Court Opinion

ID: 8203520
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:49:31.686627+00
Date Added: 2024-06-11T16:41:03.067222
License: Public Domain

ANN WALSH BRADLEY, J.
¶ 75. (dissenting). The made whole doctrine, subrogation, and the collateral source rule are all equitable doctrines. Generally, the order of equitable priorities is stated as follows: The injured party has greater equity than the subrogated insurer, while the subrogated insurer has greater equity than third parties who tortiously caused the loss. Ill Russell M. Ware, Law of Damages in Wisconsin § 32.6 (5th ed. 2010) (citing First Nat. Bank of Columbus v. Hansen, 84 Wis. 2d 422, 267 N.W.2d 367 (1978); Waukesha Sav., Bldg. & Loan Ass'n v. Hamill, 203 Wis. 414, 232 N.W 877 (1931); Valley Bancorp. v. Auto Owners Ins. Co., 212 Wis. 2d 609, 569 N.W.2d 345 (Ct. App. 1997)).
¶ 76. Examining the application of these three equitable doctrines in a particular case is a fact-intensive inquiry. See Koffman v. Leichtfuss, 2001 WI *528111, ¶ 26, 246 Wis. 2d 31, 630 N.W.2d 201. Both the analysis and the result depend on the unique circumstances of the case. Paulson v. Allstate Ins. Co., 2003 WI 99, ¶ 17, 263 Wis. 2d 520, 665 N.W.2d 744.
¶ 77. This case involves many unique circumstances. Here, the jury determined that the tortfeasor was 100 percent negligent. In stark contrast, during arbitration the tortfeasor was determined to be negligence free. The binding arbitration was done without any knowledge of the plaintiff so that traditional concepts of issue preclusion cannot apply. American Family voluntarily dismissed its subrogation claim with prejudice, and with the approval of everyone but the plaintiff. Perhaps the most unusual fact in this case is that there is an "extra" $10,000.
¶ 78. Under the unique facts of this case, how should these three equitable doctrines be applied? Who is entitled to recover the $10,000 windfall?
¶ 79. As the majority aptly explains, the plaintiffs have been fully compensated for their loss. Accordingly, the made whole doctrine is not implicated by the facts of this case. Majority op., ¶ 51.
¶ 80. Likewise, I conclude that the rule of subrogation is not determinative here. There is no subrogated party that can assert a subrogation interest in this case. American Family lost in binding arbitration and voluntarily dismissed its subrogated claim with prejudice.
¶ 81. Under the collateral source rule, neither the tortfeasor nor its insurer is entitled to the extra $10,000. As Justice Prosser correctly explains in his dissent, the collateral source rule in part provides that windfalls should not inure to the benefit of the tortfeasor or its insured. Rather, any windfall should inure to the benefit of the injured parties. Justice Prosser's *529dissent, ¶ 108 (citing Ellsworth v. Schelbrock, 2000 WI 63, 235 Wis. 2d 678, 611 N.W.2d 764).
¶ 82. Although the parties vigorously debate the interplay of these three equitable doctrines, I conclude that under the unique facts of this case, it is only the collateral source rule that is at play. In applying the collateral source rule, I conclude that the circuit court erred when it determined that the windfall of the "extra" $10,000 should inure to the benefit of the tortfeasor and its insured.
¶ 83. The arguments of the parties give rise to a number of difficult questions that need not be resolved to address the issues presented here. Left unanswered are the tougher questions for future cases.
¶ 84. Does the majority's analysis, which involved American Family's medical pay claim of a relatively small sum certain amount, apply equally to the large subrogation claim of a health insurer? What are the consequences of permitting a subrogated insurer to seek recovery against the tortfeasor first, at a point in time when it is unknown whether the injured party will be made whole? If a subrogated interest in a personal injury case is settled through arbitration before the plaintiff is made whole, what happens if it is later determined that there is insufficient money for the injured party to be fully compensated? Would the subrogated insurer be required to relinquish the money it received in arbitration to make the injured party whole? Does the injured party's knowledge or ignorance of the subrogated insurer's intent to proceed against the tortfeasor make any difference when evaluating the equities of the case?
¶ 85. For the time being, these difficult questions remain unanswered. The interaction between the three equitable doctrines can be complex and is driven by the *530specific facts of a case. Because I conclude that the collateral source rule governs the outcome of this case, I respectfully dissent.