Vhs Huron Valley Sinai Hospital v. Sentinel Insurance Company

STATE OF MICHIGAN

COURT OF APPEALS

VHS HURON VALLEY SINAI HOSPITAL, FOR PUBLICATION

doing business as DMC SURGERY HOSPITAL, January 23, 2018

9:10 a.m.

Plaintiff-Appellee,

v No. 328005

Wayne Circuit Court

SENTINEL INSURANCE COMPANY, LC No. 14-009084-NF

Defendant-Appellant.

ON REMAND

Before: FORT HOOD, P.J., and GLEICHER and O’BRIEN, JJ.

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 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 NW2d 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 defendant.2

I. FACTS AND PROCEDURAL HISTORY

In our earlier opinion we recited the relevant facts, in pertinent part, as follows:

1

VHS Huron Valley Sinai Hosp v Sentinel Ins Co, 501 Mich 857; 900 NW2d 628 (2017).

2

If it were not for our dissenting colleague’s insistence on publication pursuant to MCR

7.215(A), this opinion would not be published, as it does not meet the standards of MCR

7.215(B).

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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 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 NW2d 628

(2017).]

This 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.

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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 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 NW2d

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.

II. ANALYSIS

On 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.

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. 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 200.3

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, ___ Mich App ___, ___; ___ NW2d ___ (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 NW2d 117 (2012), which “essentially adopted the rationale” of the

United States Supreme Court’s decision in Harper v Virginia Dep’t of Taxation, 509 US 86, 97;

113 S Ct 2510; 125 L Ed 2d 74 (1993), holding that judicial decisions concerning statutory

3

This Court is bound to follow precedent of the Michigan Supreme Court. State Treasurer v

Sprague, 284 Mich App 235, 242; 772 NW2d 452 (2009).

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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.

In 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.

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 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.

In 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 standing4 by entering into a stipulated order for dismissal and consent judgment in the

trial court.

This 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 NW2d 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 as

practicable.’ ” Id. at 40, quoting Klapp v United Ins Group Agency, Inc, 468 Mich 459, 467; 663

NW2d 447 (2003).

This Court’s main goal in the interpretation of contracts is to honor the

intent of the parties. The words used in the contract are the best evidence [of] the

parties’ intent. When contract language is clear, unambiguous, and has a definite

meaning, courts do not have the ability to write a different contract for the parties,

4

“Whether a party has standing is a question of law that is reviewed de novo by this Court.”

Coldsprings Twp v Kalkaska Co Zoning Bd of Appeals, 279 Mich App 25, 28; 755 NW2d 553

(2008) (citation omitted).

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or to consider extrinsic testimony to determine the parties’ intent. [Auto-Owners

Ins Co v Campbell-Durocher Group Painting & Gen Contracting, LLC, ___ Mich

App ___, ___; ___ NW2d ___ (2017) (Docket Nos. 331384, 331389, 331802,

331803); slip op at 5, quoting Kyocera Corp v Hemlock Semiconductor, LLC, 313

Mich App 437, 446; 886 NW2d 445 (2015) (quotation marks omitted).]

“A stipulation is an agreement, admission or concession made by the parties in a legal

action with regard to a matter related to the case.” In re Estate of Koch, ___ Mich App ___, ___;

___ NW2d ___ (2017) (Docket No. 332583); slip op at 10. This Court will construe a stipulation

using the same principles applicable to a contract. Id. See also In re Nestorovski Estate, 283

Mich App 177, 183; 769 NW2d 720 (2009) (recognizing that stipulated orders that the trial court

accepts and enters are interpreted using the same legal principles applicable to contracts).

Moreover, we are aware of the well-settled legal principle that our dissenting colleague points to

from the Michigan Supreme Court’s decision in Rory v Continental Ins Co, 473 Mich 457, 468;

703 NW2d 23 (2005), where the Court recognized as a “fundamental tenant” of contract

jurisprudence that “unambiguous contracts are not open to judicial construction and must be

enforced as written.” (Emphasis in original.) This legal principle is grounded in the rationale

that the judiciary ought not interfere in the parties’ right to “arrange their affairs via contract.”

Id.

With regard to the issue of waiver, in Nexteer Auto Corp v Mando America Corp, 314

Mich App 391, 395-396; 886 NW2d 906 (2016), this Court has stated, in pertinent part:

A waiver is an intentional relinquishment or abandonment of a known

right. An affirmative expression of assent constitutes a waiver. In contrast, a

failure to timely assert a right constitutes a forfeiture.

A stipulation is an agreement, admission or concession made by the

parties in a legal action with regard to a matter related to the case. To waive a

right, the language of a stipulation must show an intent to plainly relinquish that

right. However, the use of specific key words is not required to waive a right.

[Citations and quotation marks omitted; emphasis added.]

Returning to the facts of the present case, the stipulated order for dismissal and consent

judgment provides, in pertinent part:

WHEREFORE, upon hearing and argument of April 24, 2015, this Court

entered an Order dated May 21, 2015 denying the Motion for Summary

Disposition brought by Sentinel Insurance Company (“Sentinel”).

WHEREFORE, Sentinel argued that it was entitled to summary

disposition on the grounds that this provider suit is barred by res judicata, the

injured party (Charles Hendon) having filed his own suit against Sentinel, based

upon the same accident that gave rise to this suit, which was dismissed with

prejudice pursuant to a release.

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WHEREFORE, Sentinel wishes to enter a final Order in this cause for the

purpose of filing an appeal as of right from the court’s May 21, 2015 decision,

which denied Sentinel’s Motion for Summary Disposition.

