Case Title: Earl J. Teschendorf v. State Farm Insurance Companies

Citation: 2006 WI 89

Docket Number: 2003AP003521

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2006-07-07T00:00:00Z

Document:
2006 WI 89 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2003AP3521 
 
 
COMPLETE TITLE: 
 
 
Earl J. Teschendorf and Linda Teschendorf, 
          Plaintiffs, 
     v. 
State Farm Insurance Companies, Reliance 
National Indemnity Co. and American Family 
Mutual Insurance Co., 
          Defendants. 
 
Bernard J. Shira and Maria Shira, 
          Plaintiffs-Appellants, 
     v. 
Reliance National Indemnity Co., 
          Defendant, 
American Family Insurance Co., 
          Defendant-Respondent-Petitioner. 
 
 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
2005 WI App 10 
Reported at:  278 Wis. 2d 354, 691 N.W.2d 882 
(Ct. App. 2004-Published) 
 
 
OPINION FILED: 
July 7, 2006   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
November 8, 2005   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Milwaukee   
 
JUDGE: 
Jeffrey A. Kremers   
 
 
 
JUSTICES: 
 
 
CONCURRED: 
ABRAHAMSON, C.J., concurs (opinion filed). 
PROSSER, J., concurs (opinion filed). 
ROGGENSACK, J., joins the concurrence.   
 
DISSENTED: 
        
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the defendant-respondent-petitioner there were briefs 
by Terry J. Booth and Piper & Schmidt, Milwaukee, and oral 
argument by Terry J. Booth. 
 
 
 
2
For the plaintiffs-appellants there was a brief by Eric S. 
Darling and Schmidt, Darling & Erwin, Milwaukee, and oral 
argument by Eric S. Darling. 
 
An amicus curiae brief was filed by Martha H. Heidt and 
Doar, Drill & Skow, S.C., Baldwin, on behalf of the Wisconsin 
Academy of Trial Lawyers. 
 
 
2006 WI 89
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2003AP3521   
(L.C. No. 
2000CV7497 & 2001CV456) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Earl J. Teschendorf and Linda Teschendorf, 
 
          Plaintiffs, 
 
     v. 
 
State Farm Insurance Companies, Reliance 
National Indemnity Co. and American Family 
Mutual Insurance Co., 
 
          Defendants. 
 
 
_______________________________________________ 
 
Bernard J. Shira and Maria Shira, 
 
          Plaintiffs-Appellants, 
 
     v. 
 
Reliance National Indemnity Co., 
 
          Defendant, 
 
American Family Insurance Co., 
 
          Defendant-Respondent-Petitioner. 
 
 
FILED 
 
JUL 7, 2006 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed.   
 
No. 2003AP3521 
2 
 
¶1 
DAVID 
T. 
PROSSER, 
J.   American 
Family 
Mutual 
Insurance Company (American Family) seeks review of a published 
decision of the court of appeals,1 which reversed a summary 
judgment granted to American Family by the Milwaukee County 
Circuit Court, Jeffrey Kremers, Judge.  The issue presented is 
whether an insurer may reduce the uninsured motorist coverage 
limits in 
its policy 
by 
amounts 
paid under 
a worker’s 
compensation law, where the amounts paid go to the State of 
Wisconsin Work Injury Supplemental Benefit Fund (the Fund) 
rather than the insured or any person related to the insured. 
¶2 
We conclude that Wis. Stat. § 632.32(5)(i)2. (2001-02)2 
does not allow an insurer to reduce uninsured motorist policy 
limits by worker's compensation payments that are not made to or 
on the behalf of the insured, the insured's heirs, or the 
insured's estate.   Accordingly, we affirm the court of appeals 
and hold that American Family cannot reduce its uninsured 
motorist policy limits by worker's compensation payments made to 
the Fund. 
I. BACKGROUND 
 
¶3 
The facts are undisputed.  Scott Shira (Scott) died in 
the course of his employment when an uninsured motorist's 
vehicle struck the car in which he and his passenger, Earl 
                                                 
1 Teschendorf v. State Farm Ins. Co., 2005 WI App 10, 278 
Wis. 2d 354, 691 N.W.2d 882. 
2 All references to the Wisconsin Statutes are to the 2001-
02 edition unless otherwise indicated. 
No. 2003AP3521 
3 
 
Teschendorf, were riding.3  The accident occurred January 16, 
1999, in Woodbury, Minnesota.  Scott was 33 years old.  Because 
he 
was 
unmarried 
and 
had 
no 
dependents, 
his 
worker's 
compensation death benefit was paid to the Fund as required by 
Wis. Stat. § 102.49(5)(b) instead of Scott's estate.4  Of the 
$173,448.00 in worker's compensation benefits paid because of 
Scott's death, $159,900.00 was paid to the Fund; $12,500 was 
paid to Scott's parents for funeral and other expenses; and 
$1048 was paid to medical providers. 
¶4 
Scott had purchased an automobile insurance policy 
from American Family with uninsured motorist coverage limits of 
$150,000.  After his death, Scott's parents, Bernard and Maria 
Shira (the Shiras), brought a wrongful death action, based on 
Minnesota law, against American Family to recover the uninsured 
motorist benefits under Scott's policy.  They sought $8000 in 
funeral 
expenses 
plus 
damages 
for 
loss 
of 
society 
and 
companionship.  
¶5 
Relying upon the reducing clause in the policy,5 
American Family moved for summary judgment, claiming the 
                                                 
3 The claims of Earl Teschendorf are not before this court. 
4 Wisconsin Stat. § 102.49(5)(b) states: 
In addition to the payment required under par (a) [$5000], 
in each case of injury resulting in death leaving no person 
dependent for support, the employer or insurer shall pay into 
the state treasury the amount of the death benefit otherwise 
payable . . . . 
5 Scott's uninsured motorist coverage with American Family 
contained the following reducing clause: 
No. 2003AP3521 
4 
 
uninsured motorist policy limits were reduced to $0 by the 
amount of worker's compensation benefits paid to the Fund. 
¶6 
Wisconsin Stat. § 632.32(5)(i) 
authorizes 
reducing 
clauses like the one in the American Family policy.  Paragraph 
(i) states: 
A policy may provide that the limits under the 
policy for uninsured or underinsured motorist coverage 
for bodily injury or death resulting from any one 
accident shall be reduced by any of the following that 
apply: 
1. 
Amounts paid by or on behalf of any person 
or organization that may be legally responsible for 
the bodily injury or death for which the payment is 
made. 
2. 
Amounts paid or payable under any worker's 
compensation law. 
3. 
Amounts paid or payable under any disability 
benefits laws. 
Wis. Stat. § 632.32(5)(i) (emphasis added). 
 
¶7 
The circuit court granted American Family summary 
judgment.  It held that (1) Minnesota law governs the wrongful 
death action; (2) Wisconsin law governs the interpretation of 
                                                                                                                                                             
The limits of liability of this coverage will be 
reduced by: 
1. 
A payment made by the owner or operator of 
the uninsured motor vehicle or organization which may 
be legally liable. 
2. 
A payment under the Liability coverage of 
this policy. 
3. 
A payment made or amount payable because of 
bodily injury under any workers' compensation or 
disability benefits law or any similar law. 
No. 2003AP3521 
5 
 
the 
insurance 
policy; 
and 
(3) 
Wis. Stat. § 632.32(5)(i)2. 
unambiguously permits reducing clauses that reduce uninsured 
motorist limits by the amount of worker's compensation benefits 
paid to the Fund.  The Shiras appealed. 
 
¶8 
The court of appeals reversed.  In a split decision, 
the 
court 
of 
appeals 
concluded 
that 
both 
Wis. Stat. § 632.32(5)(i)2. and the reducing clause in the 
policy unambiguously allow a reduction in policy limits only for 
those worker's compensation payments made or payable to the 
insured, 
the 
insured's 
heirs, 
or 
the 
insured's 
estate.  
Teschendorf v. State Farm Ins. Co., 2005 WI App 10, ¶1, 278 
Wis. 2d 354, 691 N.W.2d 882.  The court of appeals held that the 
phrase "to the insured" is implicit in sub. (5)(i)2. based on 
the context of the overall statutory scheme.  Id., ¶13.  In 
dissent, Judge Ralph Adam Fine contended that both sub. (5)(i)2. 
and the policy unambiguously allow for coverage limits to be 
reduced by any worker's compensation payment made, regardless of 
the recipient.  Id., ¶20 (Fine, J., dissenting).  We granted 
American Family's petition for review. 
II. STANDARD OF REVIEW 
 
