Court Opinion

ID: 9742970
Source: CourtListenerOpinion
Date Created: 2023-08-26 21:23:32.146533+00
Date Added: 2024-06-11T07:24:38.099873
License: Public Domain

DAVID T. PROSSER, J.
¶ 57. (dissenting). In 1975 the legislature amended the Wisconsin Insurance Code to require insurers to promptly pay every insurance claim. § 708, ch. 39, Laws of 1975. The new statute *333(Wis. Stat. § 631.02 (1975)) determined that an insurance claim would be overdue if not paid within 30 days after the insurer was furnished with written notice of the fact and amount of a covered loss. The statute included a potent enforcement mechanism: "All overdue payments shall bear simple interest at the rate of 12% per year." See Wis. Stat. § 628.46(1) (2003-04).1
¶ 58. In 1978 this court described the "Timely payment of claims" statute as "an additional provision of the insurance contract incorporated into it by operation of law." Anderson v. Continental Ins. Co., 85 Wis. 2d 675, 696, 271 N.W.2d 368 (1978); see also Upthegrove Hardware, Inc. v. Pa. Lumbermans Mut. Ins. Co., 146 Wis. 2d 470, 484, 431 N.W.2d 689 (1988); Poling v. Wis. Physicians Serv., 120 Wis. 2d 603, 612, 357 N.W.2d 293 (Ct. App. 1984).
¶ 59. The issue presented in this case is whether a third party tort plaintiff who is not an "insured" under an automobile insurance contract is entitled to make a claim against the insurer pursuant to Wis. Stat. § 628.46(1) — before a judgment is obtained or a settlement is reached or offered — thereby triggering the prompt payment requirement and the 12 percent interest penalty if timely payment is not made. I conclude that the legislature did not intend to authorize a third party tort plaintiff to invoke the provisions of § 628.46(1) on these facts, and that if such a plaintiffs "claim" were recognized, it would seriously undermine the contractual relationship between the insurer and the insured. Because the majority opinion reaches a different conclusion, I respectfully dissent.
*334I. STATUTORY AMBIGUITY
¶ 60. This is a statutory interpretation case. Statutory interpretation begins with the language of the statute. State ex rel. Kalal v. Circuit Court for Dane County, 2004 WI 58, ¶ 45, 271 Wis. 2d 633, 681 N.W.2d 110. "If the meaning of the statute is plain, we ordinarily stop the inquiry." Id. (quoting Seider v. O'Connell, 2000 WI 76, ¶ 43, 236 Wis. 2d 211, 612 N.W.2d 659).
¶ 61. In the Kalal methodology, statutory ambiguity is a condition precedent to the examination of extrinsic sources, except in situations involving an absurd or highly unreasonable result, or when the court seeks to confirm or verify plain meaning. This is the rule because we "assume that the legislature's intent is expressed in the statutory language." Kalal, 271 Wis. 2d 633, ¶ 44. A statute is ambiguous if it is capable of being understood by reasonably well-informed persons in two or more senses. Id., ¶ 47.
¶ 62. The majority opinion concludes that § 628.46 is unambiguous. It reaches this conclusion by disregarding fundamental rules of statutory interpretation, including: (1) the preference that words not be made superfluous, (2) the need to interpret a statute in context, and (3) the admonishment to avoid absurd or unreasonable results.
¶ 63. As will be shown, the statute is ambiguous. Without a sensible construction, the statute produces an unreasonable result, placing insurers in the impossible position of fulfilling irreconcilable duties to their insureds and to adversarial third party plaintiffs.
¶ 64. The statute to be interpreted reads in part as follows:
628.46 Timely payment of claims. (1) Unless oth*335erwise provided by law, an insurer shall promptly pay every insurance claim. A claim shall be overdue if not paid within 30 days after the insurer is furnished written notice of the fact of a covered loss and of the amount of the loss. If such written notice is not furnished to the insurer as to the entire claim, any partial amount supported by written notice is overdue if not paid within 30 days after such written notice is furnished to the insurer. Any part or all of the remainder of the claim that is subsequently supported by written notice is overdue if not paid within 30 days after written notice is furnished to the insurer. Any payment shall not be deemed overdue when the insurer has reasonable proof to establish that the insurer is not responsible for the payment, notwithstanding that written notice has been furnished to the insurer.... All overdue payments shall bear simple interest at the rate of 12% per year.
