COURT OF APPEALS DECISION DATED AND FILED August 3, 2010 A.
John Voelker Acting Clerk of Court of Appeals |
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NOTICE |
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This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports. A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. § 808.10 and Rule 809.62. |
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APPEAL
from a judgment of the circuit court for
Before
¶1 PETERSON, J. John Steffens appeals a
judgment declaring he must reimburse BlueCross BlueShield of
BACKGROUND
¶2 On
¶3 In interrogatories, Steffens claimed BlueCross’s payments totaled $64,751.40, the bulk of which were for expenses he incurred for surgery on his lower back in May 2007. AIG hired Dr. William Monacci to examine Steffens. Monacci concluded Steffens’ back surgery was necessitated by a long-standing degenerative low back condition, not the accident. Steffens, in turn, named his back surgeon on his witness list.
¶4 In January 2009, Steffens settled with AIG for $100,000, the policy limit. One month later, Steffens amended his interrogatories to omit his previous assertion his surgery was related to the accident. He revised his estimate of what BlueCross paid in accident-related medical bills accordingly, from $64,751.40 to $1,741.50.
¶5 BlueCross moved for a declaratory judgment that Steffens was obligated, under the health care plan’s terms, to reimburse it for the expense of his surgery. Steffens countered that BlueCross’s right to reimbursement depended on proving the surgery was related to the accident.
¶6 The circuit court held that Steffens was judicially estopped from claiming the surgery was unrelated to the accident because, until he obtained the settlement, he had asserted the surgery was related. The court concluded that Steffens was bound by his representation that BlueCross spent $64,751.40 on accident-related expenses, and that BlueCross was therefore entitled to a declaration the plan required Steffens to reimburse it in that amount.
DISCUSSION
¶7 This appeal presents two issues: (1) whether the circuit court properly
estopped Steffens from arguing his surgery was unrelated to the accident; and (2)
whether BlueCross must prove the benefits it paid were related to the accident.
Whether the elements of judicial
estoppel are present, and whether an insurer’s subrogation rights limit a
plaintiff’s right to recovery, are questions of law we review
independently. Olson v.
1. Judicial Estoppel
¶8 BlueCross argues Steffens may not now claim his surgery was unrelated to his accident because he asserted—in his complaint, interrogatories, and other documents filed with the court—that it was, changing his position only after he obtained a settlement. The circuit court agreed and concluded that Steffens was judicially estopped from changing his position.
¶9 Judicial estoppel is intended “to protect against a litigant
from playing ‘fast and loose with the courts.’” State v. Petty, 201
¶10 BlueCross concedes this element is not satisfied. Instead, citing treatises and federal case
law, it invites us to construe the settlement as satisfying the third
element. BlueCross acknowledges it is
unaware of any
2. Whether BlueCross Must Prove the
Surgery was Related to the Accident
¶11 Steffens argues that BlueCross must prove that the expenses it paid for his surgery were related to the accident. He contends this follows from the plain language of its plan, which only authorizes reimbursement for expenses arising from accidents for which others may be liable. We agree.
¶12 As relevant here, BlueCross’s plan provides:
If any benefits payable under the Plan to you ... were for expenses incurred as the result of ... an accident ... such that other party or parties may be liable for the payment of expenses and you subsequently obtain a settlement from ... such other parties, you ... are obliged to reimburse the plan.
Under the plan, then, BlueCross may claim reimbursement only for expenses it incurred as a result of an accident for which another may be liable. Here, the parties dispute whether Steffens required back surgery because of the accident. It follows that, to be entitled to reimbursement, BlueCross must establish the expenses it paid were in fact related to Steffens’ automobile accident.
¶13 Nevertheless, relying on Newport News Shipbuilding Co. v. T.H.E.
Insurance Co., 187 Wis. 2d 364, 368, 523 N.W.2d 270 (Ct. App. 1994), BlueCross
counters that a subrogated insurer need not show causation to be reimbursed
from a settlement. In
¶14 BlueCross also argues it is relieved from proving Steffens’ surgery was related to his accident because it has the “sole discretion to interpret” the plan. It contends we should therefore defer to its interpretation that the plan requires Steffens to reimburse it for bills he used to leverage his settlement—whether they were related to the accident or not. We disagree.
¶15 While we owe substantial deference to BlueCross’s interpretation of the plan, this deference is not “a license [for it] to make arbitrary or capricious decisions ....” See Cutting v. Jerome Foods, Inc., 993 F.2d 1293, 1295 (7th Cir. 1993). Nothing in the plan language authorizes reimbursement for benefits BlueCross paid that were not related to the liability of another. While the tortfeasor’s insurer might have factored the possibility it might be found liable for Steffens’ surgery into determining whether to settle, the plain terms of BlueCross’s plan permit reimbursement only for bills incurred as a result of an accident for which another actually is liable. Therefore, BlueCross’s interpretation of the plan as requiring reimbursement, regardless of whether Steffens’ surgery was caused by the accident, is unreasonable.
CONCLUSION
¶16 By disposing of BlueCross’s claims against Steffens, “the
declaratory judgment in this case had the effect of a summary judgment.” See Young
v.
By the Court.—Judgment reversed and cause remanded.
Not recommended for publication in the official reports.