Court Opinion

ID: 9517688
Source: CourtListenerOpinion
Date Created: 2023-08-07 00:28:58.457675+00
Date Added: 2024-06-11T12:06:43.623375
License: Public Domain

PATIENCE DRAKE ROGGENSACK, J.
¶ 123. {dissenting). Physicians Insurance Company (PIC) contracted to provide liability insurance for damages that its insureds caused by medical malpractice. The majority opinion affirms the court of appeals' conclusion that PIC's failure to answer within the statutorily prescribed time results in the following conclusive factual findings: (1) PIC's insureds were negligent; and (2) PIC's insureds' negligence was causal of plain*133tiffs' damages.1 PIC's insureds, in their answer to the amended complaint, denied that their conduct was negligent and denied that their conduct caused plaintiffs' damages, which denials joined those issues of fact and have not been stricken or proven false. Under the direct action statute, Wis. Stat. § 632.24 (2005-06),2 PIC cannot be liable unless its insureds' conduct was negligent and a cause of plaintiffs' damages. Kranzush v. Badger State Mut. Cas. Co., 103 Wis. 2d 56, 75, 307 N.W.2d 256 (1981). Therefore, the matter should be returned to the circuit court to litigate the contested factual questions relating to PIC's insureds' conduct. Because the majority opinion disconnects PIC's liability from the insureds' conduct contrary to the legislative directive, I respectfully dissent.
I. BACKGROUND
¶ 124. Undisputed facts that gave rise to a default judgment being entered against PIC are fully set out in the majority opinion; therefore, I will not review them here in any detail. Briefly, PIC contracted to provide insurance to Charles L. Folkestad, M.D., Terrance J. Witt, M.D. and Red Cedar Clinic — Mayo Health System (hereinafter, the insureds). The insureds were sued for negligence in the provision of medical services to Dale Otto, who died shortly after this action was commenced.
¶ 125. PIC was first named in the amended complaint, as an alleged insurer. A default judgment was entered against PIC because, although its attorney filed an answer to the amended complaint for the insureds in *134this malpractice action and raised defenses for PIC, through a scrivener's error, he did not name PIC as a party for whom he provided representation.
¶ 126. After almost a year of litigation in which the attorney for PIC participated in negotiations and discovery in preparation for trial, the plaintiffs discovered the scrivener's error and moved for default judgment against PIC. The circuit court granted plaintiffs' motion.3
¶ 127. The question presented here is whether in direct action litigation the scope of an insurer's default in failing to timely answer includes conclusive findings that the insureds were negligent and that their negligence caused plaintiffs' damages, even though the insureds denied that medical care was negligently provided and denied that their conduct caused plaintiffs' damages.
¶ 128. The circuit court concluded that because of the direct action statute, Wis. Stat. § 632.24, PIC's default resulted in admissions that the insureds were negligent and that the insureds' negligence caused plaintiffs damages. The court of appeals, in reliance on § 632.24, affirmed the circuit court's conclusion. Otto v. Physicians Ins. Co. of Wis., Inc., No. 2006AP1566, slip op., ¶¶ 23, 26 (Wis. App. Jul. 24, 2007). The majority opinion affirms as well.
II. DISCUSSION
A. Standard of Review
¶ 129. Although whether to hold a party in default for failure to timely answer is a discretionary decision of the circuit court, Connor v. Connor, 2001 WI *13549, ¶¶ 17-18, 243 Wis. 2d 279, 627 N.W.2d 182, we are not reviewing that discretionary decision here. Rather, this case turns on the interpretation and application of Wis. Stat. § 632.24, known as the direct action statute. We review questions of statutory interpretation and application independently, but benefiting from the discussions of the court of appeals and the circuit court. Marder v. Bd. of Regents of the Univ. of Wis. Sys., 2005 WI 159, ¶ 19, 286 Wis. 2d 252, 706 N.W.2d 110.
B. PIC's Potential Liability
¶ 130. PIC can be liable to the plaintiffs through two mechanisms: (1) solely by virtue of its contract with the insureds, or (2) through the combination of its contract and the direct action statute, Wis. Stat. § 632.24.
1. PIC's contract
¶ 131. PIC's contract of insurance requires it to pay only those damages that its insureds are legally obligated to pay.4 Here, the insureds have denied negligence and causation of plaintiffs' damages. They have been dismissed from this action; accordingly, they are legally obligated to pay nothing to the plaintiffs. Therefore, on a purely contractual basis, PIC has no liability to anyone for the plaintiffs' damages.
2. Direct action
¶ 132. The circuit court and the court of appeals rested their determinations of PIC's liability on the *136direct action statute, Wis. Stat. § 632.24. The majority opinion also relies on § 632.24 as a necessary component to PIC's liability.5 Indeed, since the insureds have not been determined to be liable to the plaintiffs, the only basis on which liability can be developed against PIC is under the direct action statute. Under direct action, if the insureds' negligent conduct caused the plaintiffs' damages, the plaintiffs can obtain a judgment directly against PIC for those damages. Kranzush, 103 Wis. 2d at 75.
