Case Title: WYOMING MEDICAL CENTER, INC., a Wyoming corporation V. WYOMING INSURANCE GUARANTY ASSOCIATION, a Wyoming non-profit unincorporated legal entity

Citation: 

Docket Number: S-09-0109

State: wyoming

Court: Wyoming Supreme Court

Date: 2010-02-26T00:00:00Z

Document:
WYOMING MEDICAL CENTER, INC., a Wyoming corporation V. WYOMING INSURANCE GUARANTY ASSOCIATION, a Wyoming non-profit unincorporated legal entity2010 WY 21225 P.3d 1061Case Number: S-09-0109Decided: 02/26/2010
OCTOBER 
TERM, A.D. 2009

 
 
WYOMING 
MEDICAL CENTER, INC., a Wyoming 
corporation,Appellant(Defendant),v.WYOMING INSURANCE 
GUARANTY ASSOCIATION, a Wyoming non-profit unincorporated legal 
entity,Appellee(Plaintiff).

 
 

Appeal 
from the District Court of Natrona County

The 
Honorable David B. Park, Judge

 
 
Representing 
Appellant:

Stephenson 
D. Emery of Williams, Porter, Day & Neville, P.C., Casper, 
Wyoming.

 
 
Representing 
Appellee:

James 
R. Bell of Murane & Bostwick, LLC, Casper, Wyoming.

 
 
Before 
VOIGT, C.J., and GOLDEN, HILL, KITE, and BURKE, JJ.

 
 
KITE, 
Justice.

 
 
[¶1]  After the Wyoming Medical Center's (WMC) 
insurer became insolvent, the Wyoming Insurance Guarantee Association (WIGA) 
paid claims made against WMC.  WIGA 
then filed a complaint against WMC claiming that it was obligated to pay the 
deductibles for each claim.  
Asserting that WIGA stood in the shoes of the insurer, WMC argued that 
WIGA's claim was barred by an earlier district court ruling that WMC was not 
obligated to pay the deductibles to its insolvent insurer.  WIGA filed a summary judgment motion 
which the district court granted, ruling that WMC was obligated to pay the 
deductibles.  WMC appealed.  We affirm.  

 
 
ISSUES

 
 
[¶2]  WMC states the issues for this Court's 
determination as follows:

 
 
            
1.         
In light of the trial court's prior ruling "[t]hat [Wyoming Medical 
Center ("WMC")] does not have any obligation to pay [Phico Insurance Company 
("Phico")] any deductible on claims settled by the Wyoming Insurance Guaranty 
Association [("WIGA"),]" is WIGA's complaint in the same court to collect those 
same deductibles from WMC under a canceled professional liability insurance 
policy on behalf of the liquidated insurer, Phico, barred by the doctrine of res 
judicata?

 
 
            
2.         
Is WMC entitled to a setoff for attorneys' fees incurred in the defense 
of various covered claims?

 
 
WIGA 
contends the district court properly granted summary judgment in its favor and 
res judicata does not apply.  

 
 
FACTS

 
 
[¶3]  PHICO Insurance Company (PHICO) issued a 
Health Care Providers Liability Policy to WMC effective from July 16, 1999, to 
July 16, 2000.  The parties renewed 
the policy twice, and it remained in effect until July 16, 2002.  The policy provided that PHICO would pay 
all sums which WMC became legally obligated to pay as damages because of bodily 
injury or property damage caused by a medical incident occurring and reported 
during the effective date of the policy.  
The policy also provided that PHICO's obligation to pay damages under the 
policy applied only in excess of a deductible amount of $50,000.    

 
 
[¶4]  On February 1, 2002, while the policy 
was still in effect, a Pennsylvania court entered an order of liquidation 
against PHICO.  The order stated 
that all insurance policies issued by PHICO were cancelled and terminated for 
all purposes.  Prior to the 
liquidation, PHICO had been providing a defense to WMC on several claims made 
against it.

