Foster v. Regent Ins. Co.

Citation371 Wis.2d 563,884 N.W.2d 534 (Table)
Decision Date26 July 2016
Docket NumberNo. 2014AP2592.,2014AP2592.
PartiesSteven Daniel FOSTER, Plaintiff–Appellant, v. REGENT INSURANCE COMPANY, Defendant–Respondent, Blue Cross Blue Shield of Wisconsin, Defendant.
CourtCourt of Appeals of Wisconsin

, P.J.

This underinsured motorist (UIM) insurance coverage dispute arises under the 2009–10 version of Wis. Stat. § 632.32

(Truth in Auto Law).1 Steven Foster appeals a judgment awarding him $238,244.50 and taxable costs. Foster claims the circuit court erred by reducing the monetary award in the jury's special verdict pursuant to a setoff provision in Regent Insurance Company's UIM endorsement. Foster contends the provision is unenforceable and should not be applied. In the alternative, he argues that even if the setoff provision is valid, the court erred when it eliminated his entire award for past and future loss of earning capacity. We reject Foster's arguments and affirm the judgment.


¶ 2 Foster was injured in a rear-end motor vehicle collision on July 19, 2011, while acting in the scope of his employment at Steve Martell Well Drilling, Inc. (Martell) and driving a company vehicle insured by Regent. As a result of his accident-related injuries, Foster received $52,460.94 in initial workers' compensation benefits,2 comprised of $23,300.59 for wages and $29,160.35 for medical expenses.3 He later settled his workers' compensation claim for an additional $137,500.4 Foster also began receiving monthly SSDI benefits in January 2012.

¶ 3 Foster settled his claim against the at-fault driver for the driver's personal automobile insurance policy limit of $100,000.5 Foster then commenced suit against Regent seeking payment of the limits of its applicable UIM coverage. Central to this appeal, Regent's UIM policy endorsement contained a setoff provision,6 which stated, in relevant part:

D. Limit Of Insurance
We will not make a duplicate payment to the extent amounts are paid or payable because of “bodily injury” under workers' compensation, disability benefits or similar law.

¶ 4 Prior to court-ordered mediation, Regent moved for a declaratory judgment regarding the enforceability of this setoff provision. Regent argued the setoff provision was not a prohibited “reducing clause,” but rather a permissible “duplicate payments clause,” which served to prevent Foster from obtaining a double recovery or a windfall. Regent further explained the setoff provision served to maximize the amount of UIM insurance available to a plaintiff by applying the coverage only to damages beyond what the plaintiff recovers from the tortfeasor, workers' compensation, and disability insurance. Foster, in turn, argued the setoff provision was void and unenforceable pursuant to binding Wisconsin law and Wisconsin's collateral source rule. The circuit court concluded the setoff provision was not a reducing clause and was thus valid and enforceable. The court reserved making a final decision on what, if any, payments may constitute a duplicate payment and whether the collateral source rule applied.

¶ 5 A jury awarded Foster $518,000 in damages in a special verdict, distributed as follows:

a. Past medical and health care expenses $63,000
b. Future medical and health care expenses $155,000
c. Past loss of earning capacity $50,000
d. Future loss of earning capacity $125,000
e. Past pain, suffering and disability $30,000
f. Future pain, suffering and disability $95,000

Following the verdict, Regent moved to reduce the jury's award by the $100,000 Foster received from the tortfeasor's insurer. Regent also sought to reduce the jury's award for past medical and health care expenses by $4755.50 based on payments Foster received through workers' compensation, and to deduct the jury's entire award for past and future loss of earning capacity based on payments Foster received from workers' compensation and SSDI. Foster conceded the $100,000 reduction was appropriate but argued Regent was not entitled to the other reductions.

¶ 6 The circuit court concluded [t]he collateral source rule does not apply under the circumstances here as the damages that ... Foster is entitled to recover under his UIM policy are governed by the terms of the insurance agreement.” The court further concluded “the evidence makes clear” that Regent is entitled to the following deductions: (1) $100,000 paid by the tortfeasor's insurer; (2) $4755.50 for unreimbursed past medical and health care expenses, as Foster “received a duplicate payment for past medical expenses incurred through workers' compensation”; and (3) $50,000 for past loss of earning capacity and $125,000 for future loss of earning capacity that “Foster received from worker[s'] compensation and social security payments for lost earning capacity in excess of $175,000.00, which duplicates the damages awarded by the jury.” The circuit court accordingly entered a judgment for Foster in the amount of $238,244.50, along with taxable costs. Foster now appeals.


