Employers Health Ins. v. General Cas. Co. of Wisconsin, No. 89-1021

CourtUnited States State Supreme Court of Wisconsin
Writing for the CourtSHIRLEY S. ABRAHAMSON
Citation469 N.W.2d 172,161 Wis.2d 937
PartiesEMPLOYERS HEALTH INSURANCE, Plaintiff-Appellant, v. GENERAL CASUALTY COMPANY OF WISCONSIN, Defendant-Respondent, Petitioner, William J. Klein, Defendant.
Docket NumberNo. 89-1021
Decision Date13 May 1991

Page 172

469 N.W.2d 172
161 Wis.2d 937
EMPLOYERS HEALTH INSURANCE, Plaintiff-Appellant,
v.
GENERAL CASUALTY COMPANY OF WISCONSIN, Defendant-Respondent,
Petitioner,
William J. Klein, Defendant.
No. 89-1021.
Supreme Court of Wisconsin.
Submitted on Briefs Jan. 25, 1991.
Decided May 13, 1991.

Page 173

[161 Wis.2d 940] Stuart B. Eiche and Schulz, Schapekahm & Eiche, S.C., Milwaukee, for defendant-respondent, petitioner.

Linda Vogt Meagher, Daniel J. O'Brien and Schellinger & Doyle, S.C., Brookfield, for plaintiff-appellant.

Noreen J. Parrett and La Follette & Sinykin, Madison, for WI Ins. Alliance, amicus curiae.

[161 Wis.2d 941] D.J. Weis and Johnson, Weis, Paulson & Priebe, S.C., Rhinelander, for WI Academy of Trial Lawyers, amicus curiae.

SHIRLEY S. ABRAHAMSON, Justice.

This is a review of a published decision of the court of appeals, Employers Health Ins. v. Gen. Cas. Co. of Wisconsin, 154 Wis.2d 696, 454 N.W.2d 10 (Ct.App.1990), reversing an order of the Milwaukee county circuit court, Judge Patricia D. McMahon. Employers Health Insurance brought an action to determine its right to subrogation under its medical insurance contract with Hugh J. Oldenberg, the insured. Employers Health sought reimbursement from General Casualty Company, which paid benefits to Hugh J. Oldenberg, its insured, under the uninsured motorist coverage provisions of its automobile liability policy.

The circuit court granted summary judgment to General Casualty Company of Wisconsin and dismissed the summary judgment

Page 174

motion of Employers Health. The court of appeals reversed the circuit court, holding that summary judgment should be granted in favor of Employers Health under the terms of the insurance policies and the Wisconsin uninsured motorist statute, sec. 632.32(4)(a), Stats. 1987-88. 1 We reverse the decision of [161 Wis.2d 942] the court of appeals.

The issue presented in this case is whether Employers Health, a health insurer that paid medical benefits to its insured, may maintain an action for subrogation to recover these medical payments from General Casualty, the insured's automobile liability carrier that made payments to the insured for bodily injury (without specifying a particular sum for medical payments) under its uninsured motorist coverage. We conclude that Employers Health may not maintain the subrogation action under either the terms of its policy or the doctrine of equitable subrogation.

I.

The facts are not in dispute. On October 23, 1985, the insured was seriously injured in an automobile accident involving an uninsured motorist, William J. Klein. There is no dispute that Klein negligently caused the injury. Both Employers Health and General Casualty paid benefits to the insured under the terms of their respective insurance policies.

Employers Health paid medical benefits to the insured under a group policy in the amount of $54,853.23 [161 Wis.2d 943] for medical expenses incurred from injuries in the automobile accident. Under its contract with the insured, Employers Health was subrogated to the insured's "right to recover damages from a responsible third party." In September of 1987, Employers Health wrote General Casualty seeking subrogation of the insured's medical expenses.

During the fall of 1987, approximately two years after the accident, General Casualty settled its insured's claim under its uninsured motorist coverage by purchasing an annuity for him with a monthly payment of $2,700 for life. 2 General Casualty did not itemize its settlement, but General Casualty asserts in this action that its settlement covered all of the insured's claimed losses for bodily injury, including medical expenses.

Employers Health maintains that General Casualty has both a contractual and statutory obligation to pay the insured's medical expenses and that Employers Health's policy with the insured entitles it to subrogation against General Casualty.