¶9 
We review a decision on summary judgment using the 
same methodology as the circuit court.  Green Spring Farms v. 
Kersten, 136 Wis. 2d 304, 315, 401 N.W.2d 816 (1987).  Summary 
judgment is appropriate where the record demonstrates "that 
there is no genuine issue as to any material fact and that the 
moving party is entitled to judgment as a matter of law."  
Wis. Stat. § 802.08(2).  Since the facts are not in dispute, 
No. 2003AP3521 
6 
 
only questions of law remain.  Statutory interpretation and the 
interpretation of an insurance policy present questions of law 
that we review de novo.  Mau v. N.D. Ins. Reserve Fund, 2001 WI 
134, ¶¶12, 28, 248 Wis. 2d 1031, 637 N.W.2d 45. 
III. THE STATUTE 
¶10 We 
first 
examine 
Wis. Stat. § 632.32(5)(i)2. 
to 
determine whether it permits an insurer to reduce uninsured 
motorist limits by amounts paid by a worker's compensation 
carrier to the Fund.  If sub. (5)(i)2. does not permit reducing 
clauses to function in the manner American Family suggests, then 
the policy must conform to the statute and our inquiry ends.  
See Theis v. Midwest Sec. Ins. Co., 2000 WI 15, ¶13, 232 
Wis. 2d 749, 606 N.W.2d 162. 
¶11 It has often been said that the goal of statutory 
interpretation "is to discern and give effect to the intent of 
the legislature."  State v. Morford, 2004 WI 5, ¶21, 268 
Wis. 2d 300, 674 N.W.2d 349.  In State ex rel. Kalal v. Circuit 
Court for Dane County, 2004 WI 58, 271 Wis. 2d 633, 681 
N.W.2d 110, the court recognized and discussed the tension 
between 
"legislative 
intent" 
and 
"statutory 
meaning" 
and 
acknowledged that "legislative intent" is sometimes at odds with 
a methodology that gives primacy to "intrinsic sources of 
statutory meaning."  Id., ¶43. 
¶12 The debate over statutory interpretation will surely 
continue.  But this court adheres to the proposition that 
statutory interpretation begins with the language of the 
statute, and if the meaning there is plain, the inquiry 
No. 2003AP3521 
7 
 
ordinarily ends.  Id., ¶45.  In examining the statutory text, 
however, we emphasize that ascertaining plain meaning requires 
us to do more than focus on "a single, isolated sentence or 
portion of a sentence[.]"  Landis v. Physicians Ins. Co. of 
Wis., Inc., 2001 WI 86, ¶16, 245 Wis. 2d 1, 628 N.W.2d 893.  We 
are expected to look to "the role of the relevant language in 
the entire statute."  Id.; see Wis. Citizens Concerned for 
Cranes & Doves v. DNR, 2004 WI 40, ¶6, 270 Wis. 2d 318, 677 
N.W.2d 612.  Accordingly, we consider the context in which words 
appear, the structure of the statute, and the purpose of the 
statute where it is evident from the statutory text.  Kalal, 271 
Wis. 2d 633, ¶¶48, 49.   
¶13 There are three situations in which the court looks 
outside the statute.  First, if the meaning of a statute is 
ambiguous after considering all intrinsic sources, we look to 
extrinsic 
sources 
such 
as 
legislative 
history 
to 
find 
legislative intent.  Id., ¶50.  This methodology is thoroughly 
familiar.   
¶14 Second, if the meaning of the statute is plain, we 
sometimes look to legislative history to confirm the plain 
meaning.  Id., ¶51; Seider v. O'Connell, 2000 WI 76, ¶¶51-52, 
236 Wis. 2d 211, 612 N.W.2d 659.  Our purpose in doing this is 
merely to contribute to an informed explanation that will firm 
up statutory meaning. 
¶15 Third, if the meaning of the statute appears to be 
plain but that meaning produces absurd results, we may also 
consult legislative history.  The purpose in this situation is 
No. 2003AP3521 
8 
 
to verify that the legislature did not intend these unreasonable 
or unthinkable results.  See Green v. Bock Laundry Mach. Co, 490 
U.S. 504, 527 (1989) (Scalia, J., concurring);6 Kalal, 271 
Wis. 2d 633, ¶52 n.9; see also Public Citizen v. United States 
Dep't of Justice, 491 U.S. 440, 465 (1989) (invoking the Supreme 
Court's absurdity exception to the plain language of the 
statute); Robbins v. Chronister, 402 F.3d 1047, 1050 (10th Cir. 
2005) (collecting federal circuit court and Supreme Court cases 
applying the absurdity exception).  Because our purpose in these 
situations is grounded in open disbelief of what a statute 
appears to require, we are bound to limit our off-statute 
investigations to obvious aberrations. 
¶16 The parties sharply disagree over the meaning of 
Wis. Stat. § 632.32(5)(i)2.  American Family contends that sub. 
(5)(i)2. is plain and unambiguous.  American Family emphasizes 
that sub. (5)(i)2. allows a policy to reduce the limits for 
uninsured motorist coverage by "[a]mounts paid or payable under 
any worker's compensation law."  (Emphasis added.)  American 
Family asserts that because "any" worker's compensation law 
                                                 
6 In Green v. Bock Laundry Mach. Co., 490 U.S. 504, 527 
(1989), Justice Scalia explained in his concurrence: 
I think it entirely appropriate to consult all public 
materials, including the background of [the federal 
rule of evidence in question] and the legislative 
history of its adoption, to verify that what seems to 
us 
an 
unthinkable 
disposition . . . was 
indeed 
unthought 
of, 
and 
thus 
to 
justify 
a 
departure 
from . . . the 
ordinary 
meaning 
of 
the 
word 
"defendant" in the Rule. 
No. 2003AP3521 
9 
 
means 
"all" 
worker's 
compensation 
laws 
and 
because 
Wis. Stat. § 102.49(5)(b) is a worker's compensation law that 
requires worker's compensation benefits to be paid to the Fund, 
the statute permits uninsured motorist limits to be reduced by 
these payments.  According to American Family, this is the only 
reasonable 
interpretation 
of 
sub. 
(5)(i)2., 
because 
the 
interpretation of the Shiras and the court of appeals requires 
the phrase "to the insured" to be read into the statute. 
 
¶17 Conversely, 
the 
Shiras 
argue 
that 
Wis. Stat. § 632.32(5)(i)2. is ambiguous.  The ambiguity arises, 
they contend, because the statute is silent as to whom the 
worker's compensation benefits must be paid before uninsured 
motorist limits may be reduced.  The Shiras reason that sub. 
(5)(i)2. can mean that policy limits may be reduced when 
worker's compensation benefits are paid to either (1) anyone or 
(2) only 
an 
insured. 
 
The 
Shiras 
contend 
that because 
§ 632.32(4) 
mandates 
uninsured 
motorist 
coverage 
for 
the 
protection of the insured, the more reasonable inference is that 
worker's compensation benefits must be paid to the insured 
before uninsured motorist limits may be reduced. 
¶18 The court itself is divided as to whether the meaning 
of Wis. Stat. § 632.32(5)(i)2. is ambiguous or plain.  In Part 
III.A., Justices Bradley, Prosser, and Roggensack analyze why 
the statute is ambiguous in the context of the entire statutory 
scheme.7  In Part III.B., Justices Wilcox, Crooks, and Butler 
                                                 
7 Justices Bradley, Prosser, and Roggensack believe that the 
statute is ambiguous. 
No. 2003AP3521 
10 
 
analyze why the meaning of the statute is plain, but determine 
that the results that follow are so unreasonable or absurd that 
they require the plain meaning to be rejected.8  Our divergent 
views on whether Wis. Stat. § 632.32(5)(i)2. is ambiguous do not 
prevent us from coming together in Part III.C. to examine 
legislative history, legislative purpose, and public policy to 
discern legislative intent.  After examining both extrinsic and 
intrinsic sources, the court reaches the conclusion that 
Wis. Stat. § 632.32(5)(i)2. does not allow an insurer to reduce 
uninsured motorist coverage limits by worker's compensation 
payments made to the Fund. 
A. 
Wis. Stat. § 632.32(5)(i)2. Is Ambiguous 
¶19 A statute is not ambiguous simply because the parties, 
the circuit court, and the court of appeals disagree as to its 
meaning.  Bruno v. Milwaukee County, 2003 WI 28, ¶¶18, 21, 260 
Wis. 2d 633, 660 N.W.2d 656.  Rather, a statute is ambiguous "if 
it is capable of being understood by reasonably well-informed 
persons in two or more senses."  Kalal, 271 Wis. 2d 633, ¶47.  
Stated otherwise, a statute is ambiguous if the "statutory 
language reasonably gives rise to different meanings."  Id. 
(ellipsis omitted).  Though not dispositive, the fact that the 
circuit court and court of appeals reached contradictory 
interpretations, despite both courts concluding that the statute 
was clear, is indicative of ambiguity.  See Stockbridge Sch. 
                                                 
8 Justices Wilcox, Crooks, and Butler believe that the 
meaning of the statute is plain, but the results produced by the 
plain meaning are absurd. 
No. 2003AP3521 
11 
 
Dist. v. Dep't of Public Instruction Sch. Dist. Boundary Appeal 
Bd., 202 Wis. 2d 214, 222, 550 N.W.2d 96 (1996). 
¶20 Several 
years 
ago, 
this 
court 
held 
that 
Wis. Stat. § 632.32(5)(i) was unambiguous, see Dowhower v. West 
Bend Mutual Insurance Company, 2000 WI 73, ¶17, 236 Wis. 2d 113, 
613 N.W.2d 557, but that ruling was made in the context of a 
$25,000 payment to the insured from another insurance company.  
A statute that is unambiguous in one context may be ambiguous in 
another, Landis v. Physicians Insurance Company of Wisconsin, 
Inc., 2001 WI 86, ¶15, 245 Wis. 2d 1, 628 N.W.2d 893; Seider v. 
O'Connell, 2000 WI 76, ¶43, 236 Wis. 2d 211, 612 N.W.2d 659, 
because words cannot anticipate every possible fact situation. 
¶21 Sometimes, a statute is ambiguous based purely on its 
words.  State of Wis. Dep't of Corrections v. Schwarz, 2005 WI 
34, ¶14, 279 Wis. 2d 223, 693 N.W.2d 703.  At other times, 
ambiguity arises from "the words of the provision as they 
interact with and relate to other provisions in the statute[.]"  
Id.  Justices Bradley, Prosser, and Roggensack think this case 
presents the latter scenario and agree with the Shiras that 
Wis. Stat. § 632.32(5)(i)2. is reasonably susceptible to two 
different meanings.9   
¶22  The literal reading of Wis. Stat. § 632.32(5)(i)2. 
favored by American Family permits the conclusion that an 
                                                 
