Statutory subrogation is a right that exists only against a wrongdoer. Employers Health Ins. v. General Cas. Co., 161 Wis.2d 937, 950-51, 469 N.W.2d 172, 177-78 (1991). Because an uninsured motorist insurer does not stand in the shoes of the uninsured motorist, it is not a wrongdoer and statutory subrogation cannot exist against it.
An action on uninsured motorist coverage is based on contract; although in order to recover, the insured must prove the negligence of the uninsured motorist. Sahloff v. Western Casualty Surety Co., 45 Wis.2d 60, 70, 171 N.W.2d 914 (1969); Employers Health Insurance v. General Casualty Company of Wisconsin, 161 Wis.2d 937, 951, 469 N.W.2d 172 (1991). Lumbermen's cannot maintain an action against West Bend's uninsured motorist coverage because such an action is based on contract and precluded under sec. 102.29 (1), Stats.
Finally, the application of subrogation law, an equitable doctrine in origin, is ultimately decided by this court without deference to the circuit or appellate courts. Employers Health Ins. v. General Cas., 161 Wis.2d 937, 956, 469 N.W.2d 172 (1991). Many important issues are not in dispute.
Our conclusion is consistent with Wisconsin Supreme Court precedent interpreting similar language in a health insurance policy's subrogation clause. SeeEmployers Health Ins.v. Gen. Cas. Co., 161 Wis.2d 937, 946-47, 469 N.W.2d 172 (1991). Neither party asserts that State Farm's policy language should be interpreted any differently than Wis. Stat. § 632.32(5)(i)1.
We begin with a discussion of the case law which provides the legal background to the issue before us. In Employers Health Ins. v. General Casualty Co., 161 Wis.2d 937, 469 N.W.2d 172 (1991), the Wisconsin Supreme Court ruled that a health insurance policy which recited a right of subrogation against a "responsible third party" did not confer a right of subrogation against an uninsured motorist carrier. Id. at 950, 469 N.W.2d at 177.
Id. at 629, 476 N.W.2d at 301. In Dailey, we also pointed out the distinction between that case and Employers Health Insurance v. General Casualty Co., 161 Wis.2d 937, 945-55, 469 N.W.2d 172, 175-79 (1991), in which the Wisconsin supreme court held that no contractual subrogation right existed. Unlike the contractual clause in Dailey, the clause in Employers Health allowed a subrogated right against a "responsible third party," which the supreme court interpreted to mean the "wrongdoer causing the injury."
(Am. Compl. at ¶ 19.) Universal argues that equitable subrogation is appropriate in this case because Universal's obligation to Menard for the Morris returns was in the nature of an indemnity or third party guarantee, while Morris' obligation was in the nature of an underlying warranty or investment. Universal cites Cunningham v. Metropolitan Life Ins. Co., 121 Wis. 2d 437, 360 N.W.2d 33 (Wis. 1985) and Employers Health Ins. v. General Casualty Co., 161 Wis. 2d 937, 958, 469 N.W.2d 172, 181 (Wis. 1991) to support its contention that the doctrine of equitable subrogation is applicable in such a situation. In Cunningham, the Wisconsin Supreme Court discussed the applicability of subrogation in the context of insurance contracts.
Reading this section of the policy as a whole, we conclude that by its plain language, Bankers Life has reserved a right of subrogation against any liable party. American Family, however, argues that the Bankers Life policy language "reserves a subrogation claim only for `damages collected' against the `person whose act caused the injury.'" It offers a statement from Employers Health v. General Casualty Co., 161 Wis.2d 937, 469 N.W.2d 172 (1991), which it contends defines damages as "pecuniary compensation from a negligent act of another" and then reasons that because it was only obligated to pay its insured under the UIM endorsement, these monies paid are not "damages collected." We are unpersuaded by this characterization of the court's language in Employers Health or by American Family's reasoning.
Each participant agrees that [WPS] shall be subrogated to the participant's rights to damages, to the extent of the benefits we provide under the policy, for illness or injury a third party caused or is liable for; that such rights shall be, and they are hereby, assigned to us to such extent; and that our subrogation rights shall not be prejudiced by any participant. Two precedents are pertinent: Employers Health Ins. v. General Casualty Co., 161 Wis.2d 937, 469 N.W.2d 172 (1991), and Dailey v. Secura Ins. Co., 164 Wis.2d 624, 476 N.W.2d 299 (Ct.App. 1991). In Employers, the health insurer paid medical benefits to its insured on a health policy.
Then, it held that "'a responsible party . . clearly refers to a party responsible for the insured's injury and not to an insurer providing uninsured motorist coverage to the insured.'" Slip op. at 14 (quoting Employers Health Ins. v. Gen. Casualty Co. of Wis., 469 N.W.2d 172, 177 (Wis. 1991)). Therefore, the District Court reasoned, Wendy's conclusion that the SPD and Plan Document language reached uninsured motorist coverage is irrational.