(2) Notwithstanding sub. (1), the payment of a claim shall not be overdue until 30 days after the insurer receives the proof of loss required under the policy or equivalent evidence of such loss....
(3) This section applies only to the classes of claims enumerated in s. 646.31(2).
¶ 65. Subsection (3) references Wis. Stat. § 646.31(2), which reads in part:
(2) CLASSES OF CLAIMS TO BE PAID. No claim may be paid under this chapter unless the claim is in one of the following classes:
(d) Third party claimants. A claim under a liability or workers' compensation insurance policy, if either the *336insured or the 3rd party claimant was a resident of this state at the time of the insured event.
¶ 66. In this case, the meaning of § 628.46(1) is seriously muddled by the confusing relationships among several statutes.
¶ 67. First, the language of Wis. Stat. § 628.46(1) has not been changed since 1975. From the beginning, the statute has contained a qualifying opening clause: "Unless otherwise provided by law." This clause implies the need to examine other statutes. Unless this qualification is considered and excluded, there is some risk in applying the statute.
¶ 68. Second, subsection (1) began as a standalone statute. Now, however, it is affected by three additional subsections, one of which incorporates a second statute by reference. This underscores the proposition that § 628.46(1) cannot be interpreted by focusing solely on the subsection itself.
¶ 69. Third, by tying § 628.46(1) to § 646.31(2), § 628.46(3) introduces the concept of a third party claimant. Petitioners rely very heavily on § 646.31(2)(d) to interpret § 628.46(1). However, the key term in § 646.31(2)(d) — "third party claimant" — is not defined, and thus it too requires interpretation. The interpretation given to the term "third party claimant" may affect claims under Chapter 646 as well as the interpretation of § 628.46(1).
¶ 70. Fourth, inasmuch as reference is made in § 628.46(3) only to § 646.31(2), the question arises whether other provisions in Chapter 646 may be considered in interpreting § 646.31(2). Specifically, should § 646.31(2) be interpreted in light of the limitations in §§ 646.01 (which excludes certain insurance) and 646.31(1) (which establishes conditions of eligibility for *337Chapter 646 claims and excludes claims "[m]ade for interest on any claim")?
¶ 71. Fifth, § 628.46(3) incorporates § 646.31(2) by reference. This incorporation occurred in 1976. At the time, Wisconsin case law provided that "[w]hen the adopting statute incorporates an earlier statute or a limited and a particular provision thereof by specific reference, such incorporation takes the statute as it existed at the time of incorporation and does not prospectively include subsequent modifications or a repeal of the incorporated statute or portions thereof." Union Cemetery v. Milwaukee, 13 Wis. 2d 64, 68, 108 N.W.2d 180 (1961). Although this rule of construction was superseded by Wis. Stat. § 990.01(5)(b) in 1979, see § 539, ch. 89, Laws of 1979, the new incorporated statute may be inconsistent with the original intent of the legislature.
¶ 72. Sixth, because plaintiffs are seeking interpretation of a statute that must have been interpreted by the Office of the Commissioner of Insurance (OCI) over a 30-year period, it would be helpful to know what interpretation, if any, OCI has given and what deference is owed to OCI's interpretation.
¶ 73. Finally, this case presents the question whether § 628.46 permits a third party tort plaintiff to invoke an insured defendant's contract rights. As a general rule, a contract cannot be enforced by a person not a party to it. Abramowski v. Wm. Kelps Sons Realty, 80 Wis. 2d 468, 472, 259 N.W.2d 306 (1977). On the other hand, this rule of "privity" is negated in certain circumstances by third party beneficiaries, Schilling v. Employers Mutual Casualty Company, 212 Wis. 2d 878, 886-87, 569 N.W.2d 776 (Ct. App. 1997), and may be affected by Wisconsin's direct action statute against insurers, Wis. Stat. § 632.24. If a third party tort plaintiff is entitled to invoke § 628.46(1), however, it is not clear *338why some third parties are specifically precluded from invoking the statute by virtue of Wis. Stat. § 646.31(2).