9 The three justices who think the statute is ambiguous are 
not oblivious to the absurd consequences that would follow the 
application of a 
plain 
reading of 
the statute.  
These 
consequences might render a plausible interpretation of the 
statute an unreasonable interpretation of the statute. 
No. 2003AP3521 
12 
 
insurer may reduce uninsured motorist limits by the amount of 
worker's 
compensation payments made 
to 
anyone. 
Subsection 
(5)(i)2. contains no qualifying language specifying to whom the 
payments must be made; payments could be made to the insured, to 
the Fund, or to anyone.   
¶23 On the other hand, when sub. (5)(i)2. is considered in 
the broader context of § 632.32(4) and (5)——which demonstrate an 
overarching purpose to protect Wisconsin citizens by requiring 
uninsured motorist coverage——one is inclined to believe that 
there is an implicit condition that the insurer may reduce 
uninsured motorist benefits only by the amount of worker's 
compensation payments made to or on behalf of the insured. 
¶24 The 
reason 
to 
doubt 
a 
literal 
meaning 
of 
§ 632.32(5)(i)2. is that it clashes with related statutes.  
Wisconsin Stat. § 632.32(4) requires that every motor vehicle 
insurance policy include uninsured motorist coverage.  Clark v. 
Am. Family Mut. Ins. Co., 218 Wis. 2d 169, 173, 577 N.W.2d 790 
(1998).  The purpose of uninsured motorist coverage is explained 
in the text of sub. (4).  The purpose is to protect "persons 
injured who are legally entitled to recover damages from owners 
or operators of uninsured motor vehicles because of bodily 
injury, 
sickness 
or 
disease, 
including 
death 
resulting 
therefrom[.]"  § 632.32(4) (emphasis added).  Uninsured motorist 
coverage seeks "to compensate an insured who is the victim of an 
uninsured motorist's negligence to the same extent as if the 
uninsured motorist were insured."  E.g., Hull v. State Farm Mut. 
Auto. Ins. Co., 222 Wis. 2d 627, 644, 586 N.W.2d 863 (1998) 
No. 2003AP3521 
13 
 
(quoting Clark, 218 Wis. 2d at 178) (internal quotation marks 
omitted). 
 
In 
other 
words, 
uninsured 
motorist 
coverage 
"substitutes for insurance that the tortfeasor should have had."  
Id. at 644-45. 
¶25 To promote this objective, uninsured motorist coverage 
is personal and portable.  St. Paul Mercury Ins. Co. v. Zastrow, 
166 Wis. 2d 423, 435, 437, 480 N.W.2d 8 (1992) (superseded by 
statute on other grounds).  The insured purchases uninsured 
motorist coverage for his own benefit and protection and it 
follows him wherever he may go, be it "in an unowned vehicle, on 
a motorcycle, on a bicycle, whether afoot or on horseback or 
even on a pogo stick."  Welch v. State Farm Mut. Auto. Ins. Co., 
122 Wis. 2d 172, 181, 361 N.W.2d 680 (1985) (superseded by 
statute on other grounds).  Thus, the purpose of uninsured 
motorist 
coverage, 
expressly 
stated 
in 
Wis. Stat. § 632.32(4)(a), is to protect insureds injured in 
motor vehicle accidents. 
¶26 In 1995 the legislature authorized reducing clauses in 
1995 Wis. Act 21.  This legislation permitted insurers to offer 
a particular type of uninsured and underinsured motorist 
coverage.  See Dowhower, 236 Wis. 2d 113.  This type of coverage 
had the effect of reducing the total amount available to 
compensate an injured insured, but by limiting the insurer's 
exposure, it helped keep uninsured motorist premiums affordable 
and encouraged insureds to purchase a predetermined, fixed level 
of insurance coverage they thought they needed rather than 
No. 2003AP3521 
14 
 
having to rely on the unpredictable liability coverage of 
tortfeasors.   
¶27 Wisconsin Stat. § 632.32(5)(i) reflects a tension 
between assuring a predetermined, fixed level of insurance 
coverage and minimizing the exposure of insurers.  When 
confronted with dueling statutory purposes, the court must 
attempt to harmonize them, if possible, so as to give effect to 
both purposes, while advancing the leading purpose underlying 
the law.  See Schwarz, 279 Wis. 2d 223, ¶28; Beard v. Lee 
Enter., Inc., 225 Wis. 2d 1, 15, 591 N.W.2d 156 (1999).  The 
consistent leading purpose of this statutory scheme is to 
require that insurers provide uninsured motorist coverage for 
the protection of their insureds, Wis. Stat. § 632.32(4); the 
subordinate purpose is to minimize the insurers' exposure by 
allowing insurers to limit the protection offered by uninsured 
motorist coverage to a fixed, predetermined amount that takes 
into account payments from specified sources, § 632.32(5)(i). 
¶28 Though sub. (5)(i) reduces the protection afforded 
insureds by uninsured motorist coverage, it does not nullify 
that 
protection 
altogether. 
 
American 
Family's 
literal 
interpretation could defeat the purpose of sub. (4) by allowing 
insureds to be left without any uninsured motorist coverage 
despite having paid premiums for it.  Allowing American Family 
to reduce its uninsured motorist limits by amounts paid by a 
worker's compensation carrier to the Fund would deny Scott and 
his parents a predetermined, fixed level of coverage, in 
contravention of the underlying statutory purpose. 
No. 2003AP3521 
15 
 
 
¶29 In view of this conflict, Justices Bradley, Prosser, 
and Roggensack conclude that Wis. Stat. § 632.32(5)(i)2. is 
ambiguous, and examine legislative history and public policy in 
Part III.C. to determine which of the two interpretations is 
more reasonable.  See Kalal, 271 Wis. 2d 633, ¶50. 
B. 
The Meaning of Wis. Stat. § 632.32(5)(i)2. Is Plain but 
Leads to Absurd Results 
¶30 An alternative interpretation, which Justices Wilcox, 
Crooks, and Butler favor, may be stated as follows: There is no 
ambiguity in Wis. Stat. § 632.32(5)(i)2.  The statute says that 
policy limits may be reduced by "amounts paid or payable under 
any worker's compensation law."  The clause "amounts paid or 
payable" is not qualified and unambiguously brings within its 
scope payments made to the insured or to any other person or 
entity, provided that the payment was made under any worker's 
compensation law. 
¶31 The parties agree that Scott's worker's compensation 
insurance death benefit was paid to the Fund "under the worker's 
compensation law,"  Wis. Stat. § 102.49(5)(b).  They dispute, 
however, whether the phrase "amounts paid or payable" should be 
qualified by the words "to the insured," as the Shiras argue.  
Since that limiting qualifier is not present in the text of the 
statute, the plain meaning of § 632.32(5)(i)2. allows policy 
limits to be reduced regardless of to whom worker's compensation 
payments are made.  Therefore, American Family is correct that 
the words of the statute are clear and do not reasonably give 
rise to different meanings.  See Kalal, 271 Wis. 2d 633, ¶47.  
No. 2003AP3521 
16 
 
¶32 Although the meaning of the statute appears to be 
plain, a literal application of the language would be absurd.  
As a general rule, courts apply the ordinary and accepted 
meaning of statutory language, unless it produces an absurd 
result.  Seider, 236 Wis. 2d 211, ¶32.  Because a literal 
application of Wis. Stat. § 632.32(5)(i)2. would produce an 
absurd and unreasonable result in certain situations, Justices 
Wilcox, Crooks, and Butler construe the statute to avoid that 
result.  State v. Delaney, 2003 WI 9, ¶15, 259 Wis.2d 77, 658 
N.W.2d 416. 
¶33 To understand the absurdity that flows from an 
interpretation that would allow policy limits to be reduced by 
payments to the Fund, some background on the Wisconsin Worker's 
Compensation Act (WCA) is necessary. 
¶34 The Fund creates a source of worker's compensation 
benefits for certain cases in addition to the benefits the WCA 
requires an employer or worker's compensation carrier to pay to 
an employee who is injured or who dies in the course of his 
employment.  See Wis. Stat. §§ 102.44, 102.47, 102.49, 102.59, 
102.65, and 102.66.  For example, the Fund distributes (1) 
worker's 
compensation 
benefits 
to 
claimants 
with 
certain 
meritorious 
claims 
whose 
claims 
have 
become 
time-barred, 
§ 102.66(1); and (2) an additional death benefit to the minor 
children of an employee who dies in the course of employment, 
§ 102.49(1). 
¶35 The Fund is financed by payments from employers or 
worker's compensation carriers.  The payments are required 
No. 2003AP3521 
17 
 
anytime 
certain 
specified 
workplace 
injuries 
occur.  
Wis. Stat. §§ 102.49(5) and 102.59(2).  For example, payments 
must be made to the Fund (1) anytime an employee dies while in 
the course of employment, § 102.49(5)(a) ($5000 payment);10 (2) 
anytime an employee dies in the course of employment and leaves 
no dependents, § 102.49(5)(b) (the entire amount of the death 
benefit); (3) anytime an employee dies and is survived by 
partial dependents, § 102.49(5)(c) (the difference between the 
death benefit to a wholly dependent survivor and a partially 
dependent survivor); and (4) anytime an employee suffers "the 
total impairment of a hand, arm, foot, leg or eye," § 102.59(2) 
($7000 payment).11 
¶36 The Fund reflects a legislatively crafted scheme to 
impose 
additional 
burdens 
upon 
employers 
or 
worker's 
compensation carriers when certain workplace injuries occur and 
to withhold death benefits from employees who die without 
dependents, so that this money can be used to pay dependent 
children of deceased employees and injured employees who would 
otherwise be undercompensated. 
¶37 The administration of the Fund is consistent with the 
overall purpose of the WCA.  The fundamental purpose of the WCA 
is to compensate injured employees.  State v. LIRC, 136 
                                                 