 
 
[¶5]  After entry of the liquidation order, 
WIGA stepped in to pay the covered claims pursuant to the Wyoming Insurance 
Guaranty Association Act, Wyo. Stat. Ann. § 26-31-101 through 26-31-117 
(1991).  

 
 
The 
Act . . . is based upon the Post-Assessment Property and Liability Insurance 
Guaranty Association Model Act . . . prepared by the National Association of 
Insurance Commissioners . . . .  

 
 
            
The Act creates an involuntary nonprofit unincorporated legal entity, 
[WIGA], whose members are insurers qualified to transact business in 
Wyoming.  Wyo.Stat. § 26-31-104(a) 
and (b).  Each member contributes an 
assessment, based on a percentage of premiums from insurance policies written in 
Wyoming, to a fund which is used to pay claims.  Wyo.Stat. § 26-31-107(a).  When an insurance company is determined 
to be insolvent, [WIGA] "steps into the shoes of the insolvent insurer."   [WIGA] is deemed the insurer to the 
extent of its obligation for covered claims . . . .  Wyo.Stat. § 
26-31-106(a)(ii).

  

Wyoming 
Ins. Guar. Ass'n v. Woods, 
888 P.2d 192, 195 (Wyo. 1994) (some citations omitted).  

 
 
[¶6]  In the present case, WIGA paid three 
claims against WMC, the first in June of 2002 for $25,000; the second in July of 
2002 for $165,000; and the third in August of 2002 for $150,000.  After paying the claims, WIGA demanded 
payment from WMC of $125,000, the sum of the deductibles for the claims paid in 
June ($25,000), July ($50,000) and August ($50,000) of 2002.  WMC refused the demand, claiming that it 
had no obligation to pay the deductibles.  

 
 
[¶7]  Subsequently, WMC filed a complaint for 
declaratory judgment against PHICO in Wyoming district court.  WMC sought a declaration that PHICO's 
liquidation was a breach of the insurance contract and, upon the insurer's 
breach, WMC had no obligation to pay PHICO any deductible on the claims WIGA 
paid.  PHICO failed to appear in the 
action and WMC moved for entry of default.  
The clerk of court entered default and ultimately, in 2004, the district 
court entered a default judgment declaring that PHICO breached the insurance 
contract and WMC had no obligation to pay PHICO any deductible on claims paid by 
WIGA.  

 
 
[¶8]  WIGA then filed its complaint requesting 
judgment against WMC for the $125,000 plus interest and costs.  WMC answered, denying any obligation to 
pay the deductibles on the ground that the default judgment, holding it did not 
have to pay PHICO, applied also to WIGA.  
WMC also filed a counterclaim against WIGA alleging that, under § 
26-31-106(a)(ii) of the Insurance Guaranty Association Act, WIGA was deemed the 
insurer upon PHICO's insolvency and was obligated to pay any damages WMC 
sustained as a result of PHICO's breach of the insurance contract, including 
$50,000 in settlement costs WMC had paid that PHICO was obligated to pay and 
$45,000 in legal fees.  WMC asked 
that WIGA's complaint be dismissed and judgment be awarded in its favor on the 
counterclaim.

 
 
[¶9]  WIGA denied that it was obligated to pay 
WMC any amounts.  WIGA subsequently 
filed a motion for summary judgment in its favor on both the complaint and the 
counterclaim.1  The parties filed briefs and, after a 
hearing, the district court issued a decision letter in which it concluded WIGA 
was entitled to judgment against WMC in the amount of $125,000 plus prejudgment 
interest and WMC was not entitled to a set-off for its payment of $50,000 in 
settlement of a different claim made against it under the insurance policy.  The district court requested additional 
briefing on the question of whether WMC was entitled to a set-off against the 
judgment in the amount of fees it had paid directly to attorneys who had 
defended claims against it.  

 
 
[¶10]  The parties subsequently filed cross 
motions for summary judgment on the attorney fees issue.  After considering the parties' briefs 
and arguments at a hearing, the district court entered an order granting summary 
judgment for WIGA on that claim as well.  
WMC appealed both orders.       

