Court Opinion

ID: 9682825
Source: CourtListenerOpinion
Date Created: 2023-08-24 13:17:50.166305+00
Date Added: 2024-06-11T18:17:42.208412
License: Public Domain

FINE, J.
¶ 39. (dissenting). Insurance companies write policies to cover certain risks, and price their policies by charging premiums to account for those risks. The insurance industry (and, therefore, the ability of persons to protect themselves against their risks) would vanish if insurance companies were forced to pay more than they contracted to pay. The law in Wisconsin, and elsewhere, recognizes this. See Bulen v. West Bend Mut. Ins. Co., 125 Wis. 2d 259, 264, 371 N.W.2d 392, 394 (Ct. App. 1985) ("We will not, under the guise of strict construction against the insurer, rewrite a policy to bind the insurer to a risk that it did not contemplate and for which it has not been paid."). Simply put, "insurance companies are not eleemosynary endeavors." Bruchert v. Tokio Marine & Nichido Fire Ins. Co., 2007 WI App 156, ¶ 12, 303 Wis. 2d 671, 678, 736 N.W.2d 234, 238.
¶ 40. In this case, National States Insurance Company issued a Medigap insurance policy covering Kathleen Ledger. The policy promised: "If maximum benefits have been paid under Medicare for in-patient hospital expense, including the lifetime reserve days, we will pay all further expense incurred for hospital confinement that would have been covered by Medicare Part A." Contrary to the Majority's assertion, Majority, ¶ 27, this clause is not ambiguous.
¶ 41. First, it is triggered when Medicare inpatient hospital-coverage is exhausted.
*505¶ 42. Second, when that happens, it promises that National States will pay:
• "further expense incurred for hospital confinement" provided
• that "further expense" "would have been covered by Medicare Part A."
There is no dispute here but that Medicare Part A would not have covered the charges for which Froedtert Memorial Lutheran Hospital seeks payment from National States. This ends the discussion.1
*506¶ 43. Making National States pay a risk that it did not insure not only robs it to pay Froedtert, it will have a cascade effect of forcing insurance companies issuing Medicare supplemental-coverage policies to increase their premiums. This is true for two reasons. First, the companies will be forced to pay more than Medicare would have paid. Second, those premiums will also have to account actuarially for the uncertainty of not being able to rely on a Medicare-negotiated cap; rather than the cap, the insurance companies will be faced with potentially unlimited liability flowing from health-care providers being able to bill them for, essentially, whatever a market unconstrained by Medicare's bargaining *507power will bear. All of this will make it more difficult for many elderly in our state to buy Medigap insurance. I respectfully dissent.

 The Wisconsin Administrative Code provisions, quoted by the Majority at ¶¶ 20, 22, and 24 n.10, are wholly consistent with the plain reading of National States's obligations here. First, Wis. Admin. Code § INS 3.39(3)(d) (1997) defined "Medicare eligible expenses" to mean "health care expenses which are covered by Medicare, recognized as medically necessary and reasonable by Medicare, and which may or may not be fully reimbursed by Medicare." (Emphasis added.) Thus, in order to be "Medicare eligible expenses," the expenses must be "covered by Medicare" because those expenses are determined by Medicare to be "necessary and reasonable." Medicare's agreement with Froedtert promises to pay Froedtert, and Froedtert promises to accept, Medicare's determination of what is "necessary and reasonable" irrespective of what Froedtert might bill others not protected by the Medicare umbrella. The appended clause, "which may or may not be fully reimbursed by Medicare" merely means that once Medicare coverage is exhausted, as is the case here, Medicare will no longer reimburse the healthcare provider for the whole of the Medicare-approved "necessary and reasonable" expense. To say that the clause, "which may or may not be fully reimbursed by Medicare" means what the Majority construes it to mean, ignores the "which are covered by Medicare" requirement, which is, as we have seen, congruent with the "that would have been covered by Medicare Part A" proviso in the National States policy.
*506WISCONSIN Admin. Code § INS 3.39(5)(c)12 (2001) is also consistent with the National States policy. As the Majority recognizes in ¶ 24 n.10, that regulation reads: "Upon exhaustion of all Medicare hospital inpatient coverage including the lifetime reserve days, [the policy must provide] coverage of all Medicare Part A eligible expenses for hospitalization not covered by Medicare." The expenses must be "eligible" under "Medicare Part A." There is no dispute here but that what Froedtert seeks to recover from National States are not "Medicare Part A eligible expenses."
Although Mrs. Ledger agreed upon her admittance to Froedtert to be "financially responsible for all charges incurred" by her during her stay at the hospital, her undertaking does not negate her contract with National States, nor could it. A simple example will make this clear. Assume a bonding company guarantees a contractor's obligation to build a building, with a liability limit of $100,000. Assume further that the contractor's contract with the owner obligates the contractor to complete the construction or be liable for all the costs of delay and remediation. Assume still further that those costs are $500,000. Could anyone seriously argue that the bonding company would be liable for the $500,000 rather that its $100,000-undertaking? Of course not. That is the situation we have here.