10 This amount is increased to $10,000 in the 2003-04 
Wisconsin Statutes.  2005 Wisconsin Act 172 increases the amount 
to $20,000. 
11 This amount is increased to $10,000 in the 2003-04 
Wisconsin Statutes.  2005 Wisconsin Act 172 increases the amount 
to $20,000. 
No. 2003AP3521 
18 
 
Wis. 2d 281, 288, 401 N.W.2d 585 (1987); Duvick v. Indus. Comm'n 
of Wis., 22 Wis. 2d 155, 161, 125 N.W.2d 356 (1963).  The WCA 
ensures employees "smaller but more certain recoveries than 
might be available in tort actions, while employers are freed 
from the risk of large and unpredictable damage awards."  Byers 
v. 
LIRC, 
208 
Wis. 2d 388, 
396, 
561 
N.W.2d 678 
(1997).  
Accordingly, the WCA balances the interests of employers and 
employees 
by 
ensuring 
a 
recovery 
sufficient 
to 
meet 
an 
employee's economic damages while keeping the expense of funding 
worker's compensation manageable for employers. 
¶38 Insofar as tort law and uninsured motorist coverage 
compensate an injured person for his or her economic damages, 
they overlap the WCA.  Accordingly, in the majority of cases, 
the legislature's decision to link the operation of uninsured 
motorist reducing clauses to recovery of worker's compensation 
benefits has the reasonable purpose of preventing double 
recovery.  However, when payments are made to the Fund instead 
of a deceased employee, there cannot be double recovery.  It is 
hard to think of a reason for allowing uninsured motorist limits 
to be reduced by worker's compensation benefits paid to the Fund 
that is consistent with the purposes of the WCA and uninsured 
motorist coverage, both of which seek to protect injured 
persons. 
¶39 The absurdity that results from American Family's 
interpretation of the statute is evident in the following 
examples.  Many of the employees who die from an employment-
related injury involving an uninsured or underinsured motor 
No. 2003AP3521 
19 
 
vehicle will have uninsured motorist and underinsured motorist 
coverage.  In every case in which a worker's compensation death 
benefit is available for the employee's death, uninsured and 
underinsured motorist policy limits would be reduced by the 
amount of the death benefit actually received by the employee's 
dependents or by the amount deposited with the Fund, plus $5000 
(now, $20,000).  According to the logic of American Family's 
position, coverage limits would be reduced by $5000 (now, 
$20,000) in every case, regardless of whether a decedent's 
dependents were made whole.  See Wis. Stat. § 102.49(5)(a).  
Thus, a reduction of $5000 (now $20,000) would mean that even 
when an insured's damages exceed his or her uninsured or 
underinsured motorist limits, the amount actually recovered from 
all sources would never equal the limits of his uninsured or 
underinsured motorist coverage.  There is no plausible reason 
why the legislature would have denied dependents this money. 
 
¶40 Similarly 
absurd 
is 
the 
suggestion 
that 
the 
legislature intended to reduce by $7000 (now, $20,000) the 
uninsured motorist and underinsured motorist limits available to 
an 
insured 
who 
has 
lost 
an 
arm, 
leg, 
or 
eye. 
 
See 
Wis. Stat. § 102.59(2).  At least three members of the court 
cannot imagine that in situations where an insured has already 
suffered the loss of a limb or an eye in an automobile accident, 
the legislature intended to permit insurers to impose a second 
loss of $7000 (now, $20,000) upon the insured in the form of 
reduced uninsured motorist coverage. 
No. 2003AP3521 
20 
 
 
¶41 Other results of American Family's interpretation 
illustrate 
its 
absurdity. 
 
Wisconsin 
Stat. § 632.32(4)(a) 
requires insurers to provide uninsured motorist coverage "in 
limits of at least $25,000 per person" "[f]or the protection of 
persons injured[.]"  Since the enactment of 2005 Wisconsin Act 
172, which increases the amount of payments to the Fund to 
$20,000 for the loss of a limb or an eye, a literal 
interpretation 
of 
§ 632.32(5)(i)2. 
would 
mean 
that 
the 
legislature 
had 
rendered 
the 
protection 
afforded 
by 
§ 632.32(4)(a) virtually illusory in some circumstances. 
¶42 Moreover, an insured's recovery under his uninsured 
motorist coverage would depend entirely on fate.  That is, if 
the insured were driving down a local highway on Wednesday 
morning during the course of his employment, he would receive 
$20,000 less for losing a leg when he was hit by an uninsured 
motor vehicle than if he had suffered the same injury on Sunday 
coming home from church.  This result is contrary to our holding 
that uninsured and underinsured motorist coverage provides a 
predetermined, fixed level of coverage.  See Welin v. Am. Family 
No. 2003AP3521 
21 
 
Ins. Co., 2006 WI 81, ¶¶46, 49-53, ___ Wis. 2d ___, ___ 
N.W.2d ___ (discussing cases).12 
¶43 These are some of the absurd results of a literal 
interpretation of Wis. Stat. § 632.32(5)(i)2.  Because this 
literal interpretation produces absurd results and defies both 
common sense and the fundamental purpose of the WCA and 
uninsured motorist coverage, Justices Wilcox, Crooks, and Butler 
reject it unless extrinsic sources reveal the legislature 
intended these consequences.  See Green, 490 U.S. at 527 
(Scalia, J., concurring). 
C. 
Legislative History and Public Policy 
¶44 Upon review of legislative history and public policy, 
the court concludes that the more reasonable interpretation of 
the statute is that payments to the Fund cannot reduce uninsured 
motorist coverage limits.  As we see it, the statute authorizes 
reductions in coverage limits by the total amount of worker's 
compensation payments made to or on behalf of the insured, the 
insured's heirs, or the insured's estate. 
1. 
Legislative History 
                                                 
12 This conclusion is consistent with our decision in Welin 
v. American Family Insurance Company, 2006 WI 81, ¶8, __ 
Wis. 2d __, __ N.W.2d __.  In Welin we held that an insurer 
could not reduce the limits of an underinsured motorist policy 
pursuant to Wis. Stat. § 632.32(5)(i)1. without regard to the 
amount 
the 
injured 
person 
actually 
received 
from 
the 
tortfeasor's insurer.  Id.  In reaching this conclusion, we 
explained that the underlying purpose of the underinsured 
motorist statute, § 632.32(4m), is to ensure that insureds 
receive "a predetermined, fixed level of coverage for an 
accident from a combination of the tortfeasor's insurance and 
the UIM insurance."  Id., ¶52. 
No. 2003AP3521 
22 
 
¶45 We return to history.  Uninsured motorist coverage 
dates back to the mid-1950s.  Helen Freedman, Uninsured Motorist 
Developments in Wisconsin, 30 The Gavel 3 (Dec. 1969).  The 
legislature first required insurers to offer this coverage 
beginning 
in 
1966. 
 
