Title: Shane T. Drinkwater v. American Family Mutual Insurance Company
Citation: 2006 WI 56
Docket Number: 2004AP001793
State: Wisconsin
Issuer: Wisconsin Supreme Court
Date: June 1, 2006

2006 WI 56 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2004AP1793 
 
 
COMPLETE TITLE: 
 
 
Shane T. Drinkwater, 
          Plaintiff-Respondent, 
     v. 
American Family Mutual Insurance Company, Jason 
R. Honshel and Additional Fictional Party #1 and 
Additional Fictional Party #2, 
          Defendants, 
Medical Associates Health Plans, 
          Subrogated Defendant-Appellant. 
 
 
 
 
ON CERTIFICATION FROM THE COURT OF APPEALS 
 
 
OPINION FILED: 
June 1, 2006   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
March 14, 2006   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Grant   
 
JUDGE: 
Robert P. VanDeHey 
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
PROSSER, J., dissents (opinion filed).   
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the subrogated defendant-appellant, there were briefs 
(in the court of appeals) by Stephen C. Krumpe and O’Connor & 
Thomas, P.C., Dubuque, IA, and oral argument by Stephen C. 
Krumpe. 
 
For the plaintiff-respondent, there was a brief (in the 
court of appeals) by Mark H. Hoskins, Jr., and Hoskins, Kalnins, 
McNamara & Vogelsberg, Lancaster, and oral argument by Mark H. 
Hoskins, Jr. 
 
An amicus curiae brief was filed (in the court of appeals) 
by William C. Gleisner, III and Law Offices of William C. 
Gleisner, III, Milwaukee; Rhonda L. Lanford and Habush Habush & 
Rottier, S.C., Madison, on behalf of the Wisconsin Academy of 
Trial Lawyers. 
 
 
2006 WI 56
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2004AP1793  
(L.C. No. 
2003CV33) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Shane T. Drinkwater, 
 
          Plaintiff-Respondent, 
 
     v. 
 
American Family Mutual Insurance Company,  
Jason R. Honshel and Additional Fictional Party 
#1 and Additional Fictional Party #2, 
 
          Defendants, 
 
Medical Associates Health Plans, 
 
          Subrogated Defendant-Appellant. 
 
 
 
FILED 
 
JUN 1, 2006 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
APPEAL from a judgment of the Circuit Court for Grant 
County, Robert P. Van De Hey, Judge.  Affirmed.   
 
¶1 
ANN WALSH BRADLEY, J.    This case is before the court 
on 
certification 
by 
the 
court 
of 
appeals 
pursuant 
to 
Wis. Stat. § 809.61 (2003-04).  Medical Associates Health Plan, 
Inc. ("the Plan"), an Iowa corporation, appeals a circuit court 
judgment that applied Wisconsin law and determined that Shane 
No. 
2004AP1793   
 
2 
 
Drinkwater must be made whole before the Plan was entitled to 
subrogation 
against 
his 
recovery 
for 
personal 
injuries.  
Drinkwater, a Wisconsin resident, was injured in a motor vehicle 
accident in Wisconsin, and the Plan paid medical expenses on his 
behalf through his employer's health insurance plan.  
¶2 
The issue is whether Iowa law or Wisconsin law applies 
to the Plan's subrogation claim against Drinkwater.  Applying 
choice-of-law 
principles, 
we 
determine that 
Wisconsin law 
applies.  Accordingly, Drinkwater must be made whole under 
Wisconsin 
law 
before 
the 
Plan 
may 
recover 
for 
any 
of 
Drinkwater's medical expenses.  We conclude that the Plan is not 
entitled to subrogation against Drinkwater's recovery because he 
was not made whole under Wisconsin law.  Therefore, we affirm 
the circuit court judgment. 
I 
¶3 
The background facts relevant to this appeal are 
undisputed.  Drinkwater is a Wisconsin resident who works at a 
company located in Iowa.  He sustained injuries that included a 
severe leg fracture when another motor vehicle struck his 
motorcycle in September 2002 in Wisconsin.  The driver of the 
other vehicle was also a Wisconsin resident who was covered 
under an insurance policy issued by a Wisconsin insurance 
company.  Both vehicles were registered in Wisconsin.   
¶4 
The Plan paid health care expenses on Drinkwater's 
behalf pursuant to a group health insurance contract it issued 
No. 
2004AP1793   
 
3 
 
to Drinkwater's employer.1  The Plan is an Iowa non-profit 
corporation and its principal offices and place of business are 
located in Iowa, although it has clinics in Iowa, Illinois, and 
Wisconsin.  The contract was issued to Drinkwater's employer in 
Iowa.   
¶5 
Drinkwater commenced an action for personal injuries, 
naming the other driver and the driver's insurer as defendants, 
and naming the Plan as a potentially subrogated party.  The Plan 
counterclaimed and cross-claimed, alleging a subrogated interest 
in the damages Drinkwater sought. 
¶6 
More specifically, the Plan alleged that pursuant to 
Iowa law, it was entitled to "first dollar" reimbursement and 
payment in full for all of its subrogated expenses without 
deduction or offset.  It alleged that its subrogation interest 
was not subject to the Wisconsin "made-whole" doctrine of Rimes 
v. State Farm Mutual Automobile Insurance Co., 106 Wis. 2d 263, 
316 N.W.2d 348 (1982), but rather that it was entitled to full 
reimbursement from any of Drinkwater's recovery based upon the 
terms of the Plan contract and Iowa law. 
¶7 
The Plan contract contained a clause providing that 
the contract "shall be governed by and interpreted in accordance 
with the laws of the State of Iowa."  It also contained a 
subrogation clause, which provided as follows: 
                                                 
1 There are actually two plan contracts for two different 
years involved in this case, but the terms of the contracts as 
relevant here are the same.  We refer to the contracts in the 
singular throughout this opinion. 
No. 
2004AP1793   
 