 
 
STANDARD 
OF REVIEW

 
 
[¶11]  When reviewing an order granting summary 
judgment, we consider the record de 
novo.  Stone v. Devon Energy Prod. Co., L.P., 
2009 WY 114, ¶ 10, 216 P.3d 489, 492 (Wyo. 2009).

 
 
[W]e 
have exactly the same duty as the district judge; and, if there is a complete 
record before us, we have exactly the same material as did [the district 
judge].  We must follow the same 
standards.  The propriety of 
granting a motion for summary judgment depends upon the correctness of a court's 
dual findings that there is no genuine issue as to any material fact and that 
the prevailing party is entitled to judgment as a matter of law.  This court looks at the record from the 
viewpoint most favorable to the party opposing the motion, giving to him all 
favorable inferences to be drawn from the facts contained in affidavits, 
depositions and other proper material appearing in the record.  

 
 

McGarvey 
v. Key Prop. Mgmt. LLC, 
2009 WY 84, ¶ 10, 211 P.3d 503, 506 (Wyo. 2009).  The question of whether res judicata 
bars a claim is one of law.  Osborn v. Kilts, 2006 WY 142, ¶ 6, 145 P.3d 1264, 1266 (Wyo. 2006).  
Statutory construction is also a question of law, which we review de novo.  Luhm v. Bd. of Trustees of Hot Springs Co. 
Sch. Dist. No. 1, 2009 WY 63, ¶ 8, 206 P.3d 1290, 1294 (Wyo. 
2009).

 
 
DISCUSSION

 
 
[¶12]  WMC argues, as it did in the district 
court, that res judicata barred WIGA's claim for payment of the deductibles. WMC 
contends the earlier default judgment against PHICO established that it had no 
obligation to pay PHICO any deductibles on claims settled by WIGA.  WMC asserts WIGA stands in the shoes of 
PHICO, has no more right to payment of the deductibles than PHICO did and its 
claim is precluded by the earlier ruling.  

 
 
[¶13]  WIGA responds that the doctrine of res 
judicata does not bar its claim because the doctrine only applies when the 
parties in the earlier action are identical to those in the later action.  Because the default judgment was entered 
in a case between PHICO and WMC, and WIGA was not a party to that action, WIGA 
contends res judicata does not apply.  
WIGA further asserts that it does not stand in the shoes of PHICO so as 
to be considered one and the same for purposes of its right to payment of the 
deductibles.

 
 
[¶14]  In its ruling on this issue, the 
district court stated:

 
 
The 
criteria used to determine res judicata's applicability to a situation are:  "(1) the parties were identical; (2) the 
subject matter was identical; (3) the issues were the same and related to the 
subject matter; and (4) the capacities of the persons were identical in 
reference to both the subject matter and the issues between them."  [Osborn v. Kilts, 2006 WY 146, ¶ 8, 145 P.3d 1264, 1266-1267 (Wyo. 2006).]  
At a minimum, the first and the fourth criteria are not present in this 
case.  The parties in this case are 
not identical, since WIGA is not PHICO for all purposes, nor were the capacities 
identical.  WMC, in the first 
action, was attempting, reasonably it seems, to avoid having to pay deductibles 
to an insolvent insurer that had not provided a defense or even had to pay the 
settlement claim.  WIGA, on the 
other hand, is carrying out its statutory obligation to protect and conserve the 
funds allocated to it.  

 
 
            
Finally, there is considerable logic to support the Default Judgment 
between WMC and PHICO.  It clearly 
makes sense to protect WMC and save it from having to pay deductibles to an 
insolvent insurer that failed to meet its obligations under the insurance 
contract.  It makes no sense, 
however, to interpret the Default Judgment as protecting WMC as against WIGA, 
which ended up paying the claim settlement amounts.  If WMC were to prevail on this argument, 
it would be in a substantially better position than it would have if PHICO had 
not become insolvent.  The Default 
Judgment does not preclude WIGA from collecting from WMC, it only prevents PHICO 
from collection attempts.

