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BlogsPublications | January 26, 2018
3 minute read

COA: Defendant did not waive standing defense where consent judgment did not expressly show intent to waive a standing argument

In VHS Huron Valley Sinai Hospital v. Sentinel Insurance Company, 328005, the Court of Appeals applied the holding Michigan Supreme Court in Covenant Med Ctr, Inc v. State Farm Mut Auto Ins Co, 500 Mich 191; 895 NW2d 490 (2017) that the plaintiff, a health care provider, did not possess a statutory cause of action against no-fault insurers for the recovery of personal protection insurance benefits. Specifically, the court held that: 1) the law set forth in Covenant applied retroactively to Defendant's pending appeal; and 2) Defendant did not waive its defense as to plaintiff’s lack of standing through a stipulated order and consent judgment.

In this case, VHS Huron Valley Sinai Hospital (“Plaintiff”) filed suit against Sentinel Insurance Company (“Defendant”) asserting a claim for Personal Injury Protection (“PIP”) benefits for services provided to Charles Hendon Jr., the insured. Defendant filed a motion for summary disposition on the theory of res judicata (claim preclusion) because the insured - Mr. Hendon - already filed a claim for uninsured motorist benefits. The court denied the Defendant’s motion and the parties entered in to a stipulated order and consent judgment. The stipulated order and consent judgment stated that Defendant would have the ability to appeal the denial of its motion for summary disposition. Defendant then filed a first appeal with the Court of Appeals which upheld the trial court’s decision. After the trial court’s decision was upheld in the first appeal, the Michigan Supreme Court came out with its opinion in Covenant. The Court of Appeals was thereafter ordered to rehear Defendant’s appeal in light of the Covenant decision.

In the second appeal the Court of Appeals held that Covenant applied retroactively to the present case because the case was pending when the decision was made and the issue of standing was preserved. In light of Covenant, the court held Plaintiff did not have a cause of action against Defendant and judgment be entered in favor of the Defendant. Although, the Plaintiff argued that the Defendant had waived the issue of standing when it entered into the stipulated order and consent judgment, the court found the Plaintiff’s agreement unavailing. In support of its holding that the Defendant had not waived the issue of standing the court applied Michigan’s waiver law which states that “to waive a right, the language of the stipulation must show an intent to plainly relinquish that right”. The court held that, even though the stipulated order and consent judgment only affirmatively stated that the Defendant could appeal the denial of its motion for summary judgment which was based on res judicata, it was not convinced that the plain language of the stipulated order and consent judgment showed that the Defendant intended to waive any and all issues related to standing. In addition, the court held that their position was supported by the record and procedural posture as a whole because: a) due to the state of the law before Covenant was decided, the Defendant surmised that challenging the Plaintiff’s standing would have been rejected by the trial court and appellate courts; b) the Defendant questioned in its motion for summary disposition if the Plaintiff had standing and raised it as an affirmative defense; and c) the Defendant filed supplemental authority while the case was pending in the Michigan Supreme Court, the day after Covenant was decided, challenging the Plaintiff’s standing to pursue the action.