Drinkwater v. American Family Mutual Insurance Co.

Summary

The Supreme Court of Wisconsin held that Wisconsin law, rather than Iowa law, governed Medical Associates Health Plan's subrogation claim against Shane Drinkwater's personal-injury recovery. Applying Wisconsin's made-whole doctrine, the court concluded that Drinkwater was not required to reimburse the Plan because his tort recovery did not fully compensate his damages, and it affirmed the circuit court judgment.

Holdings

1. Wisconsin law governs the Plan's subrogation claim against Drinkwater's recovery.
2. Under Wisconsin law, an insurer or subrogee may not recover against an insured's tort recovery until the insured has been made whole, regardless of contrary contractual language.
3. The Plan was not entitled to subrogation against Drinkwater's $250,000 recovery because he was not made whole under Wisconsin law.

Questions Presented

1. Whether Iowa or Wisconsin law governs the Plan's subrogation claim against Drinkwater's recovery.
2. Whether Wisconsin's made-whole doctrine applies despite the health-plan contract's Iowa choice-of-law and subrogation provisions.
3. Whether the Plan may exercise subrogation rights when Drinkwater's tort recovery does not fully compensate him for his damages.

Disposition

affirmed