4 
 
If a Member suffers an injury or condition, for which 
benefits are provided by [the Plan], through acts or 
omissions of a third party for which said third party 
(or any person or organization liable for such third 
party's conduct) is or may be legally liable, or if 
the Member recovers benefits from any person or 
organization by reason of such injury or condition, 
[the Plan] shall be subrogated, to the extent of the 
reasonable cash value of benefits, supplies, and 
services provided by [the Plan], to all the Member's 
rights 
of 
recovery 
against 
any 
person 
or 
organization . . . . 
¶8 
The other driver's negligence was conceded, as was the 
lack of any contributory negligence on Drinkwater's part.  The 
insurer for the other driver paid its policy limit of $250,000.  
¶9 
Drinkwater and the Plan agreed to escrow $89,006.10 of 
the proceeds, the amount that the Plan had paid for his health 
care expenses.  The Plan moved for a determination of its 
subrogation rights, requesting that the circuit court decide 
whether it was entitled to "overturn" Wisconsin's made-whole 
doctrine and whether Drinkwater was made whole. 
¶10 The 
circuit court 
determined that 
Wisconsin law 
applied.  It conducted a Rimes "made-whole" hearing in order to 
calculate Drinkwater's damages.  The court found that his total 
damages were $424,000 as follows: 
Medical expenses: 
 
 
 
 
$132,000 
Past loss of earnings: 
  
  
 
  $7,000 
Future loss of earning capacity: 
  
 $10,000 
Past pain, suffering, and disability: 
$125,000 
Future pain, suffering, and disability: $150,000 
No. 
2004AP1793   
 
5 
 
¶11 Accordingly, 
the 
circuit 
court 
concluded 
that 
Drinkwater would not be made whole by receipt of the $250,000 in 
proceeds from the tortfeasor's insurance.  Applying Wisconsin's 
made-whole doctrine, it determined that Drinkwater was entitled 
to the escrowed funds.  The court entered judgment in favor of 
Drinkwater, and the Plan appealed. 
II 
¶12 The parties agree that under Wisconsin subrogation 
law, including Rimes, the Plan would not be entitled to 
subrogation against Drinkwater.  The circuit court calculated 
his damages to be $424,000, which included $132,000 in medical 
expense, but he received only $250,000 from the tortfeasor.  As 
the circuit court determined, Drinkwater was therefore not made 
whole.  He would be further short-changed for every dollar that 
the Plan was able to recover.  The Plan admits that if 
Wisconsin's 
made-whole 
doctrine 
applies, 
then 
Drinkwater 
prevails. 
¶13 Conversely, Iowa has rejected Wisconsin's made-whole 
doctrine.  Ludwig v. Farm Bureau Mutual Insurance Co., 393 
N.W.2d 143, 146 (Iowa 1986) ("We disagree with the holding of 
the Rimes case.").  The parties agree that under Iowa law the 
Plan would be entitled to invade Drinkwater's recovery of 
$250,000 to obtain reimbursement of medical expenses it paid on 
his behalf.  Consequently, the question of whether Wisconsin law 
or Iowa law applies will determine the outcome of this case. 
¶14 In order to resolve this question, we must employ a 
choice-of-law analysis in order to determine whether Iowa law or 
No. 
2004AP1793   
 
6 
 
Wisconsin law applies.  This choice-of-law determination is a 
question of law subject to independent appellate review.  
American Family Mut. Ins. Co. v. Powell, 169 Wis. 2d 605, 609, 
486 N.W.2d 537 (Ct. App. 1992). 
A 
¶15 We begin with a review of the development and status 
of the made-whole doctrine in Wisconsin.  The made-whole 
doctrine in Wisconsin has deep and firm roots.  It traces back 
at least 75 years to Hamill v. Kuchler, 203 Wis. 414, 232 N.W. 
877 (1931), and is based largely on the equitable nature of 
subrogation. 
¶16 In Hamill, a property case involving mortgage and lien 
rights, the court explained that "subrogation does not arise 
until the debt has been fully paid."  Hamill, 203 Wis. at 425.  
"Until that is done the right of subrogation is a mere inchoate 
right and cannot be enforced."  Id. (quoting Defiance Mach. 
Works v. Gill, 170 Wis. 477, 483, 175 N.W. 940 (1920)).  
Subrogation "is a creation of the law whereby the substantial 
ends of justice may be accomplished regardless of contract 
relations."  Id. (quoting Poluckie v. Wegenke, 137 Wis. 433, 
437, 119 N.W. 188 (1909)). 
¶17 These concepts from Hamill were reinforced and applied 
in the insurance context in Garrity v. Rural Mutual Insurance 
Co., 77 Wis. 2d 537, 541-46, 253 N.W.2d 512 (1977).  In Garrity 
the court concluded that a subrogation clause in a standard fire 
insurance policy "did not change the substantive common law 
rights of the insured."  Garrity, 77 Wis. 2d at 541.  The court 
No. 
2004AP1793   
 
7 
 
cited "the general rule that there is no subrogation until the 
insured is made whole."  Id. at 542.  "[T]he insurer has no 
right as against the insured where the compensation received by 
the insured is less than his loss."  Id. at 543 (quoting Couch 
on Insurance, § 61.61 (2d ed. 1968)). 
¶18 Subsequently, in Rimes, this court again reinforced 
the 
centrality 
of 
the 
equitable 
nature 
of 
subrogation, 
concluding that "only where an injured party has received an 
award . . . which pays all of his elements of damages . . . is 
there any occasion for subrogation."  Rimes, 106 Wis. 2d at 275.  
This time, the court was addressing whether an automobile 
insurer that made payments to an insured under the medical-pay 
provisions of its policy could enforce a subrogation agreement 
when the insured received in settlement less than the total 
damages incurred.  Id. at 264. 
¶19 The court in Rimes looked to Garrity as its guide, 
explaining that "one who claims subrogation rights, whether 
under the aegis of either legal or conventional [contractual] 
subrogation, is barred from any recovery unless the insured is 
made whole."  Id. at 272.  It said that the purpose of 
subrogation is to prevent a double recovery.  Id.  Thus, only 
when an insured has received full damages from the tortfeasor 
and has been paid for a portion of those damages by the insurer 
is the insurer, under principles of equity, entitled to 
subrogation.  Id.  When either the insurer or insured must to 
some extent go unpaid, the loss should be borne by the insurer 
No. 
2004AP1793   
 