¶ 74. With these points in mind, I believe the court of appeals was correct when it concluded that the statute is inconsistent and ambiguous,2 and that its ambiguity permits us to examine extrinsic sources.
II. LEGISLATIVE HISTORY
¶ 75. Wisconsin Stat. § 628.46(1) was created as part of the 1975 state budget bill. § 708, ch. 39, Laws of 1975. The new statute was numbered § 631.02. It was submitted as part of the budget by Governor Patrick Lucey.
¶ 76. Later that year, the Legislative Council, at the behest of the Insurance Law Revision Committee, introduced 1975 Senate Bill 642. Among other things, this "general revision of the insurance law relating to insurance contracts" proposed to renumber § 631.02 as § 636.10, without further changes. However, the Senate Committee on Commerce, to whom the bill was referred, offered Senate Amendment 1, adding subsections (2) and (3) to the renumbered section. This amendment was adopted and became part of the law. See § 43, ch. 375, Laws of 1975.
¶ 77. Subsection (3) of the newly created § 636.10 provided: "This section applies only to the classes of claims enumerated in s. 646.11(2)."3 At that time, Wis. Stat. § 646.11 read in part:
*339(2) Classes of Claims To Be Paid. A claim shall not be paid unless it is:
(a) Residents. The claim of a policyholder or an insured of, or a beneficiary under, a policy or annuity, who at the time of the insured event or of the liquidation order was a resident of this state; or
(c) Third party claimants. A claim under liability [or] worker's compensation insurance policy, if:
1.Either the insured or the 3rd party claimant was a resident of this state at the time of the insured event; or
2. The claim is for bodily or personal injuries suffered in this state or by a person who when he suffered the injuries was a resident of this state; or
3. The claim is for damage to property situated in this state at the time of damage.
Wis. Stat. § 646.11 (1975).
¶ 78. In 1979 chapter 646 was repealed and recreated, renumbering the former § 646.11 to § 646.31. § 14, ch. 109, Laws of 1979. New § 646.31 begins as follows; "(1) CONDITIONS OF ELIGIBILITY. A claim is not eligible for payment from the fund unless it is an unpaid claim for a loss insured under the policy or annuity." New subsection (2) moved "3rd party claimants" from paragraph (c) to paragraph (d). Id.
¶ 79. In 1999 the legislature repealed subdivisions 2 and 3 of paragraph (d), 1999 Wis. Act 30, §§ 73-76, and merged the introduction with subdivision 1, so that paragraph (d) reads: "A claim under a liability or workers' compensation insurance policy, if either the insured or the 3rd party claimant was a resident of this *340state at the time of the insured event." Wis. Stat. § 646.31(2) (d). This is part of the language we must now review.
III. ANALYSIS
¶ 80. Wisconsin Stat. § 628.46(1) has been part of Wisconsin law for more than 30 years, but no court has ever before given it the majority's interpretation in a published opinion. There is good basis for this forbearance in the text of the statute.
¶ 81. The respondent insurers point to certain terms and phrases in §§ 628.46(1) and (2), namely, "insurance claim," "claim ... under the policy," "proof of loss required under the policy," and "covered loss," and suggest that these terms normally relate to first party claims.
¶ 82. Perhaps the most critical term in this list is "insurance claim." This term can easily be interpreted to connote a contract claim. The term "claim" — without any limiting adjective — is a broader term that may include a tort claim. The majority's interpretation of the statute either makes the terms "claim" and "insurance claim" interchangeable or concludes that a third party tort claim is an "insurance claim." Both of these propositions are dubious.
