COURT OF APPEALS DECISION DATED AND FILED February 19, 2009 David
R. Schanker Clerk of Court of Appeals |
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NOTICE |
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This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports. A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. § 808.10 and Rule 809.62. |
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APPEAL from an order of the circuit
court for
Before Higginbotham,
P.J., Lundsten and Bridge, JJ.
¶1 BRIDGE, J. Howard D. Walton appeals an order of the
circuit court affirming a decision of the Labor and Industry Review Commission
(LIRC), which in turn affirmed a ruling by an administrative law judge (ALJ)
pursuant to Wis. Stat.
§ 102.30(7) (2007-08).[1] The ALJ ruled that temporary total disability
worker’s compensation benefits awarded to Walton be paid directly to Hartford
Life Benefit Management to reimburse
BACKGROUND
¶2 In
January 2001, Walton was injured in a work related accident while employed by
CenturyTel, Inc. Walton’s claim for
temporary total disability benefits was denied by CenturyTel and its worker’s
compensation insurer, American Motorists Insurance Company (collectively
CenturyTel). Walton then applied for
temporary disability benefits under a nonindustrial insurance policy issued by
¶3 After
all disability payments from
¶4 After
the bankruptcy court issued its order of discharge, Walton filed an application
for worker’s compensation benefits with the Department of Workforce Development
against CenturyTel. Following a hearing
on the matter, the ALJ ruled that Walton’s injuries were compensable and
determined that CenturyTel was liable for, among other benefits, temporary
total disability benefits in the amount of $50,052. The ALJ further ruled, however, that pursuant
to Wis. Stat. § 102.30(7)(a),
CenturyTel was to pay that amount directly to
¶5 Walton
petitioned LIRC for review of the ALJ’s ruling with respect to
STANDARD
OF REVIEW
¶6 We
review LIRC’s decision, not the decision of the circuit court. See Wisconsin Dept. of Revenue v. Menasha
Corp., 2008 WI 88, ¶46, 311 Wis. 2d 579, 754 N.W.2d 95. The issue in this case, whether the
bankruptcy discharge of Walton’s obligation to
¶7 Although
we are not bound by LIRC’s legal conclusions, we may defer to them.
DISCUSSION
¶8 Wisconsin
Stat. § 102.30(7)(a) permits LIRC to intercept worker’s
compensation payments that would otherwise be paid directly to the claimant and
to direct that those payments be paid to a nonindustrial insurer such as
Hartford as reimbursement. To do so,
however, either of the following two conditions must be met: (1) the claimant consents; or (2) it is
established that the payments under the nonindustrial insurance policy were
improper. Walton does not contend that
it was wrongful for LIRC to order reimbursement to
¶9 In response, LIRC contends that it properly ordered reimbursement
to
¶10 Subrogation
is broadly defined as the substitution of one person in the place of another
with reference to a legal right or claim in order to prevent the sort of double
recovery that Walton seeks here. See Cunningham
v. Metropolitan Life Ins. Co., 121
¶11 In
Cunningham,
the supreme court discussed the applicability of subrogation in the context of
insurance contracts. The court
differentiated between contracts of indemnity and contracts of investment. See id. at 446. An indemnity contract generally reimburses
the insured for actual expenses that have been incurred or paid. See id. at 447. See
also Lambert v. Wrensch, 135
¶12 In
determining whether an insurance contract is one of indemnity or investment, courts
must review the insurance policy in question to determine the category in which
the contract falls.
¶13 We will assume for the sake of argument that LIRC is correct
that an insurer’s subrogated interest for payments made to its insured survives
the bankruptcy discharge of the insured’s debt to the insurer under the
reasoning in Wiegel, and that the insurer may then recover its subrogated
interest under Wis. Stat.
102.30(7)(a). The record before us,
however, does not contain the policy of insurance between Walton and
CONCLUSION
¶14 For
the reasons discussed above, the order of the circuit court is reversed and
remanded.
By
the Court.—Order reversed and
cause remanded with directions.
Not recommended for publication in
the official reports.
[1]
(a) The department may order direct reimbursement out of the proceeds payable under this chapter for payments made under a nonindustrial insurance policy covering the same disability and expenses compensable under s. 102.42 when the claimant consents or when it is established that the payments under the nonindustrial insurance policy were improper. No attorney fee is due with respect to that reimbursement.
(b) An insurer who issues a nonindustrial insurance policy described in par. (a) may not intervene as a party in any proceeding under this chapter for reimbursement under par. (a).
All references to the Wisconsin Statutes are to the 2007-08 version unless otherwise noted.
[2]
[3] LIRC also appears to take the position that Wis. Stat. § 102.30(7)(a) creates an independent right of subrogation, although this argument is not developed. While the statute permits LIRC to intercept worker’s compensation payments and use them to reimburse a nonindustrial insurer, the nonindustrial insurer would not be entitled to the reimbursement absent some preexisting subrogation right. See, e.g., Wisconsin Ins. Sec. Fund v. LIRC, 2005 WI App 242, ¶34, 288 Wis. 2d 206, 707 N.W.2d 293 (“Although Wis. Stat. § 102.30(7)(a), read in isolation, authorizes the reimbursement of a subrogated insurer ….”) (Emphasis added.) Section 102.30(7)(a) does not, in itself, establish a subrogation right; it simply permits a payment to be made directly to a subrogated entity. We therefore reject this argument.
LIRC does not argue that Walton’s debt to
[4] Pursuant
to Wis. Stat. § 102.30(7)(b),
nonindustrial insurers are precluded from participating in worker’s
compensation proceedings. See also Employers Health Ins. Co. v. Tesmer, 161
[5] At
issue in Cunningham was a Metropolitan Life Insurance Company policy
which contained a “Group Hospitalization and Physicians’ Services Benefits
Rider” and a “Group Medical Expense Insurance-Extended Coverage” rider. Cunningham
v. Metropolitan Life Ins. Co., 121