8 
 
because that is a risk that the insured has paid the insurer to 
assume.  Id. at 275-76 (citing Garrity, 77 Wis. 2d at 542.) 
¶20 This court again reaffirmed Wisconsin's commitment to 
the made-whole doctrine in Ruckel v. Gassner, 2002 WI 67, 253 
Wis. 2d 280, 646 N.W.2d 11.  In a unanimous decision, it held 
that under Rimes and Garrity, an insured must be made whole 
before an insurer may exercise subrogation rights against its 
insured, even when unambiguous language in an insurance contract 
states otherwise.  Ruckel, 253 Wis. 2d 280, ¶¶4, 40, 43. 
¶21 Ruckel, much like the case at bar, involved medical 
expenses paid under a group benefit plan.  Id., ¶¶6-7.  The 
insurance contract included a subrogation clause entitling the 
insurer to full repayment of the expenses.  Id., ¶9.  It stated 
that the insurer's right to repayment was "prior and superior" 
to the right of any other person, including the beneficiary.  
Id. 
¶22 The court explained that the insurer's argument, that 
the subrogation clause in its policy was clear, "misse[d] the 
point."  Id., ¶41.  Rather, the court explained:  "The clause is 
not unclear; it is inequitable.  It is contrary to the most 
fundamental precepts of subrogation."  Id.  Subrogation under 
circumstances where the insured had not been made whole "turn[s] 
the entire doctrine of subrogation on its head."  Id. 
¶23 Thus, our case law culminating with Ruckel establishes 
that in Wisconsin the made-whole doctrine can trump express 
language in an insurance contract:  "[P]ursuant to this court's 
holdings in Garrity and Rimes, an insurer is not entitled to 
No. 
2004AP1793   
 
9 
 
subrogation against its insured unless and until the insured is 
made whole, regardless of contractual language to the contrary."  
Id., ¶43. 
B 
¶24 The Plan asserts that this is a contract case and that 
its Iowa choice-of-law clause is controlling.  Furthermore, the 
Plan argues that even if the clause is not controlling, Iowa is 
the state with the most significant relationship to the question 
at hand.  Thus, the Plan contends, Iowa law should control under 
a choice-of-law analysis.  We disagree. 
¶25 This court recognized in Bush v. National School 
Studios, Inc., 139 Wis. 2d 635, 407 N.W.2d 883 (1987), that 
there is a qualification on the freedom to contract for choice 
of law.  The qualification "has been recognized by commentators 
and frequently invoked by courts."  Id. at 642.  Although 
parties may seek to promote "certainty and predictability in 
contractual relations," they will not be "permitted to do so at 
the expense of important public policies of a state whose law 
would be applicable if the parties choice of law provision were 
disregarded."  Id.; see also Beilfuss v. Huffy Corp., 2004 WI 
App 118, ¶¶13, 16, 20, 274 Wis. 2d 500, 685 N.W.2d 373; General 
Med. Corp. v. Kobs, 179 Wis. 2d 422, 428, 507 N.W.2d 381 (Ct. 
App. 1993) ("parties cannot, by contract, override fundamental 
polices of the state whose law would be applicable absent the 
choice of law provision"). 
¶26 "A precise delineation of those policies which are 
sufficiently important to warrant overriding a contractual 
No. 
2004AP1793   
 
10 
 
choice of law stipulation is not possible."  Bush, 139 
Wis. 2d at 643.  However, "statutes or common law which make a 
particular . . . contract provision unenforceable . . . or that 
are designed to protect a weaker party against the unfair 
exercise of superior bargaining power by another party, are 
likely to embody an important state public policy."  Id. 
¶27 In Bush, for example, a school portrait photographer 
initiated an action against the corporation for which he worked, 
asserting that he was terminated without cause in violation of 
the Wisconsin Fair Dealership law.  Id. at 637-38.  This court 
concluded that it would not honor the parties' choice-of-law 
clause specifying Minnesota law in light of the strong public 
policy represented by Wisconsin's fair dealership laws.  Id. at 
639, 644-45. 
¶28 Another example of this qualification on the freedom 
to contract for choice-of-law is Beilfuss.  There, a sales 
manager sought to have covenants not to compete with his former 
employer declared unenforceable.  Beilfuss, 274 Wis. 2d 500, 
¶¶2-3.  The court of appeals determined that the covenants were 
not enforceable under Wisconsin's long-standing public policy 
controlling covenants not to compete, despite a choice-of-law 
provision in the contract specifying that Ohio law applied.  
Id., ¶¶3, 7, 20. 
¶29 A Bush-type qualification on the freedom to contract 
for 
choice 
of 
law 
is 
apt 
here. 
 
First, 
this 
court's 
jurisprudence 
culminating 
in 
Ruckel 
establishes 
that 
in 
Wisconsin the made-whole doctrine trumps an express contract 
No. 
2004AP1793   
 
11 
 
provision to the contrary.  Second, the contractual bargaining 
in this case occurred between the Plan and Drinkwater's 
employer, not between the Plan and Drinkwater.  He had no choice 
or opportunity to bargain as to the terms of the Plan contract.  
If a party who actually bargained for a choice-of-law clause may 
seek to set it aside based on an overriding state public policy, 
as in Bush and Beilfuss, certainly a party who had no choice or 
opportunity to bargain for such a clause may do likewise, at 
least when it dictates his or her right to recover damages. 
¶30 Moreover, the issue before us is not simply one of 
contract, as the Plan asserts.  To treat it as such, without 
recognizing the tort aspects that this issue implicates, is to 
ignore the true nature of the question before the court.  To 
rest the analysis of this case only on contract contravenes this 
court's analysis in Ruckel, which applied equity, not contract, 
to a tort recovery.  In Ruckel we held that an insurer is not 
entitled to subrogation until the insured is made whole 
"regardless of contractual language to the contrary."  Ruckel, 
253 Wis. 2d 280, ¶43. 
¶31 For all of these reasons, we determine that the 
express choice-of-law provision for Iowa law in the Plan 
contract does not necessarily control the Plan's subrogation 
right against Drinkwater's recovery for personal injuries.  
Rather, we must apply a choice-of-law analysis to determine if, 
absent the clause, Wisconsin law would apply.  See Bush, 139 
Wis. 2d at 642; Kobs, 179 Wis. 2d at 428. 
 
