Appeals court says 'Covenant' applies retroactively

By Lee Dryden
BridgeTower Media Newswires
DETROIT—A Michigan Court of Appeals panel has affirmed that the game-changing Covenant v. State Farm decision applies retroactively.

In Foote Memorial Hospital v. Michigan Assigned Claims Plan, the panel of Judges Thomas C. Cameron, Jane M. Beckering and Amy Ronayne Krause affirmed the Jackson County Circuit Court in a Jan. 29 unpublished opinion.

Under Michigan’s No-Fault Act, the plaintiff hospital sought “assignment of a claim as a healthcare provider in connection with services it provided to an uninsured person involved in a motor vehicle accident.”

The plaintiff also sought payment of personal injury protection insurance (PIP) benefits.

The panel disagreed with the plaintiff’s argument that the 2017 Michigan Supreme Court Covenant decision, establishing that a healthcare provider does not have a direct cause of action against no-fault insurers, applies only prospectively.

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,” according to the opinion.

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.”

The panel stated that it is bound to follow the decision in Covenant. In W A Foote Mem Hosp v. Mich Assigned Claims Plan (2017), the appeals court concluded that the high court’s decision in Spectrum Health Hosps v. Farm Bureau Mut Ins Co of Mich (2012) controlled.

“That decision ‘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 interpretation apply retroactively to all cases pending on direct review when the rule is announced.

“The Court in W A Foote Mem Hosp applied Covenant retroactively because the issue there —whether the plaintiff possessed a statutory cause of action — was preserved and the case was pending on direct review when Covenant was issued,” the opinion stated. “The W A Foote Mem Hosp Court clarified that ‘the general rule is, and always has been, that judicial decisions apply retroactively.’”

The panel in the current case stated that, under MCR 7.215(C)(2), a “published opinion of the Court of Appeals has precedential effect under the rule of stare decisis.” 

Also, “the rule of stare decisis generally requires courts to reach the same result when presented with the same or substantially similar issues in another case with different parties,” according to WA Foote Mem Hosp v. City of Jackson (2004).

“However, despite the doctrine of stare decisis, a rule of law from a case may not be binding on a subsequent case if that case is factually distinguishable,” the panel stated, citing Yankee Springs Twp v. Fox (2004).

“The issue presented on appeal in this case — whether Covenant should be applied retroactively to those cases pending on direct appeal at the time it was decided — is not factually distinguishable from our recent decision in W A Foote Mem Hosp. That case turned on the fact that the healthcare provider had filed a direct action
against defendants that was pending when Covenant was decided. The same is true in this case.

“As a result, we conclude that Covenant applies retroactively, following the precedent set forth in W A Foote Mem Hosp, as we are bound to do.”