 
 
[¶15]  We begin our review of the district 
court's ruling by considering the law governing the doctrine of res judicata, 
which bars re-litigation of previously litigated causes of action or 
claims.  CJ v. SA, 2006 WY 49, ¶ 11, 132 P.3d 196, 202 (Wyo. 2006).  As the 
district court stated, four factors must exist for res judicata to apply:  1) the parties must be identical; 2) the 
subject matter must be identical; 3) the issues must be identical and relate to 
the same subject matter; and 4) the capacities of the persons must be identical 
in reference to both the subject matter and the issues between them.  Id.  The party asserting that res judicata 
applies must analyze the elements of the relevant doctrine by comparing the 
earlier proceeding and the present one.   Id.

 
 
[¶16]  WMC acknowledges that PHICO was a party 
in the earlier proceeding and WIGA was not, and WIGA, not PHICO, is a party in 
the present action.  WMC contends, 
however, the requirement that the parties be identical is satisfied because 
PHICO and WIGA are in privity with one another; that is, they have a close, 
significant connection and share a direct financial or proprietary 
interest.   Osborn, ¶ 10, 145 P.3d  at 1267.  For purposes of applying res judicata, 
WMC asserts, the parties need not be identical but may be in privity with each 
other. 

 
 
[¶17]  As the basis for its assertion that WIGA 
and PHICO are in privity with each other, WMC cites the following provisions of 
the Insurance Guaranty Association Act:  

 
 

-          
§ 
26-31-106(a)(ii), which states that WIGA shall "be deemed the insurer to the 
extent of its obligation of the covered claims and to that extent has all 
rights, duties and obligations of the insolvent insurer as if the insurer were 
not insolvent;" 

-          
§ 
26-31-110(a), providing that WIGA "has no cause of action against the insolvent 
insurer's insured for any sums it has paid out except the causes of action as 
the insolvent insurer would have had if it had paid those sums;"  

-          
§ 
26-31-108(d)(i)(D), stating that "notice of claims to the receiver or liquidator 
of the insolvent insurer shall be deemed notice to the association . . . ."  

[¶18]  In addition to the statutory provisions, 
WMC cites this Court's statement in Wyoming Ins. Guar. Ass'n v. Allstate 
Indemnity Co., 844 P.2d 464 (Wyo. 1992) that WIGA steps into the shoes of an 
insolvent insurance company by assuming its obligations.  WMC also contends WIGA and PHICO acted 
as if they stood in each other's shoes.  
WMC asserts that WIGA authorized PHICO to demand payment from WMC of the 
deductible amounts on WIGA's behalf; thus, by WIGA's own admission, it stands in 
the shoes of PHICO.    

 
 
[¶19]  We consider first the provisions of the 
Insurance Guaranty Association Act, keeping in mind that our review is governed 
by the following standards:

 
 
The 
paramount consideration is to determine the legislature's intent, which must be 
ascertained initially and primarily from the words used in the statute.  We look first to the plain and ordinary 
meaning of the words to determine if the statute is ambiguous.  A statute is clear and unambiguous if 
its wording is such that reasonable persons are able to agree on its meaning 
with consistency and predictability.  
Conversely, a statute is ambiguous if it is found to be vague or 
uncertain and subject to varying interpretations.  If we determine that a statute is clear 
and unambiguous, we give effect to the plain language of the statute.  

 
 
We 
have recognized that divergent opinions among parties as to the meaning of a 
statute may be evidence of ambiguity but is not conclusive.  Ultimately, whether a statute is 
ambiguous is a matter of law to be determined by the court.  

 
 

Kennedy 
Oil v. Dep't of Revenue, 
2008 WY 154, ¶ 10, 205 P.3d 999, 1003 (Wyo. 2008) (citations 
omitted).