¶ 7 This case involves the interpretation of an insurance policy and Wis. Stat. § 632.32

, both of which present questions of law that we review de novo. See

Teschendorf v. State Farm Ins. Cos., 2006 WI 89, ¶ 9, 293 Wis.2d 123, 717 N.W.2d 258. An insurance policy is a contract for insurance. See

Zarder v. Humana Ins. Co., 2010 WI 35, ¶ 25, 324 Wis.2d 325, 782 N.W.2d 682. When determining whether an insured may recover under the terms of an insurance policy, we generally begin by examining the language of the policy.7

See id. Our goal in construing an insurance policy is “to determine and carry out the intentions of the parties .” Id., ¶ 26. We interpret undefined words and phrases in an insurance policy as they would be understood by a reasonable insured, giving words and phrases their common and ordinary meaning.” Id. If the policy language is clear on its face, we apply the policy's terms. Stubbe v. Guidant Mut. Ins. Co., 2002 WI App 203, ¶ 8, 257 Wis.2d 401, 651 N.W.2d 318. However, if an insurance policy is ambiguous, we will resolve ambiguity in favor of the insured. Id. “Insurance policy language is ambiguous ‘if it is susceptible to more than one reasonable interpretation.’ Folkman v. Quamme, 2003 WI 116, ¶ 13, 264 Wis.2d 617, 665 N.W.2d 857 (quoting Danbeck v. American Family Mut. Ins. Co., 2001 WI 91, ¶ 10, 245 Wis.2d 186, 629 N.W.2d 150 ).

¶ 8 [T]he purpose of statutory interpretation is to determine what the statute means so that it may be given its full, proper, and intended effect.” State ex rel. Kalal v. Circuit Court for Dane Cty., 2004 WI 58, ¶ 44, 271 Wis.2d 633, 681 N.W.2d 110

. Statutory interpretation begins with the language of the statute. Id., ¶ 45. “Statutory language is given its common, ordinary, and accepted meaning, except that technical or specially-defined words or phrases are given their technical or special definitional meaning.” Id. Statutory language is also “interpreted in the context in which it is used; not in isolation but as part of a whole; in relation to the language of surrounding or closely-related statutes; and reasonably, to avoid absurd or unreasonable results.” Id., ¶ 46. If the meaning of the statute is plain, the inquiry ordinarily ends there. Id., ¶ 45. [I]f a statute is ambiguous, we examine extrinsic sources, such as legislative history, to ascertain the legislative intent.” Orion Flight Servs., Inc. v. Basler Flight Serv., 2006 WI 51, ¶ 17, 290 Wis.2d 421, 714 N.W.2d 130.

I. Foster claims use of the setoff provision will provide him with less than a full recovery.

¶ 9 Foster first contends Regent's policy “entitles the insured full compensation for all elements of tort damages that the underinsured driver is liable for under Wisconsin tort law, up to the UIM policy limits.” According to Foster, “$418,000 is the amount of UIM coverage required under the policy to fully compensate [him] for the amount he is legally entitled to recover from the underinsured tortfeasor.” Foster acknowledges the setoff provision is not a limits reducing clause. Nonetheless, he claims that Regent improperly seeks to pay less than full compensation based on the setoff provision.

¶ 10 We note from the outset that many of Foster's arguments hinge on the fundamentally false premise that Regent must stand in the shoes of the tortfeasor for all purposes. Foster selectively relies upon various cases to support this proposition. However, in so doing, Foster ignores other legal principles—most notably, properly giving effect to the clear contract language in Regent's policy.

¶ 11 Foster correctly observes that Regent's UIM endorsement begins with a broad grant of coverage. It provides Regent “will pay all sums the ‘insured’ is legally entitled to recover as compensatory damages from the owner or driver of an ‘underinsured motor vehicle.’ However, Regent's broad grant of coverage is limited by additional language in the UIM endorsement. Among other exclusions and limitations, the UIM endorsement contains two provisions relevant to this appeal, both of which appear under the heading “Limit Of Insurance.”

¶ 12 The first provision states that Regent “will not make a duplicate payment under this coverage for any element of ‘loss' for which payment has been made by or for anyone who is legally responsible.” Foster agrees the circuit court properly applied this provision in reducing the judgment against Regent by the $100,000 received from the tortfeasor's insurer.

¶ 13 The second provision—the setoff provision at issue in this case—states that Regent “will not make a duplicate payment to the extent amounts are paid or payable because of ‘bodily injury’ under workers' compensation, disability benefits or similar law.” This provision is unambiguous both when considered in isolation and when considered within the context of the policy as a whole. Under the UIM endorsement, Regent will not include in its payment to Foster sums that workers' compensation and disability benefits paid for Foster's injuries from the...

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