See 
Wis. Stat. § 204.30(5) 
(1967-68) 
(created by ch. 486, Laws of 1965).   
¶46 Reducing clauses have been part of the insurance 
landscape during most of this period.  Nicholson v. Home 
Insurance Company, 137 Wis. 2d 581, 594-601, 405 N.W.2d 327 
(1987), contains a thorough history of reducing clauses up to 
1987.  We will not repeat that history in its entirety, but 
merely summarize the essentials to lay the groundwork for the 
developments since Nicholson. 
¶47 The take-away points from Nicholson are as follows.  
Before 
the 
legislature 
made 
uninsured 
motorist 
coverage 
mandatory in 1971, this court upheld reducing clauses that 
reduced uninsured motorist limits by amounts the insured 
received from any other source.  E.g., Scherr v. Drobac, 53 
Wis. 2d 308, 310-11, 193 N.W.2d 14 (1972); Leatherman v. Am. 
Family Mut. Ins. Co., 52 Wis. 2d 644, 650-51, 190 N.W.2d 904 
(1971).  In response to Drobac and Leatherman, the legislature 
prohibited reducing clauses.  See ch. 72, Laws of 1973 (then-
codified at Wis. Stat. § 204.30(5)(a) (1973-74)).  Then the 
legislature amended § 204.30(5)(a) (1973-74) and renumbered it 
as Wis. Stat. § 632.32(3)(a) (1975-76) in 1975.  See ch. 375, 
Laws of 1975.  This legislation removed the express prohibition 
on reducing clauses enacted in 1973 without actually approving 
No. 2003AP3521 
23 
 
their use.  Nicholson, 137 Wis. 2d at 599; see also Legislative 
Council Committee Comment to § 632.32 ch. 375, Laws of 1975.  In 
1987 this court refused to enforce reducing clauses because, we 
said, they would thwart the purpose of uninsured motorist 
coverage "of placing the injured party in the same position that 
she would have been in had the uninsured motorist been 
insured[.]"  Nicholson, 137 Wis. 2d at 592. 
¶48 Thereafter, until 1995 Wisconsin Act 21, this court 
consistently struck down reducing clauses as contrary to the 
requirement that motor 
vehicle insurance policies include 
uninsured motorist coverage.  E.g., Kuhn v. Allstate Ins. Co., 
193 Wis. 2d 50, 61, 532 N.W.2d 124 (1995); United Fire & Cas. 
Co. v. Kleppe, 174 Wis. 2d 637, 643, 498 N.W.2d 226 (1993).  A 
review of these cases demonstrates that since the first case to 
review an uninsured motorist reducing clause, Leatherman, 52 
Wis. 2d 644, in every case the insurer has attempted to reduce 
uninsured motorist limits because of a payment to the insured.  
Of particular relevance to this case is Kleppe, in which we held 
unenforceable 
a 
reducing 
clause 
that 
would 
have 
reduced 
uninsured motorist limits by the amount of worker's compensation 
benefits received by the plaintiff.  Kleppe, 174 Wis. 2d at 643.  
In Kleppe, we based our decision on the fact that enforcing the 
reducing clause would have left the plaintiff worse off than if 
the uninsured motorist had been insured.  Id. 
¶49 1995 Wisconsin Act 21 was intended to overturn the 
Nicholson/Kleppe line of cases that refused to enforce reducing 
No. 2003AP3521 
24 
 
clauses in the context of uninsured motorist coverage.  The 
analysis from the Legislative Reference Bureau stated: 
 
The bill also permits motor vehicle insurance 
policies to reduce the limits payable under the policy 
for uninsured and underinsured motorist coverage by 
payments received from other sources.  Payments for 
bodily injury or death may be reduced . . . by amounts 
paid 
or 
payable 
under 
a 
worker's 
compensation 
law . . . . 
See 1995 Senate Bill 6, Analysis by the Legislative Reference 
Bureau (discussing proposed Wis. Stat. § 632.32(5)(i)). 
¶50 The source of 1995 Wisconsin Act 21 was 1995 Senate 
Bill 6.  1995 Senate Bill 6 was introduced by Senator Joanne 
Huelsman.  It was based in part on her 1993 Senate Bill 135.  
Senator Huelsman sent an early draft of the 1993 bill to the 
Wisconsin Insurance Alliance for comment.  The Insurance 
Alliance replied in a letter dated January 12, 1993, from its 
president, Eric Englund.  Englund wrote: 
(1) Amendments to Draft: We would like to amend 
the draft to include a provision permitting insurers 
to include language in their policies that would 
reduce the underinsured (UIM) limit shown in the 
policy by the total amount of other limits providing 
coverage to the owner of the underinsured vehicle.  
1991 SB 105 did not include similar language.  We 
suggest language inserted as subsec. (h) and reading 
as follows: 
 
(h) Notwithstanding s. 631.43(1), a policy 
may provide that the limit under the policy for 
underinsured motorist coverage for bodily injury or 
death resulting from any one accident will be reduced 
by all of the following: 
 
1. 
Amounts paid by or on behalf of persons 
or organizations who may be legally responsible. 
No. 2003AP3521 
25 
 
 
2. 
Amounts 
paid 
or 
payable 
under 
any 
worker's compensation law. 
 
3. 
Amounts 
paid 
or 
payable 
under 
any 
disability benefits laws. 
¶51 It should be noted that Englund's letter makes 
reference only to reductions in underinsured motorist coverage.  
Reductions in uninsured motorist coverage came in a later draft.  
Englund's letter also references Wis. Stat. § 631.43(1) (1991-
92), which at that time read in part: 
When 2 or more policies promise to indemnify an 
insured against the same loss, no "other insurance" 
provisions of the policy may reduce the aggregate 
protection of the insured below the lesser of the 
actual insured loss suffered by the insured or the 
total indemnification promised by the policies if 
there were no "other insurance" provisions.  The 
policies may by their terms define the extent to which 
each is primary and each excess, but if the policies 
contain inconsistent terms on that point, the insurers 
shall be jointly and severally liable to the insured 
on any coverage where the terms are inconsistent, each 
to the full amount of the coverage provided. 
 
¶52 Current Wis. Stat. § 631.43(3) provides: "Subsection 1 
does not affect the rights of insurers to exclude, limit or 
reduce coverage under s. 632.32(5)(b), (e), or (f) to (j)."  
This includes paragraph (i). 
 
¶53 Despite having added "uninsured" motorist coverage to 
the proposal suggested by the Wisconsin Insurance Alliance, 
having changed the word "limit" to "limits," having changed the 
text of § 632.32(5)(i)1., and having excepted the application of 
§ 631.43(1) to § 632.32(5)(i), Senator Huelsman still submitted 
legislation, in two consecutive sessions, with an analysis that 
used 
the 
phrase 
"reduce 
the 
limits 
payable 
under 
the 
No. 2003AP3521 
26 
 
policy . . . by 
payments 
received 
from 
other 
sources."  
(Emphasis added.)  In addition, paragraph (i) contains language 
not suggested by the Insurance Alliance: "A policy may provide 
that the limits . . . shall be reduced by any of the following 
that apply: . . . ."  The words "that apply" are a protection 
against payments that do not apply and thus do not reduce 
coverage. 
¶54 Nothing in the legislative history demonstrates that 
the legislature contemplated or intended that uninsured motorist 
limits should be reduced by payments to an entity unrelated to 
the insured (except a provider such as a hospital which stands 
in the place of the insured).  Often, silence in legislative 
history is merely the result of an incomplete record, and 
therefore, not meaningful.  Where, however, a party proffers an 
interpretation that marks a radical departure from prior law or 
produces an unusual, counter-intuitive, or unreasonable result, 
silence can be significant.  See Strenke v. Hogner, 2005 WI 25, 
¶50, 
279 
Wis. 2d 52, 
694 
N.W.2d 296. 
 
American 
Family's 
interpretation would constitute a marked departure from prior 
law and would produce absurd results.  
¶55 Prior to 1995——indeed prior to this very case——no 
Wisconsin case discussed the possibility that uninsured motorist 
limits could be reduced by payment of worker's compensation 
benefits to unrelated third parties such as the Fund.  Moreover, 
in none of the leading treatises on uninsured motorist and 
underinsured motorist insurance is there even a hint that 
uninsured 
motorist 
limits 
could 
be 
reduced 
by 
worker's 
No. 2003AP3521 
27 
 
compensation payments made to anyone other than the insured or 
to someone on behalf of the insured, the insured's heirs, or the 
insured's estate.  See generally, 2 Irvin Schermer & William 
Schermer, Automobile Liability Insurance §§ 28:3 to 28:8 (4th 
ed. 2004); 1 Alan Widiss, Uninsured and Underinsured Motorist 
Insurance §§ 14.3, 41.10 (Revised 2nd ed. 1999); 3 Matthew 
Bender & Co., Inc., No-Fault and Uninsured Motorist Automobile 
Insurance § 31.20 (2003); 12 Lee Russ & Thomas Segalla, Couch on 
Insurance §§ 171:37 to 171:43.  Rather, a review of these 
treatises reveals that the application of a setoff or reducing 
clause presumes some payment to the insured, which in turn 
reduces the amount of uninsured motorist benefits owed to the 
insured.  Because the result proposed by American Family is not 
suggested by any case or secondary source that we have been able 
to find, and because American Family has not directed our 
attention to any such source, we think it extraordinarily 
unlikely that the legislature contemplated the result sought by 
the insurer. 
¶56 We are mindful of the instruction that a court should 
consider the "mischief sought to be remedied" by a statute when 
interpreting the statute.  See Heyde Co., Inc. v. Dove 
Healthcare, LLC, 2002 WI 131, ¶15 n.3, 258 Wis. 2d 28, 654 
N.W.2d 830.  We think it telling that 1995 Wisconsin Act 21 was 
intended to "remedy" the refusal of Wisconsin courts to allow 
insurers to reduce uninsured motorist limits by amounts received 
by an injured person from other sources.  See Kleppe, 174 
Wis. 2d at 642.  We think the legislature responded to a 
No. 2003AP3521 
28 
 
discrete series of cases and did not intend to permit insurers 
to reduce uninsured motorist limits by worker's compensation 
benefits paid to the Fund. 
¶57 This 
result 
is 
completely 
harmonious 
with 
the 
legislative goal that all motor vehicle policies include 
uninsured motorist coverage to protect persons injured in 
automobile accidents "who are legally entitled to recover 
damages from owners or operators of uninsured motor vehicles." 
2. 
Public Policy of the Worker's Compensation Statutes 
 
¶58 American Family argues that allowing insurers to 
reduce uninsured motorist limits in this situation is consistent 
with the public policy reflected in Wis. Stat. Chapter 102 
("Worker's 
Compensation"). 
 