¶ 83. Metropolitan Property and Casualty adds an additional argument, that liability policy coverage provisions do not require an injured party to submit "proof of loss" to the insurer under the policy. It cites Wis. Stat. § 631.81 (approved as part of the same Chapter 375, Laws of 1975, that initially linked § 628.46 to § 646.31(2)). This statute relates "notice" and "proof of loss" to an insured's contract obligation *341under the insurance policy.4 A third party tort plaintiff is not required by § 631.81 to provide timely notice or "proof of loss" to an insurer because a third party tort plaintiff has no contract obligation.
¶ 84. It makes sense to apply § 628.46(1) to a first party claim. The first party insured has a contract with the insurer; and the insurer is part of a heavily regulated industry. Insurance regulation, by statute or rule, often serves to protect the interests of the "consumer" insured. In § 628.46(1), the legislature has created an *342additional provision of the insurance contract to assure the prompt vindication of the insured's contract rights. See Anderson, 85 Wis. 2d at 696.
¶ 85. This same principle applies to certain "third party claimants." To illustrate: A man purchases a $500,000 life insurance policy. He names his wife as beneficiary. The "insured" expects that when he dies, the insurer will make a prompt payment to his beneficiary, who is a third party. See Estate of Plautz v. Time Ins. Co., 189 Wis. 2d 136, 525 N.W.2d 342 (Ct. App. 1994).
¶ 86. A man is employed at a supermarket. He is injured on the job. His employer has purchased workers' compensation insurance for employees and the "insured" employer expects the insurer to provide prompt coverage for the third party employee's injury. See Coleman v. Am. Universal Ins. Co., 86 Wis. 2d 615, 273 N.W.2d 220 (1979).
¶ 87. A woman has a health insurance policy. She becomes ill and is rushed to a hospital for treatment. The third party health care providers expect to be promptly paid by the woman's insurer under her policy. See Wis. Physicians Serv. Ins. Corp. v. Mitchell, 114 Wis. 2d 338, 338 N.W.2d 326 (Ct. App. 1983).
¶ 88. A driver has a typical automobile insurance policy. The driver hits a deer on the highway, causing extensive damage to the vehicle. The auto repair shop gives an estimate to the insured driver and the insurer and is authorized to proceed. When it completes its work, the third party auto repair shop expects to be paid promptly by the insurer pursuant to the policy.
¶ 89. In all these situations, the insured expects the insurance contract to be honored by the insurer even though the insured may not receive any direct payment. There may be a dispute about coverage be*343tween the insurer and the insured, or there may be a dispute about the amount to be paid. But, for the most part, the insurer, the insured, and any third party claimants are on the same side. The insured and third party claimants are almost always aligned. Sometimes third party claimants have been specifically named by the insured in the policy.5
¶ 90. A third party tort plaintiff is not on the same side as the insurer and the insured. The third party tort plaintiff — at least on the facts in these cases — is an adversary. See Kranzush v. Badger State Mut. Cas. Co., 103 Wis. 2d 56, 64, 307 N.W.2d 256 (1981). In explaining the basis for a bad faith claim by an insured against an insurer, the Kranzush court stated:
The insured's right to be treated fairly... is rooted in the contract of insurance to which he and the insurer are parties. The third-party claimant has not contracted for insurance benefits and is not in a contractual relationship, much less a relationship of trust, with the insurer.
Id. at 64 (emphasis added).
¶ 91. In short, § 628.46(1) fits most comfortably with first party claims. Where it is applied to first party claims and non-adversarial third party claims, the statute bolsters and expands an insured's contract rights.