¶ 133. The majority opinion spends no time explaining how Wis. Stat. § 632.24 sets the stage for PIC's liability, without proving or stipulating that the insureds were negligent and that their negligence caused plaintiffs' damages. The majority opinion's failure to apply the plain meaning of § 632.24 leads it to erroneously conclude that PIC is liable for the plaintiffs' damages, notwithstanding the conditions imposed on the insurer's liability under § 632.24 and the denials of fault in the answers of the insureds.
a. Statutory interpretation's general principles
¶ 134. "[Statutory interpretation 'begins with the language of the statute. If the meaning of the statute is plain, we ordinarily stop the inquiry.'" State ex rel. Kalal v. Circuit Court for Dane County, 2004 WI 58, ¶ 45, 271 Wis. 2d 633, 681 N.W.2d 110 (quoting Seider v. O'Connell, 2000 WI 76, ¶ 43, 236 Wis. 2d 211, 612 N.W.2d 659). Plain meaning may be ascertained not only from the words employed in the statute, but also from statutory context. Id., ¶ 46. We do not interpret statutory language in isolation, but rather, as that *137language appears in relation to surrounding or related statutes, and reasonably, to avoid absurd or unreasonable results. Id.
¶ 135. Context includes statutory history, i.e., the previous versions of the statute currently being examined. Richards v. Badger Mut. Ins. Co., 2008 WI 52, ¶ 22,_Wis. 2d_, 749 N.W.2d 581 (citing Kalal, 271 Wis. 2d 633, ¶ 69). "Statutory history encompasses the previously enacted and repealed provisions of a statute." Id. By analyzing the changes the legislature has made over the course of several years, we may more easily discern the meaning of a statute. Id. We also presume that the legislature meant an interpretation of the statute that will advance the statutory purpose. GTE N. Inc. v. Pub. Serv. Comm'n of Wis., 176 Wis. 2d 559, 566, 500 N.W.2d 284 (1993).
¶ 136. If a statute is "capable of being understood by reasonably well-informed persons in two or more senses[,]" then the statute is ambiguous, and we may consult extrinsic sources to comprehend its meaning. Kalal, 271 Wis. 2d 633, ¶¶ 47-48, 50. We have also consulted statutory history to confirm the plain meaning of a statute. Id., ¶ 51.
b. Wisconsin Stat. § 632.24
¶ 137. As with all statutory interpretation and application, I begin my discussion with the language of the statute. Here we review Wis. Stat. § 632.24, Wisconsin's current direct action statute. It provides:
Any bond or policy of insurance covering liability to others for negligence makes the insurer liable, up to the amounts stated in the bond or policy, to the persons entitled to recover against the insured for the death of any person or for injury to persons or property, irre*138spective of whether the liability is presently established or is contingent and to become fixed or certain by final judgment against the insured.
(Emphasis added.) Section 632.24 does not make an insurer directly liable to all who choose to sue an insurance company. Rather, § 632.24 provides pnly conditional liability, wherein an insurer is liable to all who are entitled to recover against the insured for the insured's negligence. The condition imposed by the direct action statute is clear and unambiguous. Section 632.24 plainly means to impose liability on an insurer only if the claimant is "entitled to recover against the insured" for the insured's conduct that underlies the direct action against the insurer. Section 632.24 is not a strict liability statute. An examination of the statutory history supports my conclusion because it places the current statute in context and confirms the necessary connection between an insured's conduct and direct liability of the insurer.
¶ 138. A direct action statute providing injured parties with the right to directly sue insurance companies was first enacted in 1925 as Wis. Stat. § 85.25 (1925). At that time, direct action was part of the "Law of [the] Road" and applied only to motor vehicle accidents. It provided:
Accident insurance, liability of insurer. Any bond or policy of insurance covering liability to others by reason of the operation of a motor vehicle shall be deemed and construed to contain the following conditions: That the insurer shall be liable to the persons entitled to recover for the death of any person, or for injury to person or property, caused by the negligent operation, maintenance, use or defective construction of the vehicle described therein, such liability not to exceed the amount named in said bond or policy.
*139(Emphasis added.) Direct action was conditioned on the insured's negligent conduct being a cause of the claimant's damages.
¶ 139. Our decisions, which interpreted Wis. Stat. § 85.25 (1925) shortly after it was enacted, considered it in the context of the negligent operation of a motor vehicle. We did not construe the statutory right of direct action as superior to contractual provisions; but rather, we permitted contractual limitations on the timing of the right of direct action. That is, if a provision in an insurance policy precluded suit against the insurance company until the liability of its insured had been determined, we held that provision was dispositive. See, e.g., Morgan v. Hunt, 196 Wis. 298, 300, 220 N.W. 224 (1928) (concluding that § 85.25 (1925) "does not create a liability or confer any right of action where none exists under the terms of the policy itself'); see also Bro v. Standard Accident Ins. Co., 194 Wis. 293, 295-96, 215 N.W. 431 (1927) (concluding that § 85.25 (1925) "does not give the plaintiff a right of action against the insurance company. . . where none exists under the terms of the policy itself').
