposes of this Motion that Plaintiff has standing at
all[.]" Moreover, given that it is a question of law and
all of the facts necessary for its resolution are present,
the issue of standing is preserved and Covenant
applies to this case even if it were given only limited
retroactivity. See W A Foote Mem Hosp, ___Mich App
at ___; slip op at 7.
their briefs following remand, the parties disagree on a key
issue relevant to the interplay between Covenant and
the facts of this case, that being whether defendant waived
the issue of standing by entering into a stipulated order for
dismissal and consent judgment in the trial court.
Court will review issues pertaining to the interpretation of
contractual language de novo, and will interpret contractual
terms in accordance with their ordinary meaning when such
terms are not expressly defined in the contract.
Barton-Spencer v Farm Bureau Life Ins Co of Mich,
500 Mich. 32, 39; 892 N.W.2d 794 (2017). The Michigan Supreme
Court has also recently instructed that we are to
"construe contracts 'so as to give effect to every
word or phrase as far ...