*344¶ 92. By contrast, applying § 628.46(1) to a third party tort plaintiffs claim may drive a wedge between the insurer and the insured and undermine their contractual relationship. This court has recognized a "special duty of good faith and fair dealing [that] runs throughout the contract relationship between the insurer and the insured," Danner v. Auto-Owners Insurance, 2001 WI 90, ¶ 49, 245 Wis. 2d 49, 629 N.W.2d 159. Their relationship is sometimes characterized as a "fiduciary" relationship. See DeChant v. Monarch Life Ins. Co., 200 Wis. 2d 559, 570, 547 N.W.2d 592 (1996). It is unlikely that the legislature intended to put financial pressure on an insurer to terminate its "fiduciary" relationship with the insured.6
¶ 93. In Alt v. American Family Mutual Insurance Company, 71 Wis. 2d 340, 350, 237 N.W.2d 706 (1976), the court observed that an insurer "has an affirmative duty to seize whatever reasonable opportunity may present itself to protect its insured from excess liability." This duty is inconsistent with an insurer's early abandonment of the insured at the first opportunity after a tort claimant demands money, so that the insurer can avoid paying interest in excess of policy limits.7
*345¶ 94. Kranzush speaks of the balance between "the insurer's right to control the settlement process (and protect its own interests) [and] the insured's right to be protected from liability for which he is not covered." Kranzush, 103 Wis. 2d at 64 (emphasis added). "These are concerns to which the third-party claimant is a stranger." Id. The majority disrupts this balance by giving insurers a judicially sanctioned reason to elevate their interests and the interests of third party tort plaintiffs over the interests of their insureds.
¶ 95. Both the insurer and the insured have the right to put a tort plaintiff to his proof. "It is still the obligation of the tort victim to establish the fault of the tortfeasor, and it is still the prerogative of the alleged tortfeasor to defend himself in court." Id. at 65. This principle would be impaired if interest on a tort claim began to run against the insurer before a tort victim filed suit or offered settlement.
¶ 96. The Kranzush case rejected the creation of a tort of bad faith by a tort victim against the tortfeasor's insurer for failing to settle the victim's claim. The court explained that an insurer's duty to settle runs to the insured, not the claimant. Id. at 68. The court cited several cases from other courts, including Uebelacker v. *346Horace Mann Insurance Company, 500 F.Supp. 180 (E.D. Wis. 1980), then summarized their holdings: "These cases stress a constant theme: an insurer owes no duty to the third-party [tort] claimant to settle or to negotiate in good faith." Kranzush, 103 Wis. 2d at 72. We reiterate the words of the supreme court of Maine, for we believe they well express the extent to which this cause of action would constitute a serious and unprecedented departure from established tort principles:
[T]hat the insurer is the representative of the insured logically imports that the third party tort claimant's status as the adversary of the insured renders him, ipso facto, the adversary of the insured's agent. Thus, prior to the establishment of legal liability, as the tort claimant has no legal right to require the tortfeasor to negotiate or settle, it likewise lacks right to require such action by his representative. [Linscott v. State Farm Mutual Auto. Ins. Co., 368 A.2d 1161, 1163-64 (Me. 1977).]
Id. at 72-73 (emphasis added).
¶ 97. The thrust of the majority opinion is to impose a duty on insurers, by statute, to start making payments within 30 days of a tort victim's demand, or risk the commencement of 12 percent interest. This duty may be imposed even before suit is filed, to say nothing of a court's determination of the insurer's liability. By requiring insurers to pay before a settlement is reached or a judgment rendered, the majority increases the likelihood that plaintiffs will hold out and demand more, thereby elevating the strategic position of third party tort plaintiffs in litigation at the expense of insureds.
¶ 98. Irrespective of common law principles, this court is expected to follow clear legislative mandates so long as they do not violate some constitutional provision. In this case, the mandate is not clear. Because the majority opinion represents a radical departure from *347existing precedent, there ought to be some evidence that this result is what the legislature intended. I am unable to unearth that intent in extrinsic sources.
¶ 99. The original proposal was contained in Governor Lucey's 1975-77 budget. I have been unable to find any explanation of the provision that does more than repeat in summary form the terms of the provision.8 I have also been unable to locate any explanation of the 1976 amendment of the Senate Committee on Commerce.