According 
to American Family, 
Chapter 102 embodies a policy of denying recovery to claimants 
whose relationships to an injured person are remote.  American 
Family 
notes 
this 
policy 
decision 
is 
embodied 
in 
Wis. Stat. §§ 102.48, 102.49, and 102.51, which limit a death 
benefit to dependents of the deceased.  Therefore, American 
Family concludes, it is reasonable that the legislature would 
have intended that people like the Shiras, who were not 
financially dependent upon Scott, be denied uninsured motorist 
coverage. 
¶59 While American Family is correct that the Shiras do 
not qualify as dependents under the WCA, the policies underlying 
the WCA and tort law differ.  The WCA reflects a decision to 
limit the amounts recovered by injured employees to avoid 
imposing burdensome expenses upon employers.  See Threshermens 
No. 2003AP3521 
29 
 
Mut. Ins. Co. v. Gross, 217 Wis. 2d 451, 459-60, 577 N.W.2d 335 
(1998) (explaining the compromise reached by the legislature to 
balance the interests of employers and employees); id. at 483 
(Bradley, J., dissenting) (recounting the history of the 
compromise).  The WCA ensures a minimal safety net for those 
financially dependent upon a deceased or injured employee by 
causing an employee to relinquish all common law remedies in 
exchange for the abrogation of the employer's defenses.  See 
Gross, 217 Wis. 2d at 460, 469 n.7.13  
¶60 Tort law offers more than a minimal financial safety 
net.  The purpose of tort law is to make an injured person 
whole.  Though an insurer's potential obligation to pay under an 
uninsured motorist policy arises by contract, the insured's 
actual recovery is affected by common law remedies and common 
law defenses applicable in a tort action for negligence.  See 
State Farm Mut. Auto. Ins. Co. v. Gillette, 2002 WI 31, ¶¶43-48, 
68, 251 Wis. 2d 561, 641 N.W.2d 662.  The legislature has not 
imposed a compromise between insureds and uninsured motorist 
insurers that limits the recovery of insureds in exchange for 
                                                 
13 Although Gross recognized that pain and suffering is a 
factor in the determination of the level of disability in a WCA 
award, it did not impose any new liability on the employer or 
insurer 
for 
damages 
for 
general 
pain 
and 
suffering.  
Threshermens Mut. Ins. Co. v. Gross, 217 Wis. 2d 451, 460, 577 
N.W.2d 335 (1998).  Furthermore, the primary holding of the case 
(allowing employers or insurers to make claims against a third 
party for pain and suffering sustained by the injured party) did 
not change the relevant fundamental feature of the WCA: injured 
employees cannot make claims against their employer for pain and 
suffering that does not interfere with earning capacity.  Id. at 
469 n.7. 
No. 2003AP3521 
30 
 
depriving 
insurers 
of 
common 
law 
defenses 
available 
to 
tortfeasors.  Cf. id., ¶68.  Accordingly, we conclude the policy 
considerations at play in the WCA are not present here and do 
not preclude the Shiras from recovering under Scott's policy. 
¶61 In 
addition, 
American 
Family 
suggests 
that 
our 
decision should adhere to the analysis in Seider.  In Seider we 
considered whether the Office of the Commissioner of Insurance 
(OCI) exceeded its authority in adopting an administrative rule 
interpreting the valued policy law, Wis. Stat. § 632.05(2).  The 
valued policy law provides that anytime "real property that is 
owned and occupied by the insured primarily as a dwelling is 
wholly destroyed, . . . the amount of the loss shall be taken 
conclusively to be the policy limits of the policy insuring the 
property."  § 632.05(2).  The OCI promulgated an administrative 
rule that defined "dwelling" to exclude "real property any part 
of which is used for commercial (non-dwelling) purposes other 
than on an incidental basis . . . ."  Wis. Admin. Code § INS 
4.01(2)(e) (June, 1999).  We invalidated the administrative rule 
because its restrictive definition of dwelling contradicted the 
plain and unambiguous meaning of "dwelling" in § 632.05(2).  
Seider, 236 Wis. 2d 211, ¶6.  
 
¶62 Seider does not control this case.  Unlike in Seider, 
where the statute was unambiguous, Wis. Stat. § 632.32(5)(i)2. 
is either ambiguous when applied to the facts of this case or 
its plain meaning produces absurd results.  Hence, this court 
has a duty to clarify the ambiguity or look beyond the plain 
meaning and state definitively what the law is. 
No. 2003AP3521 
31 
 
IV. CONCLUSION 
 
¶63 We conclude that Wis. Stat. § 632.32(5)(i)2. does not 
allow an insurer to reduce uninsured motorist policy limits by 
worker's compensation payments that are not made to or on the 
behalf of the insured, the insured's heirs, or the insured's 
estate.  Accordingly, we affirm the court of appeals and hold 
that American Family cannot reduce its uninsured motorist policy 
limits by worker's compensation payments made to the Fund. 
By the Court.—The decision of the court of appeals is 
affirmed.  
 
 
 
No.  2003AP3521.ssa 
 
1 
 
 
¶64 SHIRLEY S. ABRAHAMSON, C.J.   (concurring).  I agree 
with 
the 
majority 
opinion 
that 
under 
Wis. 
Stat. 
§ 632.32(5)(i)2., uninsured motorist policy limits may not be 
reduced by worker's compensation payments that are not made to 
or on behalf of the insured, the insured's heirs, or the 
insured's estate.1   
¶65 I write separately to point out that the majority 
opinion demonstrates the futility of labeling a statute as 
ambiguous or unambiguous as a means of statutory interpretation 
instead of just determining what a statute means.   
¶66 The majority opinion states that Justices Ann Walsh 
Bradley, David T. Prosser, and Patience D. Roggensack conclude 
that Wis. Stat. § 632.32(5)(i)2. is ambiguous and that Justices 
Jon P. Wilcox, N. Patrick Crooks, and Louis B. Butler conclude 
that the statute is unambiguous.2  I join neither camp.   
¶67 This opinion demonstrates what I have written numerous 
times: The ambiguous/unambiguous, literal, plain meaning debate 
is 
a 
word 
game. 
 
The 
characterizations 
of 
"ambiguous," 
"unambiguous," "literal," and "plain meaning" are in the eyes of 
                                                 
1 Majority op., ¶2. 
2 Majority op., ¶18, n.7, 8. 
No.  2003AP3521.ssa 
 
2 
 
the beholder and appear to be conclusory labels a court pins on 
a statute.3   
                                                 
3 See, e.g., State ex rel. Kalal v. Circuit Court for Dane 
County, 2004 WI 58, ¶63, 271 Wis. 2d 633, 681 N.W.2d 110 
(Abrahamson, C.J., concurring) ("I have criticized this approach 
to plain meaning, ambiguity, and legislative history before.  
Language is often ambiguous; the distinction between 'plain' and 
'ambiguous' is in the eye of the beholder; and both words too 
often are conclusory labels a court pins on a statute, making 
its decision appear result-oriented." (footnotes omitted)); 
State v. Peters, 2003 WI 88, ¶28, 263 Wis. 2d 475, 665 
N.W.2d 171 (Abrahamson, C.J., concurring) (discussing fact that 
when the court determines a statute is unambiguous, it will use 
some canons of statutory construction, but not others); id., ¶40 
(Bablitch, J., concurring) ("What is plain to one may be 
ambiguous to another.  If good evidence as to legislative intent 
is present, why not use it?"); Fox v. Catholic Knights Ins. 
Soc'y, 2003 WI 87, ¶43, 263 Wis. 2d 207, 655 N.W.2d 181 
(Abrahamson, C.J., concurring) ("[T]his is another case in which 
the court mouths the exclusive plain meaning rule and then 
properly looks beyond the 'plain language' of the statute 
without finding that the statutory language is ambiguous." 
(footnote 
omitted)); 
id., 
¶53 
(Bablitch, 
J., 
concurring) 
(advocating the use of any useful and available information 
regarding legislative intent); State v. Byers, 2003 WI 86, ¶¶46-
47, 
263 
Wis.2d 
113, 
665 
N.W.2d 
729 
(Abrahamson, 
C.J., 
concurring) ("Even a casual observer of the Wisconsin cases 
would, without fear of being contradicted, summarize the case 
law 
as 
adopting 
inconsistent 
approaches 
to 
statutory 
interpretation."); State v. Delaney, 2003 WI 9, ¶38, 259 
Wis. 2d 77, 
658 
N.W.2d 416 
(Abrahamson, 
C.J., 
dissenting) 
("Rules of statutory interpretation are designed to help courts 
discern the intent of the legislature, not to serve as blinders.  
In this case, the majority opinion uses the plain language rule 
to shield its eyes from the legislative intent to exclude motor 
vehicle offenses from consideration both as a predicate offense 
and a present offense under the habitual offender statute."); 
State v. Sample, 215 Wis. 2d 487, 510, 573 N.W.2d 187 (1998) 
(Abrahamson, C.J., concurring) (advocating a holistic approach 
to statutory interpretation and observing that "[b]y using this 
approach to statutory interpretation, judges can acknowledge and 
deal with interpretive problems that arise from the inherent 
ambiguity of language as well as the limits of our linguistic 
capabilities."); City of Madison v. Town of Fitchburg, 112 
Wis. 2d 224, 236, 332 N.W.2d 782 (1983) ("This court has 
consistently stated that the spirit or intention of a statute 
No.  2003AP3521.ssa 
 