The court of appeals held for Employers Health, basing its decision largely on its interpretation of the language of the two

Page 175

insurance policies. 3 It concluded that [161 Wis.2d 944] Employers Health's policy expressly provides that it is subrogated to the insured's right to recover damages from a "responsible third party" and that it may recover benefits paid under the policy for which any other insurance provides medical pay coverage or medical expense coverage is available to the insured.

The court of appeals further concluded that the "plain meaning" of the General Casualty policy is that General Casualty would pay all losses, including medical expenses, the insured is legally entitled to recover from the owner or operator of an uninsured vehicle, unless there is "other similar insurance." 4 Because the health insurance provided by Employers Health was not, according to the court of appeals, "other similar insurance," General Casualty is responsible for the insured's medical expenses.

After analyzing both Employers Health and General Casualty's insurance policies the court of appeals concluded that General Casualty is contractually bound to pay medical expenses and that Employers Health is entitled to reimbursement for medical payments it made on behalf of the insured. The court of appeals did not address Employers Health's claim for subrogation under equitable principles.

[161 Wis.2d 945] II.

Employers Health maintains that its insured's policy gives it the right to subrogation against General Casualty. The language in the policy on which Employers Health relies reads as follows:

"If, after payments have been made under the Policy, You or Your covered Dependent has a right to recover damages from a responsible third party, We shall be subrogated to Your rights to recover." (Emphasis added) 5

The policy does not define the phrase "recover damages from a responsible third party." When no extrinsic evidence is introduced to interpret the wording of the insurance contract, this court determines the interpretation[161 Wis.2d 946] as an issue of law, without deference to the circuit court or court of appeals. Swart v. Rural Mut. Ins. Co., 117 Wis.2d 478, 482, 344 N.W.2d 719 (Ct.App.1984). The language of the policy should be given the common and ordinary meaning it would have in the mind of a lay person. Reserve Life Ins. Co. v. La Follette, 108 Wis.2d 637, 645, 323 N.W.2d 173 (Ct.App.1982). In interpreting the policy the court may consider the apparent object or purpose of the insurance, the subject matter of the insurance, the situation of the parties and the circumstances surrounding the making of the contract. Swart, 117 Wis.2d at 482, 344 N.W.2d 719, citing Chemtec Midwest Services, Inc. v. Ins. Co. of No. Amer., 290 F.Supp. 106, 109 (W.D.Wis.1968).

Employers Health argues that the phrase "responsible third party" means a

Page 176

financially, contractually or legally responsible third party and that General Casualty is an entity financially, contractually and legally responsible under its policy and the uninsured motorist law to pay damages to an injured insured.

General Casualty argues that the phrase "recover damages from a responsible third party" refers to recovery of damages from the wrongdoer causing the insured's injury or illness. The word "damages" in the context of bodily injury cases ordinarily means pecuniary compensation to an injured person for loss resulting from an unlawful or negligent act or omission or negligence of another. General Casualty, an uninsured motorist carrier, paid its insured not because it committed an unlawful or negligent act or omission causing injury to the insured but because it has a contractual and statutory duty to make payments to its insured. The amount of the payment is measured by the damages the tortfeasor is liable to pay.

[161 Wis.2d 947] We are persuaded by General Casualty's argument. General Casualty is not the wrongdoer in this case. General Casualty's liability to the insured arises not from its conduct but from an uninsured motorist's negligent conduct. General Casualty's responsibility for compensating the insured arises from the insurance policy and the uninsured motorist statute.

Citing New Amsterdam Casualty Co. v. Acorn Products Company, 42 Wis.2d 127, 166 N.W.2d 198 (1969), and Travelers Indemnity Company v. Auto Driveaway Company, 89 Wis.2d 255, 278 N.W.2d 262 (Ct.App.1979), Employers Health argues that subrogation rights do not arise exclusively from tort liability. We agree with Employers Health. Acorn Products and Travelers Indemnity are, however, distinguishable from this case.

In Acorn Products the court upheld the right of an insurer, which provided worker's compensation coverage for a general contractor (the insured), to sue a subcontractor that had breached its agreement to provide the insured general contractor with worker's compensation coverage. The insurer's right of action was based upon the defendant's (subcontractor's) breach of an express contract between the insured general contractor and the defendant, the subcontractor.