¶ 100. The Office of the Commissioner of Insurance (OCI) has recognized § 628.46 as part of the statutory Wisconsin Insurance Code since 1975. In 1978 John Sheski, a young attorney on the Health Insurance Project Team at OCI, wrote a 12-page internal memorandum discussing potential interpretations of the "Timely payment of claims" statute. Sheski advocated interpreting the statute to benefit third party claimants. Memorandum from John Sheski to Laurie Riach dated September 27, 1978, regarding "Entitlement to Statutory Interest 'Penalty' Provided by Section 636.10, Wis. Stats." (on file with the State of Wisconsin Office of Commissioner of Insurance, Madison, Wisconsin) (hereinafter Sheski Memorandum).
*348¶ 101. Sheski's memorandum discusses "present ambiguity" in the statute, draft legislation (never enacted) from the Legislative Council to revise Chapter 636, contemporary cases on prejudgment interest, the incorporation of then Wis. Stat. § 646.11(2) (1975) by reference, and a November 9, 1976, memorandum to Commissioner Harold R. Wilde from Assistant Deputy Commissioner Marvin E. Van Cleave. Sheski argued that under certain circumstances, third party claimants were entitled to receive the interest under the statute. He contended that the statute did not appear to alter case law on prejudgment interest. "[Wisconsin Stat. §] 636.10 provides a statutory right to such interest at a 12% per annum rate which the courts must award if the claimant asks for it as part of the requested relief and the insurer has no valid defense." Sheski Memorandum at 5.
¶ 102. The memorandum acknowledges, however, that the Insurance Laws Revision Committee wanted to modify the language in the statute, removing "detail that is not fairly applicable to all kinds of claims." Sheski Memorandum at 2. It quotes the Van Cleave memorandum as summarizing a discussion about the modification proposal not applying to third party claims: "Laura Sullivan related the concern of her claims people with what their responsibilities are with respect to third party claims — [Spencer] Kimball said that the response could be that there was no liability." Sheski Memorandum at 10 (quoting Van Cleave memorandum).
¶ 103. Sheski's comment on this was that "It's evident that Kimball and others were of the opinion that there was no insurer liability to third-party claimants for the interest 'penalty.'" Sheski Memorandum at 11.
¶ 104. The importance of the Sheski Memorandum is that in 1978 OCI had an advocacy memorandum in behalf of third-party claimants. Yet, I found no evi*349dence that OCI ever followed up and applied Wis. Stat. § 628.46(1) against an insurer who did not promptly settle a claim from a third party tort plaintiff. Rather, it appears that OCI has used § 628.46(1) to apply discipline only to insurers who did not promptly settle with insureds and non-adversarial third parties. In fact, in a 1987 opinion, OCI posed the question: "If an insurer agrees to pay 70 percent of a third-party claim but does not pay this amount because the third-party disagrees with the offer and the claim is ultimately settled for 80 percent, is the insurer subject to pay an interest penalty because they did not timely pay the 70 percent offer?" OCI staked out the legal position that "Interest is not due because liability has not been established," citing Wis. Stat. § 628.46. Legal Position Binder, Opinion Number 6, dated March 31, 1987 (on file with State of Wisconsin Office of Commissioner of Insurance, Madison, Wisconsin).
¶ 105. OCI's interpretation of the statute is consistent with the view that Wis. Stat. § 628.46(1) is intended to bolster the "consumer" insured's contract rights under the insurance policy. For OCI to review and discipline an insurer for its performance in dealing with a third party tort claimant would introduce a dramatic new element into tort litigation.
¶ 106. Third party tort plaintiffs have well-established alternative protections, including Wis. Stat. § 807.01(4). If Wis. Stat. § 628.46(1) is interpreted to apply to a third party tort plaintiff, the statute conflicts with Wis. Stat. § 807.01(4),9 inasmuch as a plaintiff *350under § 807.01(4) may not make a consequential offer of settlement until "after issue is joined." On the other hand, § 628.46 does not require the plaintiff to make any offer of settlement. In effect § 628.46(1), as interpreted by the majority, displaces § 807.01(4) in every third party tort plaintiff case involving an insurer. This will penalize insurers in situations where it would not penalize actual tortfeasors.