3 
 
¶68 The majority opinion explains on the one hand that "a 
statute is ambiguous 'if it is capable of being understood by 
reasonably well-informed persons in two or more senses.'"4  On 
the other hand, the majority opinion also explains that a 
"statute is not ambiguous simply because the parties, the 
circuit court, and the court of appeals disagree as to its 
meaning."5  What the opinion does not tell us is which members of 
                                                                                                                                                             
should govern over the literal or technical meaning of the 
language used."); City of Madison v. Town of Fitchburg, 112 
Wis. 2d 224, 
244, 
332 
N.W.2d 782 
(1983) 
(Abrahamson, 
J., 
dissenting) ("[T]his court may, contrary to the plain meaning 
rule, look outside the statute to see if there is persuasive 
evidence of a clear legislative intention different from that to 
which an ordinary reading of the plain words  of the statute 
would lead . . . ."); see also Ronald Dworkin, Law's Empire 
(1986) (focusing on the entire history of a statute and how it 
fits into the current legislative scheme); Richard A. Posner, 
The Problems of Jurisprudence (1990) (placing weight on the pre-
enactment history of a statute); William N. Eskridge, Jr. & 
Philip 
P. 
Frickey, 
Statutory 
Interpretation 
as 
Practical 
Reasoning, 42 Stan. L. Rev. 321 (1990) (urging consideration of 
a broad range of textual, historical, and other evidence in 
interpreting 
statutes); 
Richard 
A. 
Posner, 
Statutory 
Interpretation——in the Classroom and in the Courtroom, 50 U. 
Chi. 
L. 
Rev. 
800, 
816-17 
(1983) 
("By 
making 
statutory 
interpretation seem mechanical rather than creative, the canons 
conceal, often from the reader of the judicial opinion and 
sometimes from the writer, the extent to which the judge is 
making new law in the guise of interpreting a statute or a 
constitutional provision."). 
4 Majority op., ¶19 (quoting State ex rel. Kalal v. Circuit 
Court for Dane County, 2004 WI 58, ¶47, 271 Wis. 2d 633, 681 
N.W.2d 110). 
5 Id. (citing Bruno v. Milwaukee County, 2003 WI 28, ¶¶18, 
21, 260 Wis. 2d 633, 660 N.W.2d 656). 
No.  2003AP3521.ssa 
 
4 
 
the court of appeals or this court are not "reasonably well-
informed persons"?6 
¶69 Furthermore, this court (or a justice) has often 
stated that the consequences of an interpretation of a statute 
should not be considered.  On the other hand, the court (or a 
justice) has stated that the consequences of an interpretation 
                                                 
6 For various statements of a reasonable interpretation of a 
statute or an interpretation of a statute by a reasonably well-
informed person, see, e.g., Bruno v. Milwaukee County, 2003 WI 
28, ¶22, 260 Wis. 2d 633, 660 N.W.2d 656; id., ¶¶31-32 (Bradley, 
J., concurring); State v. Delaney, 2003 WI 9, ¶14, 259 
Wis. 2d 77, 658 N.W.2d 416. 
No.  2003AP3521.ssa 
 
5 
 
should be considered.7  In the instant case, the ambiguous and 
unambiguous analyses in the majority opinion rely heavily on the 
fact that the result (i.e., consequence) of interpreting the 
statute to allow the reduction of underinsured motorist coverage 
                                                 
7 State v. Hayes, 2004 WI 80, ¶16, 273 Wis. 2d 1, 681 
N.W.2d 203 ("Additional sources of legislative intent such as 
the context, history, scope, and objective of the statute, 
including 
the 
consequences 
of 
alternative 
interpretations, 
illuminate the intent of the legislature."); id., ¶112 n.2 
(Sykes, J., dissenting) ("[T]he majority appears to be endorsing 
the concept that statutory interpretation involves a judicial 
policy judgment based upon a weighing and balancing of competing 
"purposes and consequences" of alternative interpretations. This 
leaves room for the substitution of the judiciary's subjective 
policy choices for those of the legislature, a phenomenon that a 
text-based, plain-meaning approach to statutory interpretation 
seeks to guard against."); State ex rel. Kalal v. Circuit Court 
for Dane County, 2004 WI 58, ¶59, 271 Wis. 2d 633, 681 
N.W.2d 110 
(Abrahamson, 
C.J., 
concurring) 
("[The 
majority 
opinion] recognizes that the purposes of the legislation should 
be considered in interpretation but refuses to consider the 
consequences 
of 
different 
interpretations 
as 
an 
aid 
to 
interpretation (but does consider the consequences right in this 
opinion)."); 
Panzer 
v. 
Doyle, 
2004 
WI 
52, 
¶¶39-40, 
271 
Wis. 2d 295, 680 N.W.2d 666 (after noting economic consequences 
suggested in amicus brief, stating that "[t]his court does not 
decide cases on these grounds," but further stating that "[t]his 
is not to say that the legal and practical consequences of our 
opinions are not considered."); Tietsworth v. Harley-Davidson, 
Inc., 
2004 
WI 
32, 
¶79, 
270 
Wis. 2d 146, 
677 
N.W.2d 233 
(Abrahamson, C.J., dissenting) ("[A] court must ascertain the 
legislative intent from the language of the statute in relation 
to its context, history, scope, and objective, including the 
consequences of alternative interpretations."); State v. Byers, 
2003 WI 86, ¶56, 263 Wis. 2d 113, 655 N.W.2d 729 (Abrahamson, 
C.J., concurring) (quoting Harrington v. Smith, 28 Wis. 43, 59 
(1871)); Harrington v. Smith, 28 Wis. 43, 59 (1871) ("[T]he true 
rule for the construction of statutes is, to look to the whole 
and every part of the statute, and the apparent intention 
derived from the whole, to the subject matter, to the effects 
and consequences, and to the reason and spirit of the law; and 
thus, to ascertain the true meaning of the legislature, though 
the meaning so ascertained may sometimes conflict with the 
literal sense of the words."). 
No.  2003AP3521.ssa 
 
6 
 
by amounts paid into the Fund would produce an absurd result.  
Indeed, regardless of what we may have said in the past, there 
can be no question that this majority opinion does consider the 
consequences 
of 
alternative 
statutory 
interpretations 
to 
determine the reasonable interpretation of the statute.   
¶70 A better approach to statutory interpretation would be 
to drop the ambiguous/unambiguous/literal/plain meaning pretense 
and 
instead 
take 
a 
comprehensive 
view 
of 
statutory 
interpretation.  It is time to take a holistic, less formalist 
approach to statutory interpretation.  As I have explained 
previously, the court (some members more than others) silently 
takes a holistic approach anyway, despite lip service to the 
ambiguous/unambiguous/plain meaning shibboleths.  In the present 
case, both the ambiguous and unambiguous/literal/plain meaning 
camps 
properly 
conclude 
that 
the 
"legislative 
history, 
legislative purpose, and public policy"8 must be examined to 
determine the meaning of Wis. Stat. § 632.32(5)(i)2.   
¶71 For the reasons set forth, I write separately. 
 
 
                                                 
8 Majority op., ¶18. 
No.  2003AP3521.dtp 
 
1 
 
 
¶72 DAVID 
T. 
PROSSER, 
J.   (concurring). 
 
I 
write 
separately to address American Family's policy.  In my view, 
American Family's reducing clause would not pass muster on these 
facts——irrespective of any statute——because it is at war with 
the reasonable expectation of its insured. 
 
¶73 In interpreting insurance policies, courts apply the 
same rules of interpretation that apply to contracts generally.  
Folkman v. Quamme, 2003 WI 116, ¶12, 264 Wis. 2d 617, 665 
N.W.2d 857.  The objective in interpreting insurance policies is 
to give effect to the intent of the parties.  State Farm Mut. 
Auto. Ins. Co. v. Langridge, 2004 WI 113 ¶13, 275 Wis. 2d 35, 
683 N.W.2d 75.  "To do so, we give the words in the insurance 
policy their common and ordinary meaning, that is, the meaning a 
reasonable person in the position of the insured would have 
understood the words to mean."  Id., ¶14.  If the text of the 
policy is unambiguous, "it is enforced as written, without 
resort to rules of construction or applicable principles of case 
law."  Folkman, 264 Wis. 2d 617, ¶13. 
¶74 When interpreting an insurance policy courts begin by 
determining whether the policy is ambiguous.  Langridge, 275 
Wis. 2d 35, ¶41.  An insurance policy is ambiguous if it is 
"susceptible to more than one reasonable interpretation."  Id., 
¶48 (internal citations omitted).  Ambiguity in an insurance 
policy may arise in different ways.  First, the language of the 
disputed provision may be ambiguous because the import of the 
words is uncertain or the impact of the words is uncertain with 
respect to unusual facts.  Second, a provision that is 
No.  2003AP3521.dtp 
 