No. 
2004AP1793   
 
12 
 
C 
¶32 Wisconsin's choice-of-law jurisprudence, at least up 
until recently, has had something of a checkered past.  It would 
likely be impossible to fully reconcile the 30 years of 
Wisconsin 
jurisprudence 
immediately 
following 
this 
court's 
decision in Wilcox v. Wilcox, 26 Wis. 2d 617, 133 N.W.2d 408 
(1965).  In Wilcox, the court joined the "choice of law 
revolution" of the 1960s by rejecting traditional choice-of-law 
analysis that inflexibly looked to the law of the place of a 
wrong, "lex loci delicti."  See Shirley A. Wiegand, Officious 
Intermeddling, Interloping Chauvinism, Restatement (Second), and 
Leflar:  Wisconsin's Choice of Law Melting Pot, 81 Marq. L. Rev. 
762, 772 (1998); see also Wilcox, 26 Wis. 2d at 620-21. 
¶33 Professor Wiegand, in the article cited, maintained 
that "choice-of-law decisions in this state have traveled a very 
bumpy road" beginning with Wilcox.  Wiegand, 81 Marq. L. Rev. at 
796.  She explained that although this court had "hoped for a 
'practical and workable' approach which would serve as 'a guide 
to the future to provide a uniform common law of conflicts,' 
lower court decisions demonstrate that vision has not yet been 
achieved."  Id. at 803 (quoting Wilcox, 26 Wis. 2d at 621, 635) 
(footnotes omitted). 
¶34 We need not attempt to reconcile all of the cases to 
which Professor Wiegand referred in 1998.  The question now 
before us, which involves the made-whole doctrine, is not 
clearly controlled by any of our previous choice-of-law cases.  
No. 
2004AP1793   
 
13 
 
We apply instead our more recent choice-of-law jurisprudence to 
determine whether Iowa law or Wisconsin law applies. 
¶35 Since the time that Professor Wiegand wrote, this 
court decided State Farm Mutual Automobile Insurance Co. v. 
Gillette, 2002 WI 31, 251 Wis. 2d 561, 641 N.W.2d 662, and 
Beloit Liquidating Trust v. Grade, 2004 WI 39, 270 Wis. 2d 356, 
677 N.W.2d 298.  Both cases, Gillette in particular, supply the 
choice-of-law framework for our analysis here. 
¶36 Gillette establishes——perhaps contrary to some of the 
cases criticized in the Wiegand article——that insurance-related 
issues which arise as part of a personal injury lawsuit are not 
always readily categorized as sounding in tort or contract.  In 
Gillette, this court explained that when an insured sues an 
insurance company for underinsured motorist coverage, "contract 
law and tort law converge."  Gillette, 251 Wis. 2d 561, ¶31.  
"Contract law applies to interpret the insurance policy, but an 
insured's right to underinsured motorist benefits hinges on the 
existence of a tort cause of action against the underinsured 
motorist."  Id. 
¶37 Similarly here, where the Plan seeks subrogation 
against Drinkwater's recovery from the tortfeasor, contract law 
and tort law converge.  Although contract law applies to the 
interpretation 
of 
the 
Plan's 
insurance 
contract 
with 
Drinkwater's employer, his right to recover hinges on the 
existence of his tort cause of action against the tortfeasor.   
¶38 The issue before us cannot be characterized purely as 
one of contract.  At oral argument, the Plan's counsel asserted 
No. 
2004AP1793   
 
14 
 
that its claim was only a contract claim and that "but for" the 
Plan contract, it would have no claim.  It can just as easily be 
said, however, that the Plan would have no claim but for the 
tort that set this case in motion.  The Plan concedes, as it 
must, that "the contract involves the proceeds of a tort 
action."  Indeed, the Plan's counterclaim and cross-claim as a 
potentially subrogated party incorporate all of Drinkwater's 
allegations "that are essential to state a negligence cause of 
action for personal injuries."2 
¶39 Regardless 
of 
how 
the 
issue 
in 
this 
case 
is 
characterized, Drinkwater's right to recover is diminished on a 
dollar-for-dollar basis to the extent that the Plan is entitled 
to subrogation.  Drinkwater's right to recover in tort is thus 
tightly bound to the Plan's subrogation right, just as the 
Gillette plaintiff's right to recover was tightly bound to his 
insurance company's asserted rights under the insurance contract 
in that case.  We therefore follow Gillette, applying its 
choice-of-law framework to determine whether Wisconsin law or 
                                                 
2 The Plan is incorrect in asserting that "Schlosser [v. 
Allis-Chalmers Corp., 86 Wis. 2d 226, 271 N.W.2d 879 (1978)]'s 
rationale, if not holding, is directly on point."  That case, 
which 
involved 
a 
group 
life 
insurance 
plan, 
might 
be 
distinguished in a number of ways.  For our purposes here, it is 
sufficient to note that the controversy in Schlosser sounded 
only in contract, and the court applied a different choice-of-
law framework from that in State Farm Mutual Automobile 
Insurance Co. v. Gillette, 2002 WI 31, 251 Wis. 2d 561, 641 
N.W.2d 662. 
No. 
2004AP1793   
 