 
 
[¶20]  In construing specifically the Insurance 
Guaranty Association Act, we previously have said: 

 
 
            
The purpose of the Act is to provide a mechanism for the payment of 
covered claims which avoids excessive delay in payment and avoids financial loss 
to claimants or insureds because of the insolvency of an insurer.  The Act seeks to remedy the social 
consequences resulting from the insolvency of an insurer. . . .  Therefore, as remedial legislation 
designed for the public's protection, this court must liberally construe the Act 
to achieve its purposes and strictly construe all exceptions to indemnification. 

 
 
 Woods, 888 P.2d  at 195 (citations 
omitted).  

 
 
[¶21]  Section 26-31-106 sets out WIGA's duties 
and powers in relevant part as follows:

 
 
   (a)  Except as provided in subsection (c) of 
this section, [WIGA] shall:

(i)  Be obligated to pay covered 
claims:

   . . . .

 
 
(ii)  Be deemed the insurer to the extent of its 
obligation of the covered claims and to that extent has all rights, duties 
and obligations of the insolvent insurer as if the insurer were not 
insolvent;

 . . . .

 
 
   (c)  Notwithstanding subsection (a) of this 
section, the association:

 
 
. 
. . .

 
 
  (iv)  Is not obligated to pay a claimant an 
amount in excess of the obligation of the insolvent insurer under the policy or 
coverage from which the claim arises.

 
 
[¶22]  Section 26-31-103(a)(ii) defines a 
"covered claim" for purposes of the Act as follows:  

 
 
      (ii)  "Covered claim" means an unpaid claim which arises out of and 
is within the coverage and does not 
exceed the applicable limits of an 
insurance policy to which this chapter applies issued by an insurer, if the 
insurer is an insolvent insurer and the claimant or insured is a resident of 
this state at the time of the insured event or the property from which the claim 
arises is permanently located in this state, but "covered claim" does not 
include:

      (A)  Any amount due any reinsurer, insurer, insurance pool or underwriting 
association as subrogation recoveries or otherwise;

. 
. . .

 
 
            
(D) Supplementary payment 
obligation including but not limited to adjustment fees and expenses, attorney fees and expenses, court costs, 
interest and bond premiums.

 
 
(Emphasis 
added).

 
 
[¶23]  Pursuant to the plain language of § 
26-31-106(a)(i), WIGA is obligated to pay "covered claims."  "Covered claims" are those claims the 
insurer would have been obligated to pay but for its insolvency.  Section 26-31-103(a)(ii).  The term "covered claims" does not 
include "any amount due any insurer" nor does it include supplementary payment 
obligations, such as attorney fees.  
Section 26-31-103(a)(ii)(A) and (D).  Giving this language its plain and 
ordinary meaning, it appears the legislature intended WIGA to pay only what an 
insurer would have paid had it remained solvent.  

 
 
[¶24]  The legislature's intent that WIGA be 
obligated to pay only what a solvent insurer would have been obligated to pay is 
further reflected in the plain language of § 26-31-106(a)(ii), stating that WIGA 
is "deemed the insurer to the extent 
of [the insurer's] obligation of the covered claims and to that extent has all rights, duties 
and obligations of the insolvent insurer as if the insurer were not 
insolvent.  Similarly, § 
26-31-106(c)(iv) states that WIGA is not obligated to pay more than the 
insolvent insurer would have been obligated to pay.  A solvent insurer would have been 
obligated to pay the claim amount less the deductible.  

 
 
[¶25]  Section 26-31-110 provides in relevant 
part as follows:

 
 
   (a) Any person recovering under 
this chapter assigns his rights under the policy to the association to the 
extent of his recovery from the association.  Any insured or claimant seeking the 
protection of this chapter shall cooperate with the association to the same 
extent as that person would have been required to cooperate with the insolvent 
insured.  The association has no 
cause of action against the insolvent insurer's insured for any sums it has paid 
out except the causes of action as the insolvent insurer would have had it if 
had paid those sums.  

Giving 
this language its plain and ordinary meaning, WIGA has no cause of action 
against an insured for any sums it has paid out except those the insurer would 
have had if it had been solvent.  