In Travelers Indemnity, Auto Driveaway entered into a contract with Travelers' insured to transport the insured's car across the country. The car disappeared, and Travelers paid its insured for the loss of the car. The court upheld Travelers' right of subrogation to its insured's cause of action against Auto Driveaway. Under federal law and contract law the defendant, Auto Driveaway, was primarily liable to the insured for the disappearance of the car, even if the car owner could not show Auto Driveaway was at fault.

[161 Wis.2d 948] In both Acorn Products and Travelers Indemnity, the insurer made payments to its insured and sought subrogation from a defendant who under applicable law was liable to the insured for damages for breach of contractual responsibilities to the insured. The insurers were seeking subrogation from an entity who had "wronged" the insured and caused the insured a loss. In the case at bar Employers...

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44 practice notes
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    • United States
    • United States State Supreme Court of Wisconsin
    • 17 d2 Dezembro d2 2002
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    • 13 d3 Outubro d3 1993
    ...78 Wis.2d 284, 302, 254 N.W.2d 255 (1977), and also applicability of the provision. See, e.g., Employers Health Ins. v. General Cas., 161 Wis.2d 937, 956, 469 N.W.2d 172 (1991); Rock River Lumber v. Universal Mortg. Corp., 82 Wis.2d [181 Wis.2d 602] 235, 242, 262 N.W.2d 114 (1978). Clearly,......
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    ...Cunningham v. Metropolitan Life Ins. Co., 121 Wis.2d 437, 360 N.W.2d 33 (Wis.1985) and Employers Health Ins. v. General Casualty Co., 161 Wis.2d 937, 958, 469 N.W.2d 172, 181 (Wis.1991) to support its contention that the doctrine of equitable subrogation is applicable in such a situation. I......
  • Sprangers v. Greatway Ins. Co., No. 92-1617
    • United States
    • United States State Supreme Court of Wisconsin
    • 18 d1 Abril d1 1994
    ...School District v. Wausau Ins., 168 Wis.2d 390, 407-08, 484 N.W.2d 314 (1992); Employers Health Insurance v. General Casualty Co., 161 Wis.2d 937, 945-46, 469 N.W.2d 172 The plaintiffs assert that the exclusion is unambiguous and does not apply because the VFW is a non-profit organization o......
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44 cases
  • Frost v. Whitbeck, No. 01-0327.
    • United States
    • United States State Supreme Court of Wisconsin
    • 17 d2 Dezembro d2 2002
    ...otherwise indicated. 2. Grams v. Boss, 97 Wis. 2d 332, 338-39, 294 N.W.2d 473 (1980). 3. Employers Health Ins. v. Gen. Cas. Co. of Wis., 161 Wis. 2d 937, 945-46, 469 N.W.2d 172 4. Id. at 946. 5. American Family argued in its motion for summary judgment that both Tina and Brittany Frost were......
  • Jindra v. Diederich Flooring, Nos. 92-0640
    • United States
    • United States State Supreme Court of Wisconsin
    • 13 d3 Outubro d3 1993
    ...78 Wis.2d 284, 302, 254 N.W.2d 255 (1977), and also applicability of the provision. See, e.g., Employers Health Ins. v. General Cas., 161 Wis.2d 937, 956, 469 N.W.2d 172 (1991); Rock River Lumber v. Universal Mortg. Corp., 82 Wis.2d [181 Wis.2d 602] 235, 242, 262 N.W.2d 114 (1978). Clearly,......
  • Universal Forest Products v. Morris Forest Product, No. 06-C-0698.
    • United States
    • United States District Courts. 7th Circuit. United States District Court of Eastern District of Wisconsin
    • 2 d1 Junho d1 2008
    ...Cunningham v. Metropolitan Life Ins. Co., 121 Wis.2d 437, 360 N.W.2d 33 (Wis.1985) and Employers Health Ins. v. General Casualty Co., 161 Wis.2d 937, 958, 469 N.W.2d 172, 181 (Wis.1991) to support its contention that the doctrine of equitable subrogation is applicable in such a situation. I......
  • Sprangers v. Greatway Ins. Co., No. 92-1617
    • United States
    • United States State Supreme Court of Wisconsin
    • 18 d1 Abril d1 1994
    ...School District v. Wausau Ins., 168 Wis.2d 390, 407-08, 484 N.W.2d 314 (1992); Employers Health Insurance v. General Casualty Co., 161 Wis.2d 937, 945-46, 469 N.W.2d 172 The plaintiffs assert that the exclusion is unambiguous and does not apply because the VFW is a non-profit organization o......
  • Request a trial to view additional results

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