¶ 140. Wisconsin Stat. § 85.25 (1925) was amended and re-numbered as Wis. Stat. § 85.93 in 1929. The amendment clarified that a litigant had a right of direct action against an insurer before, as well as after, the insured's conduct was determined to be negligent and a cause of plaintiffs damages. The legislature did so by adding the phrase, "irrespective of whether such liability be in praesenti or contingent and to become fixed or certain by final judgment against the insured" to the direct action statute. Frye v. Angst, 28 Wis. 2d 575, 578, 137 N.W.2d 430 (1965). In 1929, the legislature also limited the amount that could be recov*140ered from an insurance company to the policy's limits. Section 85.93 (1929) provided:
Accident insurance, liability of insurer. Any bond or policy of insurance covering liability to others by reason of the operation of a motor vehicle shall be deemed and construed to contain the following conditions: That the insurer shall be liable to the persons entitled to recover for the death of any person, or for injury to person or property, irrespective of whether such liability be in praesenti or contingent and to become fixed or certain by final judgment against the insured, when caused by the negligent operation, maintenance, use or defective construction of the vehicle described therein, such liability is not to exceed the amount named in said bond or policy.
(Emphasis added.) The amendments did not change the condition that direct action continued to impose on the potential liability of insurance carriers, i.e., that the insured's negligent conduct was a cause of the claimant's damages. Section 85.93 (1929) remained unchanged until 1957, when it was renumbered as Wis. Stat. § 204.30(4).
¶ 141. Decisions that interpreted the 1957 version of the direct action statute explained the statutory changes up to that point in time. For example, in Frye, we explained that in 1929 the statute was amended to provide that direct action was permitted even before the liability of the insured had been determined, thereby abrogating Morgan and Bro.6 Frye, 28 Wis. 2d *141at 579. We also explained that direct action set out in Wis. Stat. § 204.30(4) (1957) was a substantive right, but that Wis. Stat. § 260.11(1) (1957) was a necessary procedural component of direct action that determined whether a given insurer could be subject to direct action in the first instance. Id.
¶ 142. Our discussion in Frye drew together what we believed the legislature meant to enact by comparing legislative amendments of direct action statutes with contemporaneous court decisions. However, in Frye, we also held that" '[mjaintenance1 of an automobile has never been considered a part of operation, or of management and control," id. at 582, and accordingly, a claim for negligent maintenance did not meet the necessary procedural parameters set out in Wis. Stat. § 260.11(1) (1957) to permit a direct action, id. at 583.
¶ 143. Apparently, we were not quite on target with the legislature with regard to that conclusion in Frye because in 1967, the legislature again amended the direct action statute. It added, "[when] caused by the negligent operation, management, control, maintenance, use or defective construction of a motor vehicle" (emphasis added) to Wis. Stat. § 260.11(1) (1967), thereby making the procedural and substantive provisions of direct action coextensive in regard to the conduct each covered.
¶ 144. In 1971, the legislature made significant revisions to Wis. Stat. § 204.30(4) wherein it removed the references to "motor vehicle" and substituted "negligence," thereby broadening the scope of direct action to impose the potential for liability on insurance carriers to "those entitled to recover" for injuries or death *142caused by "negligence," whether a motor vehicle was involved or not. The 1971 version of the direct action statute, § 204.30(4), provided:
Liability of insurer. Any bond or policy of insurance covering liability to others by reason of negligence shall be deemed and construed to contain the following conditions: That the insurer shall be liable to the persons entitled to recover for the death of any person, or for injury to person or property, irrespective of whether such liability be in praesenti or contingent and to become fixed or certain by final judgment against the insured, when caused by negligence, such liability not to exceed the amount named in said bond or policy. The right of direct action herein given against an insurer shall exist whether or not the policy or contract of insurance contains a provision forbidding such direct action.
(Emphasis added.) The amendments did not change the condition that direct action continued to impose on the potential liability of insurance carriers: that the insured's negligent conduct was a cause of the claimant's damages.
¶ 145. In 1975, Wis. Stat. § 204.30(4) was repealed and the substantive provision of direct action was recreated as Wis. Stat. § 632.24 (1975). It provided:
Direct action against insurer. Any bond or policy of insurance covering liability to others for negligence makes the insurer liable, up to the amounts stated in the bond or policy, to the persons entitled to recover against the insured for the death of any person or for injury to persons or property, irrespective of whether the liability is presently established or is contingent and to become fixed or certain by final judgment against the insured.