15 
 
Iowa law applies.  The framework in Beloit Liquidating is 
similar.  Thus, we look also to its principles to guide us.3 
¶40 The "first rule" in the choice-of-law analysis under 
Gillette is "that the law of the forum should presumptively 
apply unless it becomes clear that nonforum contacts are of the 
greater significance."  Gillette, 251 Wis. 2d 561, ¶51 (internal 
quotations omitted).  Under Gillette, if it is not clear that 
the nonforum contacts are of greater significance, then the 
court applies five choice-influencing factors: 
(1) Predictability of results; 
(2) Maintenance of interstate and international order; 
                                                 
3 We caution that neither the law of the forum nor the law 
of the place of accident is the choice-of-law rule applicable to 
every fact situation or issue that might arise regarding a group 
benefit plan or a contractual subrogation clause.  See Gillette, 
251 Wis. 2d 561, ¶87.  "A law of one jurisdiction could be 
invoked with respect to some issues and in some fact situations 
and the law of another jurisdiction invoked in respect to other 
issues and other fact situations."  Id. 
Thus, the dissent paints our opinion with too broad a brush 
when it declares that "[t]he rule of this case is that Wisconsin 
law will trump Illinois or Iowa subrogation law on a Wisconsin 
injury to a Wisconsin resident when the case is tried in a 
Wisconsin court."  Dissent, ¶76. 
In addition, we note that both parties agree that this case 
does not involve a self-funded insurance plan that is subject to 
the federal Employment Retirement Income Security Act (ERISA).  
Thus, we are not presented with questions such as federal 
preemption of state subrogation law under ERISA in this case.  
For further discussion of ERISA questions, see Arnold P. 
Anderson, 2 Wisconsin Insurance Law §§ 10.124-10.126 (5th ed. 
2004); see also Ruckel v. Gassner, 2002 WI 67, ¶42 n.7, 253 
Wis. 2d 280, 
646 
N.W.2d 11 
(explaining 
that 
legislatively-
sanctioned subrogation, including ERISA, may override common law 
made-whole principles). 
No. 
2004AP1793   
 
16 
 
(3) Simplification of the judicial task; 
(4) Advancement of the forum's governmental interests; and 
(5) Application of the better rule of law. 
Gillette, 251 Wis. 2d 561, ¶53; see also Heath v. Zellmer, 35 
Wis. 2d 578, 595-96, 151 N.W.2d 664 (1967).4 
¶41 The court in Beloit Liquidating referred to two tests 
to apply in a choice-of-law analysis.  The first test is 
"whether the contacts of one state to the facts of the case are 
so obviously limited and minimal that application of that 
state's law constitutes 
officious 
intermeddling."  
Beloit 
Liquidating, 270 Wis. 2d 356, ¶24 (quoting American Standard 
Ins. Co. v. Cleveland, 124 Wis. 2d 258, 263, 369 N.W.2d 168 (Ct. 
App. 1985)).  The second test involves an examination of the 
five 
choice-influencing factors.  
Beloit Liquidating, 270 
Wis. 2d 356, ¶25.5 
                                                 
4 The factors were suggested by Robert A. Leflar in his 
article, Choice-Influencing Considerations in Conflicts Law, 31 
N.Y.U. L. Rev. 267 (1966).  See Beloit Liquidating Trust v. 
Grade, 2004 WI 39, ¶25 n.15, 270 Wis. 2d 356, 677 N.W.2d 298.  
This court first applied the factors in Heath v. Zellmer, 35 
Wis. 2d 578, 595-96, 151 N.W.2d 664 (1967). 
5 In Beloit Liquidating, the court applied the five factors 
even after determining that the application of the nonforum 
state's law would have constituted officious intermeddling.  
Beloit Liquidating, 270 Wis. 2d 356, ¶¶24-32, 677 N.W.2d 298; 
see also Finch v. Southside Lincoln-Mercury, Inc., 2004 WI App 
110, ¶¶28-31, 274 Wis. 2d 719, 685 N.W.2d 154; but see American 
Standard Ins. Co. v. Cleveland, 124 Wis. 2d 258, 263, 369 
N.W.2d 168 (Ct. App. 1985) ("[I]f no officious intermeddling 
would 
result, 
then 
we 
apply 
the 
choice-influencing 
considerations . . . ."). 
No. 
2004AP1793   
 
17 
 
¶42 The "first rule" of Gillette and the first test of 
Beloit Liquidating are related.  It could not "become[] clear 
that 
nonforum 
contacts 
are 
of 
the 
greater 
significance" 
(Gillette) if the nonforum state's contacts are "so obviously 
limited and minimal that application of that state's law 
constitutes officious intermeddling" (Beloit Liquidating). 
¶43 That 
said, 
we 
need 
not 
address 
further 
the 
relationship of the "first rule" of Gillette and the first test 
of Beloit Liquidating.  The application of either Gillette's 
"first rule" or Beloit Liquidating's first test to the facts 
here necessitates that we apply the five choice-influencing 
factors.  It is not "clear" whether Iowa's contacts are of the 
"greater significance" (Gillette), yet Iowa's contacts are not 
"so obviously limited and minimal" that application of Iowa law 
would constitute officious intermeddling (Beloit Liquidating).   
¶44 Specifically, the 
relevant 
contacts 
of 
Iowa and 
Wisconsin include the following:   
• The accident and Drinkwater's injuries occurred in 
Wisconsin. 
• Drinkwater is a Wisconsin resident who works at an Iowa 
company. 
• The Plan is an Iowa corporation with its principal 
offices and place of business located in Iowa, although 
it has clinics in Iowa, Illinois, and Wisconsin.   
• The Plan contract was issued in Iowa to Drinkwater's 
employer. 
No. 
2004AP1793   
 