2 
 
unambiguous when viewed in isolation may become ambiguous when 
considered in the context of the entire policy.1  Folkman, 264 
Wis. 2d 617, ¶19. 
¶75 The Shiras argue the reducing clause in their son's 
policy is ambiguous because it does not state that the uninsured 
motorist coverage limits will be reduced by the payment of 
worker's compensation benefits "to anyone."  Because the policy 
lacked the phrase "to anyone," the Shiras contend American 
Family's interpretation of its policy is contrary to the 
reasonable expectations of an insured. 
¶76 In response, American Family argues that because the 
reducing clause in the policy mirrors Wis. Stat. § 632.32(5)(i), 
which they contend is unambiguous, an insured could not 
reasonably expect to have coverage under the facts of this case. 
¶77 We have previously held that reducing clauses that 
mirror Wis. Stat. § 632.32(5)(i) can be contextually ambiguous.  
Dowhower v. West Bent Mut. Ins. Co., 2000 WI 73, ¶¶33, 36, 236 
Wis. 2d 113, 613 N.W.2d 557; Schmitz v. Badger Mut. Ins. Co., 
2002 WI 98, ¶49, 255 Wis. 2d 61, 647 N.W.2d 223.  However, 
contextual ambiguity in those cases involved such factors as 
organization, labeling, explanation, inconsistency, omission, 
and the text of other provisions in the policy.  See Folkman, 
264 Wis. 2d 617, ¶19. 
                                                 
1 Although to date we have applied principles of contextual 
ambiguity only when evaluating underinsured motorist coverage, 
there is no reason that contextual ambiguity cannot arise in 
relation to reducing clauses in uninsured motorist coverage.  
See Myers v. Gen. Cas. Co. of Wis., 2005 WI App 49, ¶18, 279 
Wis. 2d 432, 694 N.W.2d 723. 
No.  2003AP3521.dtp 
 
3 
 
¶78 Here the reducing clause produces a result that is 
completely at odds with the reasonable expectation of an 
insured, because the insured would expect that reductions in 
uninsured policy limits would be based on payments made to or on 
behalf of the insured, the insured's heirs, or the insured's 
estate.  This is why the court of appeals upheld the reducing 
clause in a case where worker's compensation payments were paid 
to an insured and the payments exceeded the insured's uninsured 
motorist policy limits.  See Myers v. Gen. Cas. Co. of Wis., 
2005 WI App 49, 279 Wis. 2d 432, 694 N.W.2d 723. 
¶79 The reducing clause in this policy is ambiguous 
because 
it 
is 
susceptible 
to 
more 
than 
one 
reasonable 
interpretation on the particular facts of this case.  This is 
because the overall purpose of the policy is to provide coverage 
for the insured, the insured's heirs, or the insured's estate in 
the event of the insured's death, at a level determined by the 
insured when purchasing the policy.  Most of the time, a literal 
reading of the reducing clause is completely consistent with 
this purpose. 
¶80 A 
reasonable 
insured 
could 
not 
be 
expected 
to 
anticipate that coverage might vary dramatically depending on 
whether the insured was married or single, whether the insured 
had 
dependents, 
or 
whether 
the 
insured 
was 
working 
or 
vacationing at the time of a fatal automobile accident.  If 
Scott Shira had been traveling in Minnesota to attend a sporting 
event instead of conducting business, his estate would have 
received full coverage.   
No.  2003AP3521.dtp 
 
4 
 
¶81 As long as an interpretation is reasonable, insurance 
policy terms "should be interpreted as they would be understood 
from the perspective of a reasonable person in the position of 
the insured[.]"  Langridge, 275 Wis. 2d 35, ¶47 (internal 
citations omitted).  A rational consumer in Scott's position 
would not expect that the uninsured motorist coverage for which 
he paid money could be reduced to nothing even though neither he 
nor his estate or his heirs had received any compensation for 
his injuries. 
¶82 The court has repeatedly held that a policy is 
consistent with the reasonable expectations of an insured where 
it clearly sets forth that the insured purchased a fixed level 
of recovery that is arrived at by combining payments from all 
sources.  See Taylor v. Greatway Ins. Co., 2001 WI 93, ¶25, 245 
Wis. 2d 134, 628 N.W.2d 916; Dowhower, 236 Wis. 2d 113, ¶33.  
Under American Family's interpretation, however, the reducing 
clause would not only deny an insured a fixed level of recovery 
but also do so without mentioning the possibility that uninsured 
motorist limits could be reduced even though the insured or the 
insured's estate received nothing. 
¶83 In fact, the policy is written in such a way that the 
insured is reasonably led to expect that coverage limits will be 
reduced only by payments that he actually receives.  The Quick 
Reference page states: "This policy is a legal contract between 
you (the policyholder) and the company. . . . The policy details 
the rights and duties of you and your insurance company."  This 
language combined with the very nature of insurance, where an 
No.  2003AP3521.dtp 
 
5 
 
insurer assumes financial responsibility for defined risks and 
losses suffered by an insured, establishes an expectation of 
contract 
benefits 
that 
is 
contrary 
to 
American 
Family's 
interpretation.  Absent an explicit warning, an insured would 
not expect that payments from one third party to another third 
party could affect the contractual relationship the insured has 
with the insurer and give the insurer a windfall. 
¶84 The second paragraph within the uninsured motorist 
portion of the policy, which sets forth American Family's 
general obligation, states: 
We will pay compensatory damages for bodily injury 
which an insured person is legally entitled to recover 
from the owner or operator of an uninsured motor 
vehicle.  The bodily injury must be sustained by an 
insured person and must be caused by accident and 
arise out of the use of the uninsured motor vehicle. 
Based on this paragraph, a reasonable insured would expect 
American Family ("We") to have to pay the Shiras.  Scott 
suffered bodily injury——death——as that term is defined by the 
policy.  Scott's death was caused by the driver of an uninsured 
motor vehicle.  The Shiras are insured persons as that term is 
defined by the policy.2  Therefore, a reasonable insured would 
                                                 
2 In relevant part, the policy defines an insured person as 
"[a]nyone . . . entitled to recover damages due to bodily injury 
to you, a relative, or another occupant of your insured car."  
The circuit court ruled, and American Family did not appeal, 
that under Minnesota law the Shiras would be legally entitled to 
recover from the uninsured motorist. 
As Arnold Anderson explains, the Shiras are Class III 
insureds; that is, "someone who has a derivative claim based on 
injury to a Class I [named insured] or Class II [occupancy 
insured] insured."  Arnold P. Anderson, Wisconsin Insurance Law 
§ 4.18 (5th ed. 2004).   
No.  2003AP3521.dtp 
 
6 
 
expect American Family to pay compensatory damages to the 
Shiras. 
 
¶85 Finally, the immediate context of the reducing clause 
does nothing to dispel this expectation.  In its entirety, the 
reducing provision states: 
The limits of liability of this coverage will be 
reduced by: 
1. 
A payment made by the owner or operator of 
the uninsured motor vehicle or organization which may 
be legally liable. 
2. 
A payment under the Liability coverage of 
this policy. 
3. 
A payment made or amount payable because of 
bodily injury under any workers' compensation or 
disability benefits law or any similar law. 
Clearly, the first example——a payment made by an owner or 
operator legally responsible——contemplates a scenario in which 
the insured receives payment.  Similarly, the second example——a 
payment under the policy's liability coverage——contemplates a 
scenario in which an injured person would otherwise receive 
duplicate payments under both the liability and uninsured 
motorist portions of the policy.  A look at the liability 
portion of the policy confirms this expectation.  It states: 
"Any amount payable under this coverage to or for an injured 
person will be reduced by any payment made to that person under 
the Uninsured Motorist coverage of this policy."  This language 
creates an expectation of symmetry between the liability and 
uninsured motorist coverages that if payment is made under one 
portion of the policy, payment under the other portion will be 
reduced by that amount. 
No.  2003AP3521.dtp 
 
7 
 
 
¶86 Thus it is after two subparts in which uninsured 
motorist limits can be reduced only by payments to the insured 
that the insured reaches the portion of the policy in dispute.  
Given the context in which the worker's-compensation reducing 
clause appears, we conclude that a reasonable insured would 
reasonably expect that the uninsured motorist coverage limits 
would be reduced only by the worker's compensation benefits that 
the insured, the insured's heirs, or the insured's estate 
actually received. 
 
¶87 The court has held that a policy is contrary to the 
reasonable expectations of an insured and offers illusory 
coverage where the policy does not "clearly set forth that the 
insured is purchasing a fixed level of UIM recovery arrived at 
by 
combining 
payments 
from 
all 
sources." 
 
Schmitz, 
255 
Wis. 2d 61, ¶75.  A fortiori, a policy in which a reducing 
clause is effective before the insured ever receives the amount 
of the uninsured motorist limits from all sources, and which 
contains no mention of this possibility, is contrary to the 
reasonable expectations of an insured.  If such a reducing 
clause were allowed by Wis. Stat. § 632.32(5)(i)2., I would hold 
that to counter the reasonable expectations of an insured the 
uninsured motorist policy would have to state explicitly that 
the limits would be reduced by worker's compensation benefits 
paid to the Fund, not just to the insured. 
 
¶88 I am authorized to state that Justice PATIENCE DRAKE 
ROGGENSACK joins this opinion. 
 
No.  2003AP3521.dtp 
 
 
 
1