(Emphasis added.) The amendments did not change the condition that direct action continued to impose on the *143potential liability of insurance carriers: that the insured's negligent conduct was a cause of the claimant's damages.
¶ 146. In Kranzush, we examined Wis. Stat. § 632.24 (1975) in light of a claimed bad faith refusal to settle made by the injured party. Kranzush, 103 Wis. 2d at 57. We began by noting that § 632.24 does not create strict liability for the insurance companies subject to its provisions. Id. at 66. We explained, "it is obvious that these statutes fall far short of creating the no-fault compensatory scheme embodied in the worker's compensation statutes. ... The claimant is not locked into a legislatively driven bargain whereby bis recovery, though smaller, is not contingent upon his success in a lawsuit." Id. at 66-67.
¶ 147. In parsing Wis. Stat. § 632.24 (1975), we said that "an insurer [is] liable up to policy limits to 'the persons entitled to recover against the insured'" Id. at 75 (emphasis added).7 Of significance to the case now before us, we also explained in Kranzush that "it is clear from the language of the statute that the liability to which the insurer is exposed is predicated upon the liability of the insured." Id. We explained further," [hinder this section the claimant has a right of action against the insurer only to the extent that he has the same right of action against the insured for his negligence." Id.
¶ 148. Wisconsin law holding that the substantive liability of an insurer under Wisconsin's direct action statute is predicated on the insured's conduct being *144negligent and a cause of the claimant's damages has been settled for more than 60 years. For example, in Kujawa v. American Indemnity Co., 245 Wis. 361, 14 N.W.2d 31 (1944), we reviewed the direct action statute then in place, Wis. Stat. § 85.93 (1929), in light of a direct action against the insurer where the insured was not joined in the action. Id. at 363. The action against American Indemnity was commenced before the statute of limitations had run on the claim against the insured; however, before the action against American Indemnity was concluded, the statute of limitations ran on claims against the insured. Id. at 362. American Indemnity moved to dismiss. Id. We explained that since its enactment, the direct action statute "makes the insurance company directly liable 'to the persons entitled to recover for the death of any person, or for injury to person or property, caused by the negligent operation . . . irrespective of whether such liability be in praesenti or contingent and to become fixed or certain by final judgment against the insured." Id. at 363. We reasoned that, because the statute of limitations had not run against Kujawa's claim against the insured when the action against American Indemnity was commenced, the statute of limitations did not preclude continuation of that action. See id. at 366.
¶ 149. In interpreting the direct action statutes in Kujawa, we explained that "[i]t is quite impossible to read into the statutes [secs. 85.93 and 260.11] an intent to create a liability on the part of the insurance carrier completely dissociated from the liability of the insured." Id. at 365 (emphasis added).8 We said, "[t]here is *145nothing in it to negative the idea that the insurer is not liable unless the assured is, or that any defense under the policy that relieves the insurer from liability as against the assured also relieves it from liability as against injured persons. As to the statute, it does not create liability against the insurer." Id. at 365 (emphasis added). Accordingly, wé concluded that negligent conduct by an insured was a necessary component to maintaining a direct action against an insurer. Id. at 366.
¶ 150. In Wiechmann v. Huber, 211 Wis. 333, 248 N.W. 112 (1933), we also examined whether a lawsuit against an insurer would lie under the direct action statute when the lawsuit had not been commenced before the plaintiffs claim against the insured had abated. The plaintiff argued that because Wis. Stat. § 85.93 (1929) gave it a right of direct action against the insurer, the fact that the plaintiff could no longer maintain an action against the insured was not disposi-tive. Id. at 335. We disagreed. Id. at 336. In concluding that no action could be brought against the insurer after the claim against the insured had expired, we explained, "It is quite impossible to read into the statutes an intent to create a liability on the part of the *146insurance carrier completely dissociated from the liability of the insured." Id. at 336.
¶ 151. In Tierney v. Lacenski, 114 Wis. 2d 298, 338 N.W.2d 320 (Ct. App. 1983), the court of appeals was asked to decide whether a direct action against the insurer would lie under Wis. Stat. § 632.24 (1975) when the plaintiff did not serve a statutorily required notice of claim. Plaintiffs failure precluded any action against the insured. Id. at 303-04. In concluding that no direct action could be maintained against the insurer, we said:
Even under the direct action statute, sec. 632.24, Stats., which makes an insurer liable up to the policy limits to "the persons entitled to recover against the insured for the death of any person or for injury to the person or property," it is clear from the statutory language that the liability to which the insurer is exposed is predicated upon the insured's liability. Under this section, the claimant has a right of action against the insurer only to the extent that he has the same right of action against the insured for his negligence.
