Attorney Weiss was recently appointed as the chairperson for the Amicus Committee of the Wisconsin Defense Counsel.

The “Wisconsin Defense Counsel (WDC) is a statewide organization of attorneys dedicated to the defense of Wisconsin citizens and businesses, the maintenance of an equitable civil justice system, and the education of its members.”  The Amicus Committee is responsible for filing “friend of the court” briefs at the appellate levels on issues that are important to Wisconsin citizens and businesses.  A link to the Wisconsin Defense Counsel web page can be found here.

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Attorney Weiss publishes article on Trademark Infringement.

Attorney Weiss recently authored an article on trademark infringement law.  The article was published in the Summer 2015 edition of the Wisconsin Defense Counsel Journal and is entitled: “a Protectable Mark? – A Focused Primer”.  A link to the article can be found here.

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The Made Whole Doctrine Revisited

A recent Wisconsin Court of Appeals case, Employers Mutual Casualty Company v. Joseph Kujawa, 2015 WI App 26, may change the context in which courts evaluate insurance companies’ subrogation rights.

Joseph Kujawa settled his personal injury claim with the tortfeasor before filing suit, and did not include his personal auto carrier, Employers Mutual, in the negotiations. He signed an indemnification agreement with the tortfeasor agreeing to indemnify it against subrogation claims. Employers Mutual filed a declaratory action against Kujawa for collection of its subrogation lien, effectively requesting a Rimes hearing. The court found that Kujawa was not made whole and therefore Employers Mutual had no right of subrogation.

The right of subrogation has always been limited by equitable considerations. The right of an insurance company to subrogate against the tortfeasor (defendant) is limited in the situations where the insured (plaintiff) and the insurance company are “competing for a limited pool of funds.” When an insured and his or her insurer are competing over the same funds, it is easier for the court to find in favor of the injured party. See Schulte v. Frazin, 176 Wis. 2d 622, 629, 500 N.W.2d 305 (1993). (“Where either the insurer or the insured must to some extent go unpaid, the loss should be borne by the insurer for that is a risk that the insured has paid it to assume.”)

However, courts over the years have differed on what actually limits that pool of funds. Here, Kujawa stresses the concept that “the injured party should have the right to settle on its own terms,” citing Schulte, 176 Wis. 2d at 634. Relying on prior Wisconsin cases, the Kujawa Court held that even when the tortfeasor’s policy limits are more than enough to cover the plaintiff’s claims and the subrogation claims, the injured party signing an indemnification agreement with the tortfeasor acts to shrink the available pool of funds. 2015 WI App 26, at ¶ 9.

It follows that the injured party has the right to dictate the direction of litigation. However, the Kujawa court grants the insured even greater control by effectively allowing the insured to curtail the rights of his or her insurance carrier. The court admits that Kujawa voluntarily accepted a settlement that did not “fully compensate” him for his damages, but did not find that Kujawa was jeopardizing his insurance company’s right of subrogation in violation of the policy. Id. at 12. In a questionable decision, the Court of Appeals writes, “Kujawa acted in good faith and had reasonable reasons for compromising the claim.” Id. Kujawa’s statements regarding his settlement amount to nothing more than passing off litigation as a mere annoyance standing between him and his settlement funds.

The takeaway from this case is that Employers Mutual should not have sued its insured for the $767.00 (yes, that was its entire subrogation lien), and it should not have appealed the trial court’s negative ruling, because it risked the negative outcome. Possibly, also that carriers should be leery of the “made whole doctrine” in the context of pre-suit settlement of personal injury claims of their insureds. They should make every possible effort to place an insured on notice of the lien and to follow up often regarding the lien. Be proactive in protecting the insurer’s rights; once the deed is done, the decision in Kujawa could work to limit, or eliminate, the insurer’s rights to recover later.

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Very quick introduction to ERISA and subrogation

This little outline is intended as an introduction for insurance claims adjusters, claim representatives, and new attorneys, in the context of subrogation liens in personal injury suits. Experienced attorneys, feel free to comment!

What is ERISA, anyway, and how does it affect settlement negotiations or payment of verdicts in personal injury cases?

ERISA is the Employee Retirement Income Security Act of 1974, a federal law that sets minimum standards for retirement and health benefit plans for employees in private industry. Certain plans qualify, usually called “self-funded plans.” The ERISA law covers a bigger scope of requirements and standards for those benefits plans, but what we in subrogation are mainly concerned with is whether that particular health plan is covered by ERISA and therefore exempted from state subrogation laws.

In particular, ERISA plans often have language saying that they are entitled to 100% reimbursement in the event of a recovery by the injured party. ERISA liens must be paid back in full before the injured person or the other subrogated parties (such as personal auto insurers with medical payments liens) receive anything themselves.

States have different laws that may reduce the reimbursement to subrogated parties. Wisconsin’s law regarding subrogation includes equitable doctrines such as the “made whole” doctrine, and the “common fund” doctrine.

“Made whole” means that a person is fully compensated for the loss they suffered. It can be described as requiring the injured individual to have received a fair settlement or equal to what they would likely receive in a jury verdict. Plaintiff’s attorneys may define “made whole” as “covering all of the client’s expenses and claims.” Of course, plaintiff’s attorneys may have other reasons for accepting less than “made whole” settlements, such as not wanting to go to trial for one reason or another.