 
 
[¶26] 
The plain and ordinary meaning of the statutory language clearly reflects that 
the legislature intended WIGA to be obligated to pay the claims against WMC to 
the same extent PHICO would have been had it not become insolvent.  Had PHICO remained solvent, it would 
have been obligated to pay the claims less the deductibles.  Pursuant to the terms of the insurance 
contract, WMC was required to pay the deductibles.  Had WMC refused to pay the deductibles, 
it would have been in breach of the insurance contract and a solvent PHICO could 
have sought recovery from WMC of the deductible amounts.  WIGA's rights and duties are no more and 
no less than PHICO's would have been.  
Construing the statutory language otherwise would leave WMC in a better 
position as a result of WIGA's involvement than it would have been if PHICO had 
not been insolvent, a result we are not convinced the legislature intended.    

 
 
[¶27]  The parties have cited no case 
addressing an insurance guarantee association's right to reimbursement of 
deductibles it has paid after an insurer's insolvency, and we have found 
none.  However, there is wide 
support for construing insurance guaranty association statutes, as we have, to 
mean that the rights and duties of such associations are limited to those 
explicitly set forth in the statutes.   In T & N PLC v. Pennsylvania Ins. Guar. 
Ass'n, 800 F.S. 1259, 1263 (E.D.Pa. 1992) (citations omitted), for example, 
the court stated: 

 
 
[T]he 
courts have construed the Insurance Guaranty 
Act broadly to effect the purposes of the Act and to guarantee 
the payment of covered claims. Where, however, "the Act explicitly denies a 
recovery . . . or bars a cause of action . . . [it] must be strictly construed." 
Thus, under the provisions of the Insurance Guaranty 
Act, it is clear that, contrary to T&N's contention, PIGA 
does not "stand in the shoes" of an insolvent insurer for all purposes.  

 
 
Similarly, 
in Nebraska Life & Health Ins. Guar. 
Ass'n. v. Dobias, 531 N.W.2d 217, 220 (Neb. 1995), the Court stated:  "[A] guarantor is not the legal 
successor of the insolvent insurer.  Rather, as a statutory creation, the 
guarantor is only liable to the extent provided by the statute creating the 
guarantor."  

 
 
[¶28]  Construing its Insurance Guarantee Act, 
the court in Saylin v. Cal. Ins. Guar. 
Ass'n, 224 Cal. Rptr. 493, 497 (Cal. Ct. App. 1986) (citations omitted) 
concluded because:

 
 
"covered 
claims" are not coextensive with an insolvent insurer's obligations under its 
policies, CIGA cannot and does not "stand in the shoes" of the insolvent insurer 
for all purposes. Indeed, CIGA is "expressly forbidden" to do so except where 
the claim at issue is a "covered claim." 

 
 
Similarly, 
the court in Virginia Property & 
Casualty Ins. Guaranty Ass'n v. International Ins. Co, 385 S.E.2d 614, 616 
(Va. 1989) stated: 

 
 
            
The Act, considered as a whole, clearly indicates that the General 
Assembly did not intend that the Association merely "step into the shoes" of the 
insolvent insurer. . . . [The Association] is not merely a solvent substitute 
for an insolvent insurance company. . . .  

 
 
            
The insolvency of [the insurer] created a legal relationship between [the 
insured] and the Association which reflected the terms of the [insurance] policy 
only to the extent they were not otherwise limited by the 
Act."

 
 
[¶29] 
Thus, our conclusion that WIGA does not step into PHICO's shoes except to the 
extent provided in the Wyoming act, and is entitled to reimbursement of the 
deductibles just as PHICO would have been had it remained solvent, is consistent 
with other courts' interpretations of their insurance guaranty association 
acts.  The 2004 default judgment 
declaring that PHICO breached the insurance contract and WMC was not obligated 
to pay the deductible amounts to PHICO does not change this result.  The default judgment was entered after 
and as a result of PHICO's insolvency.  
The judgment declaring that PHICO's insolvency constituted a breach of 
contract relieving WMC of the duty to pay PHICO has no effect upon WIGA's 
statutory rights and duties, which are limited expressly to those PHICO would 
have had if it were not 
insolvent.  But for its 
insolvency, PHICO would have been required to pay the claims against WMC and WMC 
would have been obligated to pay the deductible amounts.  