Id. at 303-04 (citation omitted).
¶ 152. My review of the statutory history of Wis. Stat. § 632.24 and the cases that have construed the changing form of Wisconsin's direct action statutes uncovers a consistent theme: liability of an insurer sued under direct action is tied to and conditioned on a finding that the insured's negligent conduct was a cause of the plaintiffs damages. This is so because from the beginning of direct action, the direct action statutes have conditioned the liability of an insurer, i.e., direct action "makes an insurer liable" only to "persons entitled to recover against the insured." Kranzush, 103 Wis. 2d at 75; see also Kujawa, 245 Wis. at 364; Wiech*147mann, 211 Wis. at 336; Biggart v. Barstad, 182 Wis. 2d 421, 428, 513 N.W.2d 681 (Ct. App. 1994); Tierney, 114 Wis. 2d at 304-05.
¶ 153. This conclusion is also consistent with the purposes of the direct action statute, wherein recovery is conditioned on the nature of the conduct of the insured. Those purposes are:
[to] save litigation and reduce the expense by determining the rights of all parties in a single action which is usually defended by the insurance carrier. [To] expedite the final settlement of litigation and the final payment to the injured person, if he be entitled to recovery. [To] place the burden upon the insurance carrier who has been compensated in advance for its liability to pay the damage assessed for such injuries to person and damage to property as have been caused by actionable negligence on the part of the person insured.
Decade's Monthly Income & Appreciation Fund v. Whyte & Hirschboeck, S.C., 173 Wis. 2d 665, 675, 495 N.W.2d 335 (1993) (quoting Ducommun v. Inter-State Exchange, 193 Wis. 179, 185, 212 N.W. 289 (1927)).
¶ 154. The majority opinion recognizes that the liability of the insurer is tied to the conduct of the insured, as evidenced by its statement:
An insurer's liability is, of course, dependent upon the conduct of its insured, but the insurer's liability is not necessarily dependent on the insured's liability. There can be no recovery against the insurer unless the insured's conduct giving rise to liability is proven.9
I agree completely with those statements of the law. However, no sooner has the majority correctly stated the law, when in the same discussion, it ignores the *148conduct of the insureds and concludes that, notwithstanding that the insureds' conduct has not been proven to be negligent or a cause of plaintiffs' damages, PIC is liable.10
¶ 155. To reach its result, the majority opinion relies heavily on its reconstruction of our decision in Loy v. Bunderson, 107 Wis. 2d 400, 320 N.W.2d 175 (1982).11 The majority opinion applies Loy selectively, taking various statements from it and implying that those statements support its conclusion that PIC is liable without proving that the insureds were negligent and that their negligence was a cause of the plaintiffs' damages.12 However, read in its entirety, Loy supports this dissent's conclusion that PIC cannot be liable to the plaintiffs until the plaintiffs prove that the insureds' conduct was negligent and a cause of the plaintiffs' damages.
¶ 156. Loy involved the question of whether a "special release" of General Casualty and its insured, *149Truesdill, was valid when it left Travelers Insurance subject to suit. Id. at 401-02. Under the terms of the release, General Casualty paid $20,000 upon a $50,000 policy for its release. Id. at 402. Travelers remained subject to suit on its $500,000 policy for amounts between $50,000 and $500,000, as did Truesdill.13 Id. at 402, 405. Under the release, Travelers continued to have a duty to defend Truesdill against the claim that his negligence caused the plaintiffs damages. Id. at 403.
¶ 157. In parsing the direct action statute, Wis. Stat. § 632.24 (1975), we explained that "[t]he insurance company has a direct liability to an injured party if other factors trigger insurance company liability." Id. at 421 (emphasis added). We further explained that "it is the nature of the insured's conduct and its consequences with which an insurance company is concerned." Id. at 422. In expressing the necessary nexus between the insured's conduct and the insurer's direct liability to the injured party, we quoted Nichols v. United States Fidelity & Guaranty Co., 13 Wis. 2d 491, 109 N.W.2d 131 (1961):
The fact that a third party can sue an insurer of a motor vehicle direct. . . without first recovering a judgment against the insured defendant, does not enlarge the coverage afforded by such policy or determine the insurer's liability thereunder.
Loy, 107 Wis. 2d at 422 (quoting Nichols, 13 Wis. 2d at 499). We summed up our conclusions about the relationship between the insured's conduct and the potential for liability of the insurer under the direct action statute as follows:
*150An insurer is directly liable to the plaintiff if the underlying conditions of negligence are satisfied although, after commencement of the action, the insured is released or protected by an absolute covenant not to sue. The responsibility of an insurance company to an injured party is derivative of the insured's conduct, but it is not derivative of the status of the insured's personal liability to a plaintiff at the time the insurer's contractual obligations are triggered by a judgment for damages.