The “common fund doctrine” allows plaintiff’s attorneys to ask other parties who did not participate in the litigation to give up a third of their settlement to cover attorney fees. Essentially the subrogation party is paying 1/3 to the plaintiff’s attorney. My position as a subrogation attorney is that on the one hand, we always make an appearance in a case and file the appropriate pleadings, and do participate in mediation, but on the other hand, we admit that the plaintiff’s attorney helps us out by negotiating with the defense insurance company, and by being prepared to try the case and present all the facts.

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Attorney Weiss was recently admitted to practice before the United States Court of Appeals for the Federal Circuit.

Attorney Weiss was recently admitted to practice before the United States Court of Appeals for the Federal Circuit.  According to its website, the United States Court of Appeals for the Federal Circuit has “nationwide jurisdiction in a variety of subject areas, including international trade, government contracts, patents, certain money claims against the United States government, federal personnel, veterans’ benefits, and public safety officers’ benefits claims.” See this link for a further description of its jurisdiction: http://www.cafc.uscourts.gov/the-court/court-jurisdiction.html

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Attorney Weiss to speak on avoiding bad faith at the claims stage.

On April 23, 2015, Attorney Monte Weiss will be speaking at the Wisconsin Defense Counsel’s Spring Convention in Kohler, Wisconsin. He will be offering his opinions on how carriers can avoid assertions of bad faith while handling their insureds’ matters in the claims stage.

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Court rules for Attorney Jahn’s client, denying spoliation motion

In a recent subrogation case venued in Racine County, the defense filed a motion to dismiss Weiss Law Office’s client, the insurance company Plaintiff, based on the alleged spoliation of evidence.

In this case, the Plaintiff insured a homeowner who had a sewage pump fail, which resulted in sewage entering the insured’s basement. The Defendant allegedly caused the failure by negligently severing an electrical line serving the pump. Defense claimed that Plaintiff engaged in spoliation of evidence when the homeowner quickly hired contractors to get the pump running again.

The Court denied the motion, based on a case Weiss Law Office argued in the Wisconsin Court of Appeals, Am. Family Mut. Ins. Co. v. Golke, 2009 WI 81. Golke is directly relevant here, holding that (1) dismissal of a case for spoliation is a sanction imposed for egregious conduct, and (2) after a party has had notice and an opportunity to inspect evidence, the destruction of that evidence is not spoliation. After a hearing, the Court found that the Plaintiff’s insureds had not engaged in egregious conduct by getting repairs done quickly.

Another way of stating the rule applied here is that a case may not be dismissed for spoliation without a finding of egregious conduct, which is “a conscious attempt to affect the outcome of the litigation or a flagrant, knowing disregard of the judicial process.”

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Behrndt v. Austin Mutual – 13AP2596

After a house fire, how may insurance companies determine whether a house is a “total loss,” and what are they required to pay the homeowner?

In Behrndt v. Austin Mutual, 13AP2596, the homeowners made an analogy to the way insurance policies total a crashed automobile. They argued that because the cost of repairs was more than the pre-fire value of the home, their home was a total loss, and accordingly, their homeowner’s insurance company had to pay them the face value of the policy. (The value of the policy was, of course, much more than either the cost of repairs or the alleged market value at the time.)
The Behrndt’s house was described as having smoke and fire damage on the inside, but no structural damage to the foundation, roof, or outer walls.

The appeals court affirmed Austin Mutual’s motion for summary judgment based on the Valued Policy Law, Wis. Stat. 632.05(2). A damaged house is only a total loss when it is “wholly destroyed.”

A house may be “wholly destroyed” when the municipality has ordered it to be razed.
Otherwise, a house is “wholly destroyed” when, as described in Eck v. Netherlands Insurance Co., 203 Wis. 515, 234 N.W. 718 (1931), “the condition of the remnant of the building is such that an uninsured person, who desires a structure such as the one before the fire, would use the remnant when restoring the building.” Eck, 203 Wis. at 515. Behrndt said “The test is a way to determine whether the condition of a structure has lost its character and identity.”

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Monte Weiss is presenting at the Summer Conference for the Wisconsin Defense Counsel

On August 1, 2014, Monte Weiss will be presenting at the summer conference for the Wisconsin Defense Counsel.   He will be speaking on construction defect insurance coverage issues.  Check out the link below for information about the seminar. http://www.wdc-online.org/index.php/events-calendar/summer-conference

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Pumpkin, Inc. v. Basil E. Ryan, Jr. – 2013AP1320

Pumpkin, Inc. sued Ryan Management, Inc. and alleged several intentional acts, including conversion, theft, and battery. American Family assumed the defense of Ryan Management, Inc. Summary Judgment was granted with to American Family by circuit court with regard to American Family’s duty to defend and Ryan Management, Inc. appealed that decision. Relying on Estate of Sustache v. American Family Mut. Ins. Co., 2008 WI 87, the court held that American Family’s duty to defend an insured extends determination that the insured has coverage if the plaintiff proves his case.

If Pumpkin, Inc. proved its case on with regard to the intentional acts it alleged, American Family would have no coverage and thus it had no duty to defend Ryan Management, Inc. The court affirmed the summary judgment granted by the circuit court.

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