18 
 
• The tortfeasor is a resident of Wisconsin and was covered 
under an insurance policy issued by a Wisconsin insurance 
company. 
• Both Drinkwater and the other driver were operating 
vehicles registered in Wisconsin at the time of the 
accident.  
¶45 Both Wisconsin's and Iowa's contacts are significant.  
It is not clear that Iowa's contacts are of greater significance 
(Gillette).  At the same time, however, Iowa's contacts are more 
than minimal and limited (Beloit Liquidating).  We therefore 
turn to apply the five choice-influencing factors. 
¶46 Predictability of results.  This factor deals with the 
parties' expectations; put another way, what legal consequences 
comport with the predictions or expectations of the parties?  
Gillette, 251 Wis. 2d 561, ¶54.  Whether the application of Iowa 
law or Wisconsin law is more likely to lead to predictable and 
expected results under the facts of this case depends on which 
party's 
perspective 
on predictability 
and 
expectations is 
considered. 
¶47 On the one hand, the application of Iowa law is 
consistent with the Plan's ability to predict and expect that 
Iowa law will apply to all its insureds or members.  On the 
other hand, Wisconsin citizens are entitled to some assurance 
that when they suffer injuries within their own state, they can 
generally predict and expect that Wisconsin law will dictate 
their rights to recovery. 
No. 
2004AP1793   
 
19 
 
¶48 It may be true that the Plan reaps some benefit from 
the ability to know with complete predictability that Iowa law 
will apply.   Yet, the application of Wisconsin law in this case 
does not completely undermine predictability for the Plan.  A 
company such as the Plan is in a relatively good position to 
calculate the risks associated with decreased predictability 
whether Iowa law will apply.  In contrast, we would not expect 
reasonable Wisconsin insureds to foresee that they should 
routinely over-insure themselves for injuries resulting from 
Wisconsin accidents on the off chance they might become subject 
to another state's law that effectively limits their recovery. 
¶49 Thus, although the application of Iowa law might 
modestly increase predictability for the Plan, the application 
of Wisconsin law would facilitate predictability for Wisconsin 
citizens such as Drinkwater.  The Plan, and those similarly 
situated, are in a better position to calculate the risk of a 
modest amount of unpredictability and adjust accordingly.  The 
first 
factor 
therefore 
points 
at 
least 
somewhat 
to 
the 
application of Wisconsin law. 
¶50 Maintenance of interstate order.  This factor requires 
that a jurisdiction which is minimally concerned defer to a 
jurisdiction that is substantially concerned.  Gillette, 251 
Wis. 2d 561, 
¶55. 
 
Under 
the 
facts 
of 
this 
case 
both 
jurisdictions are more than minimally concerned.   
¶51 We cannot say that the application of Wisconsin law 
would appreciably impede state-to-state commercial intercourse 
as compared to the application of Iowa law.  Although it might 
No. 
2004AP1793   
 
20 
 
be said that the application of Wisconsin law would discourage 
Iowa companies from hiring Wisconsin residents, it might just as 
easily be said that the application of Iowa law would discourage 
Wisconsin citizens from working for Iowa corporations.  Thus, 
somewhat paradoxically, both Iowa and Wisconsin have at least 
some interest in the application of either jurisdiction's laws. 
¶52 In addition, we note that this case does not appear to 
involve the risk of forum shopping.  The accident occurred in 
Wisconsin, and both Drinkwater and the tortfeasor who caused his 
injuries are Wisconsin residents.  Similarly, any fear that a 
prospective plaintiff would move to this state merely to take 
advantage of its made-whole doctrine is unfounded.  All in all, 
the second factor does not appreciably favor Iowa law or 
Wisconsin law. 
¶53 Simplification of the judicial task.  This court has 
stated a general rule that the judicial task is rarely 
simplified when lawyers and judges must apply themselves to 
foreign law.  Beloit Liquidating, 270 Wis. 2d 356, ¶28; see also 
Finch v. Southside Lincoln-Mercury, Inc., 2004 WI App 110, ¶30, 
274 Wis. 2d 719, 685 N.W.2d 154 ("application of our own law, as 
opposed to the law of a foreign jurisdiction, will always 
simplify our judicial task, except where Wisconsin law is 
No. 
2004AP1793   
 
21 
 
complex or uncertain as 
compared 
to 
that 
of 
the 
other 
jurisdiction").6 
¶54 The judicial task would not be simplified by the 
application of Iowa law.  In order to see why, we will delve a 
bit deeper into Iowa law. 
¶55 In Ludwig, the Iowa Supreme Court rejected the 
Wisconsin approach to the made-whole doctrine.  Ludwig, 393 
N.W.2d at 146.  It concluded that amounts recovered against a 
third party for separate elements of a claim can be identified 
and credited toward subrogation claims, even though other 
elements of the claim against the third party may not be fully 
satisfied.  Id.  The court explained that its holding could be 
implemented if parties included allocation of elements of 
damages in settlement documents or special interrogatories.  Id.  
¶56 The Iowa Supreme Court acknowledged that in many cases 
identification 
of 
specific 
amounts 
could become 
difficult 
because a lump sum settlement might be made.  Id. at 146 n.2.  
Similarly, the court recognized, the insured and third party 
might be "less than solicitous" of the interests of a subrogee, 
and might therefore attempt to establish by agreement that the 
settlement included little to no reimbursement for the element 
                                                 
6 Cf. Gillette, 251 Wis. 2d 561, ¶59 ("A Wisconsin court can 
easily and simply apply Manitoba law to determine damages in the 
present case.").  Professor Leflar explained as follows:  "It 
has been argued that a court should apply its own local law 
unless there is good reason for not doing so.  No one can deny 
the propriety of this argument so long as the 'unless' clause is 
adequately emphasized."  Leflar, 31 N.Y.U. L. Rev. at 288 
(footnote omitted). 
No. 
2004AP1793   
 