Id. at 426. Accordingly, the reasoning and conclusions in Loy reaffirm my conclusion that, notwithstanding the direct action statute, PIC cannot be held liable to the plaintiffs until the conduct of the insureds is proved to be negligent and a cause of plaintiffs' damages. In addition, requiring proof of those facts furthers a purpose of the direct action statute, i.e., requiring the insurer to pay damages "as have been caused by actionable negligence on the part of the person insured." Decade's Monthly Income, 173 Wis. 2d at 675 (quoting Ducommun, 193 Wis. at 185).
¶ 158. However, here, the majority opinion, for the first time in more than 60 years, detaches the conduct of the insured from the obligation of the insurer. None of the purposes of the direct action statute is furthered by this interpretation of Wis. Stat. § 632.24. See id. The majority opinion accomplishes this coup de grace by asserting, without any cited authority, "A necessary corollary of the insurer's direct liability to an injured complainant is that the insurer may admit an allegation of its liability, as well as the underlying allegation of the tortious conduct of its insured."14 One can only wonder how this assertion plays out if an insurer were to admit that the insured's conduct was *151negligent and a cause of the claimant's damages, but also asserts that the policy has lapsed.
¶ 159. Furthermore, there are collateral consequences for members of certain professions who have been determined to have provided services in a negligent manner, thereby causing injury. Such an admission of negligence may result in consequences in addition to paying damages.15 And finally, and of utmost importance in the case before us, the insureds have denied that they negligently provided medical care to Dale Otto and that their care was a cause of plaintiffs' damages. Therefore, even if one were to accept the bold assertion of the majority opinion, which I do not, it has no application here.
¶ 160. The majority also relies on PIC's obligation under Wis. Stat. § 802.02(4) to answer the amended complaint.16 I have no quarrel with the assertion that PIC must answer the amended complaint. However, its failure to timely answer does not negate the answers that the insureds made in regard to their own conduct. An example will show the fallacy of the majority's reliance on § 802.02(4) for its assertion that PIC's failure to timely answer admitted the negligence of the insureds who had denied that their conduct was negligent.
¶ 161. Suppose that three doctors and one nurse were sued for their treatment of a patient who dies subsequent to surgery. All the doctors answer and deny negligence, but the nurse does not answer. Does the *152nurse's default admit the doctors' negligence? Of course, it does not. Is the nurse liable for all of the damages that the patient suffered even though she provided only post-operative care? Of course, she is not. The nurse is not subject to direct action liability.
¶ 162. Accordingly, the only way that PIC can be liable here is if the direct action statute permits the separation of the insured's conduct from the insurer's liability. However, we have held for more than 60 years that it does not do so. Kujawa, 245 Wis. at 364; Wiechmann, 211 Wis. at 336.
¶ 163. The majority opinion also relies on Martin v. Griffin, 117 Wis. 2d 438, 344 N.W.2d 206 (Ct. App. 1984), in its efforts to justify its overruling 60 years of precedent that uniformly has held that under the direct action statute, the insurer's liability is tied to the insured's conduct.17 Martin is of no assistance because the court of appeals did not address the issue upon which the case now before us turns.
¶ 164. In Martin, the court of appeals examined the failure of Milbank Mutual to file a timely answer when it was sued under the direct action statute for Griffin's alleged negligence in operating a motor vehicle. Id. at 440. It began by noting that whether to grant a default judgment is a discretionary determination of the circuit court. Id. at 442. It then examined the circuit court's reasoning and concluded that the circuit court "did not abuse its discretion by granting Martin a default judgment." Id. at 444. In speaking to the issue of liability, the court said, "By failing to file a timely answer of denial, Milbank has admitted the unconditioned allegation that its policy covered Griffin for liability for damages caused by his negligence." Id. *153However, the court of appeals did not address the question of whether Milbank's default resulted in an admission that Griffin was negligent. It simply assumed that once Milbank defaulted, it was responsible for Griffin's negligence because negligence had been alleged. Id.
¶ 165. The majority opinion asserts that the court of appeals' conclusion in Martin should control the outcome of this case.18 To some extent, there are parallels in the facts between the two cases, and PIC does not deny that its default resulted in a conclusive finding that it is liable for the damages caused by the negligence of its insureds. However, beyond that conclusion, the holdings in Martin do not address the critical question here. That is, whether PIC's failure to answer admitted that the insureds negligently provided medical care to Dale Otto and whether that negligence was a cause of plaintiffs' damages, even though the insureds denied those allegations and their denials have not been stricken.