¶ 107. Several courts have explained that the purpose of Wis. Stat. § 807.01(4) is to encourage settlement of cases prior to trial. See Beacon Bowl, Inc. v. Wis. Elec. Power Co., 176 Wis. 2d 740, 778, 501 N.W2d 788 (1993); DeMars v. LaPour, 123 Wis. 2d 366, 373, 366 N.W.2d 891 (1985); Graves v. Travelers Ins. Co., 66 Wis. 2d 124, 140, 224 N.W.2d 398 (1974); Gorman v. Wausau Ins. Cos., 175 Wis. 2d 320, 328, 499 N.W.2d 245 (Ct. App. 1993). This purpose is different from bolstering an insured's contract rights.
¶ 108. There are numerous situations in which a third party tort claimant will be entitled to pre-verdict interest on his claim, but the majority's interpretation of § 628.46 may conflict with established Wisconsin law on pre-verdict interest in personal injury cases in the absence of an offer of settlement under § 807.01(4). See Johnson v. Pearson Agri-Systems, Inc., 119 Wis. 2d 766, 350 N.W.2d 127 (1984).10 By reconciling Wis. Stat. § 628.46 with our pre-verdict interest decisions in other *351third party cases, my position requires a third party tort plaintiff to meet a higher burden than a person exercising a contract right under a policy, and thus decreases the likelihood of satellite litigation.
¶ 109. If the majority were not concerned about the far-reaching implications of its decision, it would not have decided to rewrite a purportedly unambiguous statute to create "tests" for the third party tort plaintiff to meet.
¶ 110. I think the better course is to uphold the interpretation of the OCI and the court of appeals.
¶ 111. For the reasons stated, I respectfully dissent.

 All references to the Wisconsin Statutes are to the 2003-04 version unless otherwise indicated.

 Kontowicz v. Am. Standard Ins. Co., 2005 WI App 22, ¶ 10, 278 Wis. 2d 664, 693 N.W.2d 112; see also Wis. Physicians Serv. Ins. Corp. v. Mitchell, 114 Wis. 2d 338, 344-45, 338 N.W.2d 326 (Ct. App. 1983).

 Wisconsin Stat. § 628.46 was amended again in 2001 and 2002 to create subsection (2m), which relates to payment for chiropractic services. See 2001 Wis. Act 16, § 9327(lc); 2001 Wis. Act 65, §§ 19, 20.

 Wisconsin Stat. § 631.81 provides:
631.81 Notice and proof of loss. (1) Timeliness of notice. Provided notice or proof of loss is furnished as soon as reasonably possible and within one year after the time it was required by the policy, failure to furnish such notice or proof within the time required by the policy does not invalidate or reduce a claim unless the insurer is prejudiced thereby and it was reasonably possible to meet the time limit.
(2) Method of giving notice. It is a sufficient service of notice or proof of loss if a 1st class postage prepaid envelope addressed to the insurer and containing the proper notice or proof is deposited in any U.S. post office within the time prescribed. The commissioner may expressly approve clauses requiring more expeditious methods of notice where that is reasonable.
(3) Meaning of insurer's acts. The acknowledgment by the insurer of the receipt of notice, the furnishing of forms for filing proofs of loss, the acceptance of such proofs, or the investigation of any claim are not alone sufficient to waive any of the rights of the insurer in defense of any claim arising under the insurance contract.
In such cases as Neff v. Pierzina, 2001 WI 95, 245 Wis. 2d 285, 629 N.W.2d 177, Wisconsin courts have discussed an insured's contractual obligation to provide the insurer with timely notice or proof of loss. The statute reinforces the insured's contractual obligation. The insured's breach of this obligation may prejudice the insurer and invalidate or reduce the insured's claim. See also, Wis. Stat. § 632.26.

 The court of appeals has provided an explanation why some third party claimants qualify under Wis. Stat. § 628.46(1):
Under established Wisconsin law, a contract cannot be enforced by a person not a party to it. The exception to that rule is a contract specifically made for the benefit of a third party. The person claiming to be a third-party beneficiary of a contract must show that the contract was entered into by the parties to the contract directly and primarily for his benefit.