22 
 
of damages in which the subrogee is interested.  Id.  Thus, the 
court reasoned, a mini-trial such as that in Rimes might be 
required.  Id.; see also Iowa American Ins. Co. v. Pipho, 456 
N.W.2d 228, 230 (Iowa Ct. App. 1990) (remanding for a "mini-
trial" because a settlement did not state what share of the 
plaintiff's medical bills was attributed to a settlement 
agreement). 
¶57 Accordingly, it cannot be said that the application of 
Iowa law would simplify the judicial task.  Iowa case law 
suggests that a Rimes-type hearing may often be required under 
Iowa law.  Thus, the application of Iowa law would be no simpler 
than the application of Wisconsin law.  Moreover, the Ludwig 
court's discussion causes us concern that the application of 
Iowa law might inject additional opportunities for litigants to 
game the system, thereby increasing the potential complexity of 
the judicial task.  This factor points to the application of 
Wisconsin law. 
¶58 Advancement of the forum's governmental interests.  
"The question in private litigation, such as in an automobile-
accident case, is whether the proposed nonforum rule comports 
with the standards of fairness and justice that are embodied in 
the policies of the forum law."  Gillette, 251 Wis. 2d 561, ¶62 
(quoting Heath, 35 Wis. 2d at 598 (1967)).  "If it appears that 
the application of forum law will advance the governmental 
interest of the forum state, this fact becomes a major, though 
not in itself a determining, factor in the ultimate choice of 
No. 
2004AP1793   
 
23 
 
law." 
 
Gillette, 
251 
Wis. 2d 561, 
¶62; 
accord 
Beloit 
Liquidating, 270 Wis. 2d 356, ¶30.   
¶59 Wisconsin has a strong interest in compensating its 
residents who are victims of torts.  Gillette, 251 Wis. 2d 561, 
¶61; Conklin v. Horner, 38 Wis. 2d 468, 481, 157 N.W.2d 579 
(1968) ("The policy of our tort law is to compensate those who 
are injured by negligent acts.").7 
¶60 Our state's made-whole doctrine, with its deep and 
firm roots, is a central means by which Wisconsin's interest in 
compensating its resident tort victims is effectuated.  The 
court has repeatedly reaffirmed the strength and reach of the 
doctrine.  As already explained, this occurred most recently in 
Ruckel in which the court held that under Rimes and Garrity an 
insured must be made whole before an insurer may exercise 
subrogation rights against its insured, even when an unambiguous 
subrogation clause in an insurance contract states otherwise.  
Ruckel, 253 Wis. 2d 280, ¶¶4, 40, 43. 
¶61 In order for this factor to weigh in favor of the 
application of Wisconsin law, we need not determine that Iowa's 
law is a "bad law" or that it "serves no legitimate purpose."  
Gillette, 251 Wis. 2d 561, ¶65.  We can, and do, however, 
                                                 
7 This court has also recognized "admonitory" and deterrent 
aspects of our tort law.  Gillette, 251 Wis. 2d 561, ¶64; 
Conklin v. Horner, 38 Wis. 2d 468, 482, 157 N.W.2d 579 (1968).  
Similarly, the court has said:  "It is in the interest of this 
state and of its citizens to retain where possible those laws 
which require motorists to refrain from acts of ordinary 
negligence."  Conklin, 38 Wis. 2d at 483. 
No. 
2004AP1793   
 
24 
 
determine that limiting Drinkwater's net recovery to less than 
the damages he would recover under Wisconsin law undermines 
Wisconsin's significant interest in fully compensating its 
citizens who are tort victims.  This factor points strongly to 
the application of Wisconsin law.  
¶62 Application of the better rule of law.  As previously 
suggested, we need not and do not necessarily conclude that Iowa 
law is bad law or serves no legitimate purpose.  Yet, this 
court's repeated affirmations of Wisconsin's made-whole doctrine 
must to some extent be taken as an indication of Wisconsin's 
view that our made-whole doctrine constitutes the better rule.  
This court has rejected the Iowa approach. 
¶63 We cannot help but observe that the application of 
Iowa law would seem to work inequitable results, at least from 
the viewpoint of a tort system such as that in Wisconsin.  At 
oral 
argument, 
counsel 
for 
the 
Plan 
conceded 
that 
if 
Drinkwater's medical expenses had been $251,000, a sum that is 
$1,000 more than the limits of the tortfeasor's liability 
insurance, under Iowa law the Plan would have been subrogated to 
all of Drinkwater's recovery.  In other words, according to the 
Plan's counsel, the most severe cases of injury are those in 
which the injured party would be most likely to end up with a 
net recovery of zero.  This is the type of result that, as we 
declared in Ruckel, "turn[s] the entire doctrine of subrogation 
on its head."  Ruckel, 253 Wis. 2d 280, ¶41.  The final factor 
thus points to the application of Wisconsin law. 
No. 
2004AP1793   
 
25 
 
¶64 Considering 
the 
five 
choice-influencing 
factors 
together, we conclude that Wisconsin law should apply.  All of 
the factors either point to the application of Wisconsin law or 
are neutral. 
The 
parties 
agree, 
as 
do 
we, 
that 
under 
Wisconsin's made-whole doctrine, the Plan is not entitled to any 
subrogation against Drinkwater's recovery.  Accordingly, we need 
go no further to conclude that the circuit court judgment must 
be affirmed. 
III 
¶65 In sum, we conclude that Wisconsin law applies to 
require that Drinkwater must be made whole before the Plan is 
entitled to subrogation against Drinkwater's recovery for his 
personal injuries.  The Plan is not entitled to subrogation 
because Drinkwater was not made whole under Wisconsin law.  
Accordingly, we affirm the circuit court judgment. 
By the Court.—The judgment of the Grant County Circuit 
Court is affirmed. 
 