¶ 166. In its effort to impose strict liability on PIC, the majority opinion seeks to enlist the default judgment statute, Wis. Stat. § 806.02. The majority opinion asserts that in regard to default judgments, "[t]he ordinary rule is that the allegations in a complaint 'are admitted when not denied' in the answer of a defendant against whom the allegations are made."19 I do not disagree with that statement, but it does not support holding PIC liable to the plaintiffs. There was no allegation that PIC provided negligent medical care. That was alleged against the insureds. By contrast, it was alleged that PIC,
*154had in full force and effect, at all material times, a policy of insurance covering Dr. Folkestad, Dr. Witt, and Red Cedar Clinic for the alleged negligence which is the subject of this complaint, and is therefore directly liable to the plaintiffs for the below enumerated damages."20
I agree that, if the insureds were proved to have negligently provided medical care to Dale Otto that was a cause of the plaintiffs' harm, then PIC's default admits that it provided coverage for that conduct. However, there is nothing in the default judgment statute that permits a court to assert the claimed liability of a defendant against another defendant when claims of jointly negligent conduct have not been made.
¶ 167. Holding one defendant liable for more conduct than is alleged against him in a complaint serves no rational purpose, as we held long ago. In Pett v. Clark, 5 Wis. 198 (1856), we concluded that it was error to enter default judgment against two defendants after one of the two defendants had answered, without first striking that answer. Id. at 198-99. Here, the insureds' answer has not been stricken, nor has any basis to strike their answer been asserted.
¶ 168. In Haugen v. Wittkopf, 242 Wis. 276, 7 N.W.2d 886 (1943), we examined the pleading relationship between an insured and the insurer. In Haugen, an insurer did not raise the defense of assumption of risk, but its insured did. Id. at 281. We concluded that even though "the answer of the insurer did not so assert that defense, its liability is to indemnify the host, and as the host is not liable the insurer is not and there can be no recovery against it." Id. at 281. Haugen fits well with the circumstances before us because all of the insureds denied that they negligently provided medical care to *155Dale Otto causing the plaintiffs' damages. Therefore, the conduct that is necessary to prove before there can be direct liability against PIC under Wis. Stat. § 632.24 remains unproven.
¶ 169. Other jurisdictions also have examined the effect of a default by one defendant on the liability of another defendant. For example, in Fred Chenoweth Equipment Co. v. Oculus Corp., 328 S.E.2d 539 (Ga. 1985), the Supreme Court of Georgia examined the effect of a default by a defendant, Oculus, who was alleged to owe Chenoweth for materials and equipment, on the liability of Oculus's surety. Id. at 540. In determining that the surety was not liable based on Oculus's default, the court reasoned that there were actually two causes of action presented by the pleadings. The cause of action against Oculus was based on breach of contract for failing to pay, and the cause of action against the surety was an action on the bond of the surety. Id. at 540-41. Therefore, the court concluded that liability of the two defendants was not joint. Id. at 541. It also concluded that the default judgment against Oculus did not reach the merits of the breach of contract claim against it. Id. However, in order to recover on the bond, the court noted that the merits of the claim against the insured would have to be addressed before the surety could be liable for payment. Id.
¶ 170. Here too, there are two claims for relief: one for medical malpractice and one on a contract to provide insurance for medical malpractice. However, the merits of the plaintiffs' claims against the insureds must be litigated before their direct action will meet the necessary conditions for direct liability under Wis. Stat. § 632.24. PIC and its insureds are not joint tortfeasors.
¶ 171. Accordingly, the majority opinion has provided no rationale for ignoring 60 years of precedent *156which has made direct action liability conditioned upon the conduct of the insured. As Justice Thomas Fairchild said in Wiechmann, "It is quite impossible to read into the statutes an intent to create a liability on the part of the insurance carrier completely dissociated from the liability of the insured." Wiechmann, 211 Wis. at 336. However, after more 60 years, the majority opinion chooses to do so.
III. CONCLUSION
¶-172. The majority opinion affirms the court of appeals' conclusion that PIC's failure to answer within the statutorily prescribed time results in the following conclusive factual findings: (1) PIC's insureds were negligent; and (2) PIC's insureds' negligence was causal of plaintiffs' damages. PIC's insureds, in their answer to the amended complaint, denied that their conduct was negligent and denied that their conduct caused plaintiffs' damages, which denials joined those issues of fact and have not been stricken or proven false. Under the direct action statute, Wis. Stat. § 632.24, PIC cannot be liable unless its insureds' conduct was negligent and a cause of plaintiffs' damages. Kranzush, 103 Wis. 2d at 75. Therefore, the matter should be returned to the circuit court to litigate the contested factual questions relating to PIC's insureds' conduct.21 Because the majority opinion disconnects PIC's liability from the insureds' conduct, contrary to the legislative directive, I respectfully dissent.
*157¶ 173. I am authorized to state that Justices DAVID T. PROSSER and ANNETTE KINGSLAND ZIEGLER join this dissent.

