VHS Huron Valley Sinai Hosp. v. Sentinel Ins. Co.

• Decision Date: 23 January 2018
• Docket Number: No. 328005,328005
• Parties: VHS HURON VALLEY SINAI HOSPITAL, doing business as DMC Surgery Hospital, Plaintiff-Appellee, v. SENTINEL INSURANCE COMPANY, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

322 Mich.App. 707

916 N.W.2d 218

VHS HURON VALLEY SINAI HOSPITAL, doing business as DMC Surgery Hospital, Plaintiff-Appellee,

v.SENTINEL INSURANCE COMPANY, Defendant-Appellant.

No. 328005

Court of Appeals of Michigan.

Submitted October 5, 2017, at Lansing.

Decided January 23, 2018, 9:10 a.m.

Miller & Tischler, PC (by Milea M. Vislosky ) for plaintiff.

Secrest Wardle (by Mark F. Masters and Drew W. Broaddus ) for defendant.

Before: Fort Hood, P.J., and Gleicher and O’Brien, JJ.

ON REMAND

Fort Hood, P.J.

This case is again before us following remand from the Michigan Supreme Court.¹ 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 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 in this opinion, 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 defendant.²

I. FACTS AND PROCEDURAL HISTORY

In our 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 $68,569.

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 [personal protection insurance (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 per curiam opinion of the Court of Appeals, issued October 13, 2016 (Docket No. 328005), pp. 1-2, 2016 WL 6038312, vacated and remanded 501 Mich. 857, 900 N.W.2d 628 (2017).]

This Court concluded that the trial court properly determined that res judicata did not bar plaintiff’s claim for 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 3-4. 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 . Therefore, this Court affirmed the trial court’s decision. Id . at 5.

On 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 in 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. , 501 Mich. 857, 900 N.W.2d 628 (2017). On remand to this Court, defendant moved 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 agreeing to the stipulated order for dismissal and consent judgment, which permitted defendant 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.

II. ANALYSIS

On remand, the pivotal question is whether the Michigan Supreme Court’s decision in Covenant affects this Court’s prior decision concluding that summary disposition in favor of defendant was not warranted.

As an 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, 895 N.W.2d 490. 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, 895 N.W.2d 490. 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 200, 895 N.W.2d 490.³

Post- Covenant , 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 , 321 Mich.App. 159, 172, 909 N.W.2d 38 (2017), 2017 WL 3836645. In W. A. Foote Mem. Hosp. , id. at 173, 909 N.W.2d 38, 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. , 321 Mich. App. at 190–191, 909 N.W.2d 38.

In W. A. Foote Mem. Hosp ., id. at 167–168, 173–174, 183, 196, 909 N.W.2d 38 , this Court applied Covenant retroactively because 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 174 n. 9, 909 N.W.2d 38, 2017 WL 3836645. 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 issue had been raised and preserved." Id . at 175 n. 9, 909 N.W.2d 38 (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 191, 195, 909 N.W.2d 38 .

As in 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 the facts necessary for its resolution are present, the issue of standing is preserved and Covenant would apply to this case even if it were...