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Automobile Insurer Not Required to Reimburse Group Health Insurance Plan Under Automobile Liability Policy's Medical Expense Coverage

Security Health Plan of Wisconsin, Inc. v. American Standard Ins. Co. of WI, et al., No. 2017AP1914, unpublished slip op. (Wis. App. Ct. Oct. 25, 2018), 2018 WI 47 (May 11, 2018)

In Security Health Plan of Wisconsin, Inc. v. American Standard Ins. Co. of WI, et al. the Wisconsin Court of Appeals held that American Standard Insurance Company of Wisconsin and American Family Mutual Insurance Company ("American Family") did not have to reimburse Security Health Plan of Wisconsin, Inc. ("Security Health") for medical expenses Security Health paid to forty-two persons who were insured by both Security Health and American Family and were injured in separate automobile accidents. The court determined that the coverage provided by American Family was not a "plan" under WIS. ADMIN. CODE § INS 3.40, and therefore Security Health had no right to recovery.

Security Health issues group health insurance plans and American Family issues automobile insurance policies in Wisconsin. Forty-two individuals, who were insured by both Security Health and American Family, were involved in separate auto accidents and incurred medical expenses. Security Health paid for most of those medical expenses and sued American Family to recover the amount it paid. The circuit court granted declaratory judgment in favor of Security Health and a money judgment in the principal amount of $165,799.30 against American Family.

SECTION INS 3.40 regulates how a health insurance plan may interact with other insurance plans, e.g. automobile insurance plans. Security Health invoked the "right of recovery" provisions under § INS 3.40, which provides that if an insurer pays "more than it should have paid" under the coordination of benefits provision, the insurance plan then has the right to recover the excess paid from an insurance company that was required to pay the amount. However, to invoke the "right to recovery" provisions, the coverage provided by both Security Health and American Family has to be a "plan" as defined under § INS 3.40(3)(i) and (8)(a).

The court of appeals ruled that American Family's coverage was not a "plan" for two independently dispositive reasons: (1) the medical expense coverage in the American Family policies was not "required by law" because Wis. Stat. § 632.32(4)(bc) specifically states that a named insured may reject medical expense coverage; and (2) the American Family medical expense coverage was not a "no-fault" contract because "no-fault" did not refer to medical expense coverage in an automobile insurance policy issued in Wisconsin.

©2018 von Briesen & Roper, s.c

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About this Author

Heidi Vogt, von Briesen Roper Law Firm, Milwaukee, Insurance and Litigation Law Attorney

Heidi Vogt is a Shareholder and Co-Chair of the Litigation and Risk Management Practice Group as well as the Chair of the Insurance Coverage and Risk Management Section. Her practice focuses on insurance coverage litigation, commercial disputes, constitutional law, and complex litigation. She has represented insurance companies in Wisconsin and across the country in both state and federal courts in complex insurance coverage matters for more than 20 years.

She represents and counsels insurance clients on a wide variety of...

414-287-1258
Davin Frank, Von Briesen Law Firm, Milwaukee, Insurance and Litigation Law Attorney
Attorney

David Frank is a member of the Litigation and Risk Management Practice Group and the Insurance Coverage and Risk Management Section. He focuses his practice on insurance coverage disputes and litigation. He has experience in aviation and aerospace litigation and served as a Naval Flight Officer in the United States Navy for more than eight years. He also served as a law clerk to The Honorable William W. Brash III and The Honorable Karen E. Christenson of the Milwaukee County Circuit Court.

Dave is a member of the State Bar of Wisconsin, the Eastern District of Wisconsin Bar Association, the Milwaukee Bar Association, Wisconsin Defense Counsel and Defense Research Institute.

He is an active volunteer at the Veterans Administration through Marquette University Law School’s Volunteer Legal Clinic to assist Veterans and their families with legal issues.

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