 Majority op., ¶¶ 43, 55.

 All further references to the Wisconsin Statutes are to the 2005-06 version, unless otherwise noted.

 Although the circuit court's decision to grant default judgment against PIC under the circumstances of this case is very troubling to me, that issue was not brought to us for review.

 In ¶ 6 of its Amended Answer, PIC averred "that the extent of coverage ... [was] limited by the terms and conditions of [its] policy." However, the actual policy is not part of the record before us.

 Majority op., ¶ 31.

 The notes by Howard Ohm, Chief, Legislative Reference Library, reflect that the purpose of the amendment was to change the interpretation of Bro v. Standard Accident Insurance Co., 194 Wis. 293, 215 N.W. 431 (1927) and Morgan v. Hunt, 196 Wis. 298, 220 N.W. 224 (1928). Those cases had concluded that clauses in insurance policies may prevent a *141direct action against the insurance carrier until the liability of the insured has been determined.

 This condition on the insurer's liability, i.e., it rests upon the claimant having a right to recover against the insurer for the insured's conduct, has been in the direct action statute since 1925 when it was first enacted. See Wis. Stat. § 85.23 (1925).

 Ignoring the strong language in Kujawa v. American Indemnity Co., 245 Wis. 361, 14 N.W.2d 31 (1944), that absolutely connects the conduct of the insured to the question of *145whether the insurer is liable to the claimant under the direct action statute, the majority opinion tries to show that Kujawa supports its position of disconnecting the insured's conduct from liability for the insurer. See majority op., ¶¶ 37-39. It does so by saying that "under certain circumstances" the insurer may be liable even when the insured is not. Majority op., ¶ 36. However, whether the insurer may be liable when the insured is not is not the question presented by this lawsuit. The question here is whether the insurer may be liable without proving that the insured's conduct was negligent and a cause of the plaintiffs' damages.

 Majority op., ¶ 35 (emphasis in majority opinion).

 Majority op., ¶ 55.

 Majority op., ¶ 36.

 The majority opinion quotes Loy v. Bunderson, 107 Wis. 2d 400, 320 N.W.2d 175 (1982), as saying that " 'responsibility of an insurance company to an injured party is derivative of the insured's conduct,... it is not derivative of the status of the insured's personal liability to a plaintiff,'" majority op., ¶ 36, and " 'upon the insurer irrespective of whether there is a final judgment against the insured,'" id. Those quotes are absolutely correct, but they do not support the conclusion that PIC can be held liable when the insureds' conduct has not been proved to be negligent and causal of plaintiffs' injuries. The statute does not create strict liability for the insured. The statutory conditions tie liability of the insurer to the insured's conduct such that a claimant must be "entitled" to recover against the insured before liability can be imposed on the insurer.

 In the absence of the General Casualty policy, Travelers Insurance would have provided "dollar-one" coverage. Loy, 107 Wis. 2d at 404. Therefore, it benefited from the "special release."

 Majority op., ¶ 40.

 See, e.g., Wis. Stat. § 753.30(4) (requiring "[t]he clerk of circuit court [to] provide the medical examining board with a ... copy of an order of a circuit court in which a physician ... is found negligent in treating a patient.").

 Majority op., ¶¶ 41-43.

 Majority op., ¶¶ 60-73.

 Majority op., ¶ 67.

 Majority op., ¶ 42.

 Amended Complaint, ¶ 6.

 The majority questions how a remand to litigate questions about the insureds' conduct is possible because the insureds have been dismissed. Majority op., ¶ 97. However, that poses no problem in a direct action. Kujawa, 245 Wis. at 363.