Goossen v. Estate of Standaert, 189 Wis. 2d 237, 249, 525 N.W2d 314 (Ct. App. 1994) (citations omitted).

 A liability insurance contract often requires the insurer to provide counsel for an "insured" defendant. Although counsel is compensated by the insurer, counsel is ethically obligated to represent the insured with loyalty and "independence of professional judgment." SCR 20:1.8(f)(2). The insurer must not interfere in this relationship. In my view, the advent of insurer liability to third party tort plaintiffs for interest may create new tensions in the insurer/insured relationship and cause some insurers to "pull the plug" on their insureds at an earlier stage than they might have in the past.

 In Weimer v. Country Mutual Insurance Company, 216 Wis. 2d 705, 724, 575 N.W.2d 466 (1998), the court quoted *345Arnold E Anderson's treatise on Wisconsin Insurance Law § 8.2, at 237 (3d ed. 1990): "An insurance company has a duty to ... do all that is reasonably necessary to protect its insured from any liability in excess of policy limits." Then it added: "Failure to include language requesting release of [the insured] may subject [the insurer] to a claim of bad faith." Weimer, 216 Wis. 2d at 724 (emphasis added) (citing Alt v. Am. Family Mut. Ins. Co., 71 Wis. 2d 340, 350, 237 N.W.2d 706 (1976)).
Requesting release of the insured will not mean much if the plaintiff's rejection of the request does not toll the operation of the statute.

 Book 1 of the 1975-77 Executive Budget describes the budget requests of the Office of the Commissioner of Insurance and the Governor's recommendations with respect to these requests. This document does not mention the Governor's proposal for the timely payment of claims statute. The budget document does mention that the "mission of the office [of Commissioner of Insurance] is to regulate and supervise the insurance industiy so that the insurance consumer can be assured that there will be fair competition in the market place and that the consumer's needs can be met." Department of Administration, Bureau of Planning & Budget, Executive Budget of the State of Wisconsin, Book 1, at 122, 1975-77 (Jan. 1975).

 Wisconsin Stat. § 807.01(4) reads as follows:
(4) If there is an offer of settlement by a party under this section which is not accepted and the party recovers a judgment which is greater than or equal to the amount specified in the offer *350of settlement, the party is entitled to interest at the annual rate of 12% on the amount recovered from the date of the offer of settlement until the amount is paid. Interest under this section is in lieu of interest computed under ss. 814.04(4) and 815.05(8).

 In Johnson v. Pearson Agri-Systems, Inc., 119 Wis. 2d 766, 350 N.W.2d 127 (1984), the court was confronted with the question whether a plaintiff in a personal injury action is entitled to interest on the damage award from the time of the injury through the date the verdict is rendered. The court noted *351three statutes: Wis. Stat. § 814.04(4) (1981-82) ("pre-judgment interest at the rate of 12% per year from the time of the verdict until judgment is entered"); Wis. Stat. § 815.05 (post-judgment interest at 12% per year); and Wis. Stat. § 807.01(4) (regarding settlement offers from plaintiff). The court said:
If this court were to accept plaintiffs arguments and allow for pre-verdict interest we would face serious policy decisions that could thwart the attempt of the legislature to encourage settlement of lawsuits. Should we allow twelve percent pre-verdict interest for instance to a plaintiff even though no settlement offer had been made by such plaintiff? There would be no incentive for a plaintiff to offer to settle in order to get pre-verdict interest. This would seem to he an unwarranted thwarting of a statute designed to encourage an end to litigation and to reheve overcrowded court calendars. To award pre-verdict interest where an offer made and rejected was more than what the jury finally awarded would likewise thwart the purpose of the statute. To award pre-verdict interest where an offer was less than the verdict would then in effect amend a legislative act by doubling the amount the legislature had determined should he the incentive for encouraging the making and acceptance of settlement offers. This we decline to do.
Johnson, 119 Wis. 2d at 773-74.