 
 
[¶30]  The doctrine of res judicata simply does 
not apply to bar WIGA's claim.  WIGA 
was not a party to WMC's earlier action against PHICO nor does WIGA stand in the 
shoes of PHICO so that the judgment relieving WMC from paying the deductibles to 
the insolvent PHICO likewise relieves WMC from paying the deductibles to 
WIGA.  PHICO breached its insurance 
contract with WMC and upon its breach WMC was relieved of paying PHICO.  WIGA did not have or breach any contract 
with WMC and the default judgment declaring that PHICO breached the contract did 
not pertain in any way to WIGA.  

 
 
[¶31]  Unlike WMC's action against PHICO, WIGA 
filed its action against WMC pursuant to the Insurance Guaranty Act seeking 
payment from WMC for amounts WIGA paid on claims against WMC beyond what a 
solvent PHICO would have been obligated to pay.  WIGA and PHICO are not identical and 
were not in privity so as to make it appropriate to apply the default judgment 
in the breach of contract action against WIGA to bar its claim under the 
Insurance Guaranty Act.  The subject 
matter of the earlier action was whether PHICO breached the insurance contract 
and WMC was relieved from paying PHICO the deductible amounts.  The subject matter of the present action 
was whether WIGA was entitled to recover the deductible amounts from WMC under 
the Insurance Guaranty Act as PHICO could have done had it remained 
solvent.  PHICO's capacity in the 
breach of contract action was different from WIGA's capacity in the statutory 
action and their capacities were different in terms of their entitlement to 
payment after PHICO's insolvency of the deductible amounts.  We affirm the district court's order 
granting summary judgment to WIGA on its complaint.

 
 
[¶32]  We turn to consideration of WMC's 
contention that the district court erred in granting summary judgment to WIGA on 
its counter-claim for a set-off against the judgment in the amount of attorney 
fees.  After PHICO's insolvency, WMC 
paid the attorney fees at issue directly to the law firm for services it 
provided in defending WMC against claims covered under the insurance 
policy.  WMC asserts that but for 
the insolvency PHICO would have been required to reimburse WMC for attorney fees 
it paid directly to its attorneys for defending the claims.  Likewise, WMC contends, WIGA is 
obligated for the attorney fees and a set-off against the judgment is an 
appropriate way to accomplish that.

 
 
[¶33]  The district court found that the 
attorney fees at issue were incurred prior to PHICO's insolvency.  The district court held that they were 
not "covered claims" under § 26-31-103(a)(ii)(D), which expressly excludes 
attorney fees.  Because WIGA is 
responsible only for covered claims, which does not include attorney fees, the 
district court concluded WIGA was not responsible for the attorney 
fees.

 
 
[¶34]  WMC contends the district court's 
holding is incorrect because the legislature would not have intended to exclude 
from "covered claims" the attorney fees the insurer would have been obligated to 
pay had it remained solvent.  
Looking at the language of § 26-31-103(a)(ii)((D) excluding 
"supplementary payment obligation including . . . attorney's fees," WMC contends 
it must mean attorney fees arising out of something besides the insurance 
contract itself, for example, an attorney fees award in a bad faith action.  WMC asserts the words do not mean to 
exclude from covered claims attorney fees it incurred in the defense of claims 
covered by the policy.  