 
 
 
No.  2004AP1793.dtp 
 
1 
 
 
¶66 DAVID T. PROSSER, J.   (dissenting).  The made-whole 
doctrine is a well-established feature of Wisconsin tort and 
insurance law.  I support this doctrine and wish it were the law 
in all jurisdictions.  Unfortunately, it is not.  We must 
recognize that fact in considering this case. 
¶67 Shane 
Drinkwater 
was 
very 
badly 
injured 
by 
an 
underinsured Wisconsin motorist.  He has not been made whole.  
If Mr. Drinkwater were employed by a Wisconsin employer and 
insured by a Wisconsin insurer, there would be no dispute that 
the made whole doctrine would apply to his case.  But the facts 
are otherwise.  At the time of the accident, Mr. Drinkwater 
worked for an Iowa employer and was insured by an Iowa health 
plan.  In the insurance contract, the Iowa insurer explicitly 
reserved its subrogation rights, as permitted under Iowa law, 
and it unambiguously provided that Iowa law would govern the 
contract. 
¶68 Mr. 
Drinkwater's 
employer, 
United 
Clinical 
Laboratories, is located in Dubuque.  The company has more than 
100 employees. 
¶69 The Dubuque metropolitan area includes the states of 
Illinois, Iowa, and Wisconsin.  Jo Daviess County in Illinois 
and 
Grant 
County 
in 
Wisconsin 
are 
directly 
across 
the 
Mississippi River from Dubuque.  Because of this geography, 
there is a good possibility that Shane Drinkwater was not the 
only 
Wisconsin 
resident 
who 
worked 
for 
United 
Clinical 
No.  2004AP1793.dtp 
 
2 
 
Laboratories.  There is a good possibility that Illinois 
residents work there as well. 
¶70 All the employees of United Clinical Laboratories who 
live 
in 
Iowa 
and 
all 
the 
employees 
of 
United Clinical 
Laboratories 
who 
live 
in 
Illinois 
are 
governed 
by 
the 
subrogation clause in the Medical Associates Health Plan.  The 
Illinois residents are governed by the clause because Illinois,1 
like Iowa,2 does not recognize the made whole doctrine. 
¶71 United Clinical 
Laboratories 
is one 
of numerous 
employers in the border states of Illinois and Iowa who employ 
Wisconsin residents.  Many of these employers afford their 
employees 
health 
care 
plans 
that 
contractually 
reserve 
subrogation rights and do not recognize the made whole doctrine.  
Some of these employers may be much smaller than United Clinical 
Laboratories.  Conversely, Shane Drinkwater is one of the 
thousands of Wisconsin residents who drive across this state's 
border to take advantage of an employment opportunity and health 
insurance in one of these neighboring states.3 
¶72 These 
Wisconsin 
residents 
will 
receive 
enhanced 
protection because of this court's decision if they are involved 
                                                 
1 Eddy v. Sybert, 783 N.E.2d 106, 110 (Ill. App. Ct. 2003). 
2 Ludwig v. Farm Bureau Mut. Ins. Co., 393 Wis. 2d 143 (Iowa 
1986). 
3 The Wisconsin Department of Revenue estimates that in 2004 
more than 53,000 Wisconsin residents were employed at jobs in 
Illinois.  See Letter dated December 28, 2005, from Michael L. 
Morgan, State of Wisconsin Secretary of Revenue, to Brian Hamer, 
Director, Illinois Department of Revenue (on file with the State 
of Wisconsin Department of Revenue, Madison, Wisconsin). 
No.  2004AP1793.dtp 
 
3 
 
in an accident in Wisconsin.  They will receive more protection 
than their co-workers and consequently may become more expensive 
to insure than their co-workers who live in Illinois or Iowa.  
This may have an effect on health care costs for their 
employers.  It may have an effect on Wisconsin resident 
employment. 
¶73 In resolving the choice of law issue presented here, 
the court skillfully marshals the facts and policy in a manner 
that supports its decision.  But some of the facts carry no 
weight.  For instance, the fact that "[t]he tortfeasor is a 
resident of Wisconsin and was covered under an insurance policy 
issued by a Wisconsin insurance company," majority op., ¶44, is 
really not relevant.  The law would not be different if the 
tortfeasor lived in Illinois and was covered under a policy 
issued by an Illinois insurance company.  What is important is 
that the tortfeasor's insurer provided liability coverage. 
¶74 The fact that "[b]oth Drinkwater and the other driver 
were operating vehicles registered in Wisconsin at the time of 
the accident," id., also is not significant.  It merely 
supplements the fact that the two drivers were Wisconsin 
residents. 
¶75 There are three important Wisconsin-related facts: (1) 
Mr. Drinkwater was and is a Wisconsin resident; (2) his accident 
occurred in Wisconsin; and (3) his suit was filed in Wisconsin. 
¶76 The rule of this case is that Wisconsin law will trump 
Illinois or Iowa subrogation law on a Wisconsin injury to a 
Wisconsin resident when the case is tried in a Wisconsin court.   
No.  2004AP1793.dtp 
 
4 
 
¶77 What is not clear is what the result would be if there 
were a Wisconsin injury to an Illinois or Iowa resident and the 
case were tried in a Wisconsin court against the insured's home 
state insurer (like Medical Associates Health Plan) claiming 
subrogation rights.  Because Wisconsin is visited by hundreds of 
thousands of out-of-state tourists, this sort of scenario must 
be anticipated.   
¶78 We also do not know what the result would be if a 
Wisconsin resident like Mr. Drinkwater were to be injured in an 
Illinois or Iowa accident but able to sue in Wisconsin and bring 
in the out-of-state insurer claiming subrogation. 
¶79 This uncertainty undermines the predictability of 
results.  As this court stated: 
 
Predictability is one of the choice-influencing 
considerations 
that 
deserves 
special 
emphasis 
in 
consensual 
arrangements. . . . [S]ince 
a 
legal 
relationship is entered into by pre-arrangement, it is 
imperative that the parties know their rights will be 
the same, irrespective of the forum, and that their 
agreement 
will 
have 
the 
same 
consequences, 
irrespective of where the contract is performed or 
where a dispute in regard to it is resolved. 
Heath v. Zellmer, 35 Wis. 2d 578, 596, 151 N.W.2d 664 (1967). 
¶80 The result in this case is certainly fair to Mr. 
Drinkwater.  The nagging concern is whether our decision will 
have collateral consequences to other people or the law. 
 
 
No.  2004AP1793.dtp 
 
 
 
1