Court Opinion

ID: 9689911
Source: CourtListenerOpinion
Date Created: 2023-08-24 18:49:32.663119+00
Date Added: 2024-06-11T08:50:34.568891
License: Public Domain

¶ 31. (dissenting).
"against the insurer"
What happened to those words? The majority opinion in essence rewrites Wis. Stat. § 631.15(3m) and deletes those words. The end result: the insurance company wins and the policyholder, who was sold illegal illusory coverage, inevitably loses.
¶ 32. How can this happen? Not easily. To reach this conclusion the majority must ignore the plain meaning of the statute, delete the problematic phrase "against the insurer," discard the stated clear and specific legislative intent, and misconstrue case law interpreting the statute. Because I disagree with this approach and believe that the majority's conclusion effectively transforms the insurance code into a safety net for those insurers who issue illegal policies, I respectfully dissent.
¶ 33. The majority opinion rests to a large degree on its misreading and misapplication of Wis. Stat. § 631.15. It apparently reads that statute to require a policy to conform to the insurance code in any case where the policy violates a state statute or rule. However, the statute does not command conformance to the statute in every case where there is a conflict between an insurance policy and a statute. Section 631.15(3m), by its plain language, requires conformance of the policy and enforcement of the statute only "against the insurer":
*181(3m) Enforcement of statute and rule requirements. A policy that violates a statute or rule is enforceable against the insurer as if it conformed to the statute or rule.
Wis. Stat. § 631.15(3m) (emphasis added).
¶ 34. The statutory language signifies that conformance of policies to the statutes under § 631.15(3m) is not a two-way street. The benefits of § 631.15(3m) are to flow in one direction only — in the direction of the insured. If an insurer issues a policy inconsistent with the Wisconsin Statutes, it cannot seek enforcement of the statute of which it was in violation for its own benefit. However, an insured may seek enforcement of a statute where the policy has been issued in violation of the statute to the insured's detriment.
¶ 35. While this is made clear from the express language of the statute, legislative statements of intent remove all doubt as to the intended effects of § 631.15. The legislature explained the effects of the statute as follows:
First, insured persons should always be able to enforce rights given them under the contract as issued....
Second, contracts issued with terms deviating in favor of the insurer from those prescribed by a specific statute should be, in effect, reformed to accord with the statute and then be enforced against the insurer. This is standard common law doctrine.
Comment to § 41, ch. 375, Laws of 1975, Wis. Stat. Ann. § 631.15 (West 1995).
¶ 36. Today's majority contravenes not only the language of the statute, but also the express intent of the legislature. The majority does not enforce the stat*182ute "against the insurer" in this case, but against the insured. If the statutory language were followed and the intent of the legislature effectuated, Progressive would be obligated to satisfy Brunson's reasonable expectations and would be liable for the $25,000 of illusory coverage it issued under Meyer v. Classified Insurance Co., 192 Wis. 2d 463, 531 N.W.2d 416 (Ct. App. 1995).
¶ 37. There is no question that unless the policy is reformed to comply with § 632.32(4m)(d) the UIM endorsement issued by Progressive is entirely worthless. It has been established that it is impossible to recover in any circumstance under a UIM endorsement providing $25,000 of coverage in Wisconsin. Hoglund v. Secura Ins., 176 Wis. 2d 265, 270-71, 500 N.W.2d 354 (Ct. App. 1993). As the court of appeals correctly explained in Meyer and Hoglund such an endorsement is wholly illusory and contrary to public policy.
¶ 38. To rectify the wrong committed upon Wisconsin insureds by the issuance of such policies, the court of appeals crafted the remedy that is at the center of this case. In Meyer, the court explained that an insurer issuing such an illusory policy was required to compensate the insured for damages exceeding the at-fault driver's liability limits up to the $25,000 limit of UIM coverage purchased by the insured. Meyer, 192 Wis. 2d at 469. Thus, Brunson would be entitled to have his reasonable expectations fulfilled. Progressive would be liable for the full amount of the $25,000 of worthless UIM coverage it issued. Today's majority lets Progressive off this hook.
¶ 39. The majority curiously asserts that the application of the statute actually operates to the insurer's detriment in this case because operation of § 631.15(3m) results in higher coverage limits. In *183another case, higher coverage limits might operate against the interest of insurer. However, this is not such a case.
