Wisconsin Subrogation Laws

State Subrogation

YES, equitable and contractual – must distinguish between investment and indemnity insurance policies

If insurance contract is found to be one of indemnity, insurer will be allowed to receive subrogation, even absent express subrogation clause.  If contract is found to be one of investment, insurer will not be permitted to receive subrogation absent express subrogation clause (Cunningham v. Metropolitan Life Ins. Co., 360 N.W.2d 33 (Wisc. 1985))

Equitable subrogation is permitted only when rights of those seeking subrogation have greater equity than rights of those who oppose it (Employers Health Ins. V. General Cas. Co. of Wisconsin, 469 N.W.2d 172 (Wisc. 1991)).

Made Whole Doctrine

YES, can’t contract around (Ruckel v. Gassner, 646 N.W.2d 11 (Wisc. 2002)).

Wisconsin is referred to as the “mother of all made whole states”. It got this nickname because how Wisconsin handles the Made Whole Doctrine has been used as an example of the doctrine in a large number of other states.

Mere fact that the settlement figure exceeds the insurer’s claim for subrogation is immaterial; the injured party is not made whole unless all his damages arising out of the tort have been fully compensated. Can hold a trial to determine made whole damages issues. (Rimes v. State Farm Mut. Auto. Ins. Co., 316N.W.2d 348 (Wisc. 1982)).

In Wisconsin a Rimes hearing will be held if there is a made whole issue. The Rimes hearing is a mini trial in which the court determines various items of damages which a jury would have found to be sufficient to make the insured whole. The test of being made whole depends on whether the insured has been completely compensated for all types of damages, including personal injury and property damage. (Valley Forge Ins. Co. v. Home Mut. Ins. Co., 396 N.W.2d 348 (Wis. Ct. App. 1986)).

Common Fund

YES, three requirements:

1. Money from tortfeasor is acquired solely by the efforts of Insured’s attorney.
2. Notice must be given to Insurers that an action against tortfeasor will commence and reasonable fee will be taken from common fund unless Insurers join action against tortfeasor.
   1. Notice by the attorney to parties who may benefit from successful litigation before pursuing a claim on their behalf. The notice must be timely, and give the other party an opportunity to choose its own counsel to represent its interest.
   2. Where an attorney is entitled to compensation under the common fund doctrine and exactly what constitutes a reasonable fee requires a subjective analysis.
3. Subrogated Insurer doesn’t become a party to the action against tortfeasor.

(Oakley v. Fireman’s Fund of Wisconsin, 470 N.W.2d 882 (Wisc. 1991))

Collateral Source Rule

Applies, evidence not admissible

Hospital Lien Act

Stat. Ann. §779.80:

• Hospital shall have lien for services rendered by way of treatment, care, or maintenance – for the amount of the reasonable and necessary charges
• Not effective unless written notice filed in the office of the clerk of the circuit court, not later than 60 days after discharge; then mail notice to interested parties
• Lien will not interfere with any attorney’s lien or contract, is subservient to taxable court costs

Medicaid Statute

Stat. Ann. §49.89:

• The department has a lien equal to the amount of the medical assistance provided
• Recipient of benefits must provide notice to department of a claim
• Distributing recovery: Reasonable costs of collection including attorney fees shall be deducted first. The amount of assistance granted shall be deducted next, and the remainder shall be paid to the recipient