 
 
[¶35]  WIGA contends the language is clear that 
attorney fees are excluded from "covered claims."  Both parties acknowledge they have found 
no cases involving language identical to § 26-31-103(a)(ii)(D).   However, WIGA cites Scherer v. Texas Property and Cas. Ins. 
Guar. Ass'n, 958 S.W.2d 413 (Tex. Ct. App. 1997), in which the court 
construed the Texas guaranty association statute, which excluded from the 
definition of covered claims "supplementary payment obligations, including . . . 
attorney's fees . . . incurred prior to the determination that an insurer is 
[insolvent]."   Except for the 
fact that the Texas provision expressly excludes attorney fees incurred prior to 
the determination of insolvency, and the Wyoming provision appears to exclude 
all attorney fees, the provisions are identical.  

 
 
[¶36]  In Scherer, the insureds asserted that 
because their policy included a duty to defend them from suit and that duty was 
not fulfilled, their claim for attorney fees reimbursement was within the policy 
terms and was not a supplementary payment obligation.  Like WMC, the insureds in Scherer contended the exclusion related 
solely to other attorney fees not covered by the policy's "duty to defend" 
clause.  The Texas court concluded 
the statutory language precluded the insureds' recovery of attorney fees, 
stating that the Texas guaranty act "shows the legislature capable of drawing 
stark lines with limited exceptions regarding what types of claims and what 
amounts are compensable."  Id. at 414.  The court concluded the exclusion 
applied to all attorney fees incurred before the insurer's insolvency for which 
it would have been liable.  Id.

 
 
[¶37]  The Wyoming Insurance Guaranty 
Association Act reflects that our legislature is also capable of drawing the 
line between what is covered and what is not.  As we have said, it is clear the 
legislature intended WIGA's rights and duties to be defined by the statutes and 
not to be defined by an insurance policy.  
Section 26-31-106(a)(i) makes it clear WIGA is obligated to pay covered 
claims.  Section 26-31-103(a)(ii) 
defines "covered claims" as unpaid claims arising out of and within the coverage 
of an insurance policy.  Section 
26-31-103(a)(ii)(D) clearly excludes from "covered claims" supplementary payment 
obligations, including attorney fees.  
Giving the statutory language its plain and ordinary meaning, we conclude 
the legislature intended to exclude attorney fees from the definition of 
"covered claim."   Because § 
26-31-106(a)(i) and (ii) provide that WIGA is obligated to pay "covered claims" 
and is deemed the insurer to the extent of its obligation for the covered 
claims, we conclude the legislature did not intend for WIGA to be obligated for 
attorney fees.   

 
 
[¶38]  To construe the statutory language as 
WMC would have us do would require us to ignore the plain language chosen by the 
legislature. We have said before that the omission of words from a statute is 
considered to be an intentional act by the legislature and we will not read 
words into a statute when the legislature has chosen not to include them.  Kennedy, ¶ 14, 205 P.3d  at 1004.  When statutory words are clear and 
unambiguous, a court risks an impermissible substitution of its own views, or 
those of others, for the intent of the legislature if any effort is made to 
interpret or construe statutes on any basis other than the language invoked by 
the legislature.  Id.  The definition of "covered claims" the 
legislature adopted expressly excludes attorney fees.  Absent a clear indication that the 
legislature did not intend the statute to mean what it says, we conclude WIGA 
was not responsible for WMC's attorney fees. 

 
 
[¶39]  We affirm the district court's orders 
granting summary judgment in favor of WIGA.         
     

 
 
FOOTNOTES

 
 

1In its summary judgment motion, in addition to arguing that res judicata 
did not apply, WIGA argued alternatively that the default judgment entered in 
Wyoming against PHICO was void because the liquidation order from the 
Pennsylvania court and Pennsylvania law provided that no action at law or equity 
could be brought against PHICO in Pennsylvania or elsewhere except as a claim in 
a liquidation proceeding.  WMC 
responded that this Court rejected a similar argument in Hoiness-La Bar Ins. v. Julien Constr. 
Co., 743 P.2d 1262 (Wyo. 1987) and, in any event, the Pennsylvania order 
addressed only monetary claims, it did not bar declaratory judgment 
actions.  Neither party raises the 
issue on appeal and we confine our discussion to the issues 
raised.