¶ 40. In this case, higher coverage limits operate to the benefit of the insurer by relieving the insurer of its liability and allowing the insurer to hide behind the very statute which it violated. By conveniently ignoring that the benefits of statutory conformance are always to inure to the benefit of the insured, the majority has effectively read the words "against the insurer" out of § 631.15(3m) and has flouted the legislative intent.
¶ 41. Its misreading of § 631.15(3m) has alsd caused the majority to misconstrue the case law interpreting the provision. The majority opinion discusses court of appeals decisions in Appleton Papers, Inc. v. Home Indemnity Co., 2000 WI App 104, 235 Wis. 2d 39, 612 N.W.2d 760, and Wisconsin Patients Compensation Fund v. St. Mary's Hospital of Milwaukee, 209 Wis. 2d 17, 561 N.W.2d 797 (Ct. App. 1997), and concludes that they reach "conflicting results," because one conforms an errant policy to the statutes while the other does not. Because the majority fails to acknowledge that Wis. Stat. § 631.15(3m) requires enforcement only "against the insurer," it fails to see that the results of the two decisions, unlike the result of its own decision, are entirely consistent with the language of the statute and the legislative purpose.
¶42. In Appleton Papers the court of appeals required statutory conformance over the insurer's objections, where the insured sought enforcement of the statutory provisions to avoid an arbitration clause included in the policy by the insurer in contravention of the statutes. 2000 WI App 104, ¶ 42. In doing so, the court of appeals simply followed the legislative man*184date reforming terms of a policy deviating in favor of the insurer to comply with the statute and then enforcing it "against the insurer." In St. Mary's the court of appeals read § 631.15(3m) to prevent an insurer from invoking that provision to bring a policy into conformance with the statutes for its own benefit. 209 Wis. 2d at 35. In reaching its conclusion, the court of appeals correctly concluded that § 631.15 is intended to operate for the benefit of the insured and not to the benefit of the insurer. Id.
¶ 43. Finally, I note that the majority also rests its decision on the "conformance to law" clause contained in the policy. While we have enforced such provisions in the past, I have yet to find a case where we have enforced such a provision in a manner that allows an insurer to avoid the consequences of issuing an illusory and illegal policy. The facts before us do not suggest that we should begin to do so with this case.
¶ 44. Wisconsin courts had established that UIM coverage of $25,000 was illusory as far back as 1989.5 On July 15,1995, the legislature amended the statutes to require an insurer to issue minimum UIM coverage of $50,000. Yet, in November 1995, six years after the courts identified UIM coverage of $25,000 as illusory, and well after the statutory change was effective, Progressive sold Brunson an illegal six-month $25,000 UIM policy.
¶ 45. Brunson was severely and permanently injured in January 1996. It was not until June of 1996, after the accident and even after the policy had already expired, that Progressive eventually notified Brunson that it was of the opinion that his former policy actually *185provided him with $50,000 in coverage. At no time while the policy was in effect did Progressive ever attempt to advise Brunson of a change in his $25,000 policy limits. Finally, two years later, in July 1998, while acknowledging that it had erroneously sold a $25,000 UIM policy to Brunson, Progressive requested that the trial court reform the policy to provide for $50,000 in coverage.
¶ 46. Public policy requires that we not allow insurers to accept the premium for a policy that is illusory as written and then fall back on the "conformance to law" clause of their policy when the deceptive nature of the policy they have drafted comes to light. Doing so transforms the insurance code into a safety net for insurers who issue illegal policies. The majority's decision provides no consequences for insurers that draft policies in advantageous contravention of the statutes.
¶ 47. Insurers now know that the conformance to law clause will remedy their statutory violation and save them from a judicially created penalty, such as the Meyer remedy, crafted to prevent such illegal policies. Thus, today's majority opinion not only fails to provide consequences for issuing a policy that violates the law, but instead confers a benefit for doing so. In arriving at this anomalous conclusion, the majority ignores the mandate of § 631.15(3m): it is only to be enforced "against the insurer."
¶ 48. I am authorized to state that Chief Justice SHIRLEY S. ABRAHAMSON joins this dissent.

 See Wood v. American Family Mut. Ins. Co., 148 Wis. 2d 639, 653, 436 N.W.2d 594 (1989); Kaun v. Industrial Fire & Cas. Ins. Co., 148 Wis. 2d 662, 670, 436 N.W.2d 321 (1989).