WHEREFORE, Sentinel and Plaintiff VHS Huron-Valley Sinai Hospital,

d/b/a DMC Surgery Hospital (“DMC”) have agreed to the amount that DMC

would be entitled to, if Sentinel’s position regarding res judcata/release [sic] is

ultimately rejected by the Michigan Court of Appeals or Supreme Court.

WHEREFORE, the parties hereby agree to the entry of a judgment

(subject to Sentinel’s right to appeal as set forth above) against Sentinel and in

favor of DMC in the amount of $61,712.18, plus taxable costs and RJA interest

consistent with Bonkowski v Allstate [Ins Co], 281 Mich App 154[; 761 NW2d

784] (2008)].

WHEREFORE, the parties further agree that, if Sentinel’s position

regarding res judcata/release [sic] is ultimately rejected by the Michigan Court of

Appeals or Supreme Court, DMC will also be entitled to an award of interest

pursuant to MCL 500.3142, to be calculated at the time the aforementioned

judgment is paid to DMC based upon the following dates:

* * *

WHEREFORE, based upon the foregoing, IT IS HEREBY ORDERED

that judgment is entered in favor of DMC and against Sentinel in the amount of

$61,712.18, plus taxable costs and RJA interest consistent with Bonkowski v

Allstate, 281 Mich App 154 (2008), plus interest pursuant to MCL 500.3142 to be

calculated as indicated above at the time said judgment is satisfied.

IT IS FURTHER ORDERED that, notwithstanding anything set [forth]

above, Sentinel hereby reserves its appellate rights with respect to the May 21,

2015 denial of its Motion for Summary Disposition, as it is Sentinel’s intention to

use this order as a final order allowing it to appeal by right from that decision.

IT IS FURTHER ORDERED that the aforementioned judgment amount

shall not be recoverable until Sentinel has exhausted its appellate remedies,

relative to the denial of its Motion for Summary Disposition.

IT IS FURTHER ORDERED that if, for any reason, Sentinel chooses not

to further pursue its appellate remedies, this judgment shall remain in effect and

shall be recoverable upon expiration of any applicable appeal period(s) relative to

the denial of Sentinel’s Motion for Summary Disposition.

IT IS FURTHER ORDERED that if, for any reason, an appellate court

determines that this Consent Judgment is not a final order that is appealable by

right, this agreement is null and void.

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IT IS FURTHER ORDERED that the above-entitled cause of action be,

and hereby is, dismissed with prejudice and without costs to any of the parties

hereto, pursuant to the terms herein.

This is a final order that resolves the last pending claim and closes the case

at the trial court level.

In this case, the Michigan Supreme Court has made it abundantly clear, following a

comprehensive review of the no-fault act, MCL 500.3101 et seq., that health care providers do

not have standing to pursue a claim against a no-fault insurer for PIP benefits for allowable

expenses that an insured incurs. Covenant, 500 Mich App at 195. While plaintiff asserts that

defendant waived its opportunity to challenge plaintiff’s standing to bring this cause of action by

entering into the stipulated order for dismissal and consent judgment, we disagree with this

contention. We recognize that the language of the stipulated order and consent judgment

establishes defendant’s intent to appeal this case on the issue of “res judicata/release,” the issue

that was decided following defendant’s motion for summary disposition. However, we are not

persuaded that a review of the plain language of the stipulated order and consent judgment leads

to the inexorable conclusion that defendant intended to waive any and all issues related to

plaintiff’s standing. Our conclusion is buttressed by the fact that there is no language in the

stipulated order and consent judgment indicating that defendant intended to clearly and

unequivocally waive its legal position with respect to plaintiff’s standing. Nexteer Auto Corp,

314 Mich App at 395-396. This Court may not “read into the contract terms not agreed upon by

the parties.” Trimble v Metro Life Ins Co, 305 Mich 172, 175; 9 NW2d 49 (1943).

While we properly base our conclusion on the plain language of the stipulated order for

dismissal and consent judgment, our determination is supported by a review of the record and the

procedural posture of this case as a whole. For example, as a matter of background, given the

state of the law before Covenant was decided, defendant may have reasonably surmised that any

challenges to plaintiff’s standing would have been rejected by the trial court and the appellate

courts. See W A Foote Mem Hosp, ___ Mich App at ___; slip op at 7 (recognizing, in the

context of rejecting the assertion that standing was waived, that where counsel for the defendants

was aware of the state of the caselaw, “it is clear that counsel was aware that then-applicable

Court of Appeals precedent likely would have rendered any [argument regarding standing]

futile[.]”) Put another way, defendant may have concluded, very reasonably on the basis of the

then-existing pertinent jurisprudence, that disputing plaintiff’s standing in the trial court, as on

appeal, would not have been the most successful avenue to pursue. Additionally, as noted above,

defendant aptly questioned in its motion for summary disposition whether plaintiff even had

standing in this case. Moreover, while its application for leave was pending in the Michigan

Supreme Court, and the day after Covenant was decided, defendant filed supplemental authority

in the Michigan Supreme Court challenging plaintiff’s standing to pursue this cause of action.

Such circumstances support our conclusion that the plain language of the stipulated order for

dismissal and consent judgment in this case does not manifest defendant’s intention to “plainly

relinquish” its right to challenge plaintiff’s standing. Nexteer, 314 Mich App at 395-396.

III. CONCLUSION

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Accordingly, in light of the Michigan Supreme Court’s pronouncement in Covenant,

plaintiff does not have a cause of action against defendant.5 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. We do

not retain jurisdiction.

/s/ Karen M. Fort Hood

/s/ Colleen A. O'Brien

5

There is no indication in the record that Hendon assigned his rights to “past or presently due

benefits” to plaintiff. Covenant, 500 Mich at 505 n 40.

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