Graef v. Applied Underwriters, Inc.

1

Francis G. Graef, Plaintiff-Appellant, v. Applied Underwriters, Inc., Defendant-Respondent.

No. 2023AP420

Court of Appeals of Wisconsin, District III

April 9, 2024

APPEAL from an order of the circuit court for Marinette County Cir Ct. Nos. 2017CV73 2018CV127: JANE M. SEQUIN, Judge.

Before Stark, P. J., Hruz and Gill, JJ.

STARK P.J.

¶1 Francis G. Graef appeals from an order granting Applied Underwriters, Inc.'s motion to dismiss Graef s personal injury lawsuit. Applied Underwriters had contracted with Graef s worker's compensation insurance carrier Continental Indemnity Company, to adjust its worker's compensation claims. Graef sued Continental, and later Applied Underwriters, seeking damages for injuries he claimed were caused by Applied Underwriters' denial of medication under the Wisconsin Worker's Compensation Act (the Act).

¶2 This case previously came before this court and our supreme court on the question of whether the exclusive remedy provision in WIS. STAT. § 102.03(2) (2021-22)^[1] of the Act barred Graef's tort action against Continental. Our supreme court determined "that the Act provides Graef's exclusive remedy for the injuries alleged in his complaint," and, accordingly Continental was dismissed from this suit. See Graef v. Continental Indent. Co., 2021 WI 45, ¶3, 397 Wis.2d 75, 959 N.W.2d 628.

¶3 This appeal presents the same question as to Applied Underwriters, and we reach the same conclusion. Our conclusion that the Act's exclusive remedy provision bars this tort action against Applied Underwriters is based on this court's previous decision in Walstrom v. Gallagher Bassett Services, Inc., 2000 WI.App. 247, ¶13, 239 Wis.2d 473, 620 N.W.2d 223, which held that WIS. STAT. § 102.03(2) also applies to agents and representatives of a worker's compensation insurance carrier. Given Walstrom'?, holding, Applied Underwriters stands in the same shoes as Continental for the purpose of the exclusive remedy provision. Therefore, our supreme court's conclusion-that Continental is immune from liability in tort-applies to Applied Underwriters as well. Accordingly, we affirm the circuit court's decision.

BACKGROUND

¶4 The operative facts underlying this appeal were outlined previously by our supreme court. Graef, 397 Wis.2d 75, ¶¶4-6. In summary, after a workplace accident in 2012-for which Graef received worker's compensation benefits-he continued to suffer from both physical injuries as well as depression. Graef alleged that Continental's-and later Applied Underwriters'-refusal to cover the cost of his depression medication in June 2015, a cost he was unable to shoulder on his own, resulted in worsening depression and caused him to suffer a self-inflicted, nonfatal gunshot wound to the head on August 9, 2015. These facts, which were presented in Graef s amended complaint, are accepted as true for purposes of this appeal. See Cohn ex rel. Shindell v. Apogee, Inc., 225 Wis.2d 815, 817, 593 N.W.2d 921 (Ct. App. 1999).

¶5 Graef filed suit against Continental alleging that it was '"negligent in failing to continue to authorize and pay for' the June 2015" depression medication refill. Graef, 397 Wis.2d 75, ¶6. Thereafter, Continental moved for summary judgment, claiming that Graef brought his claim in the wrong forum because the Act provided his exclusive remedy. The circuit court^[2] denied Continental's motion, but we reversed-on the basis that Graef s right to recovery existed under the Act and was the exclusive remedy-and directed the court to grant summary judgment in favor of Continental. Graef v. Continental Indent. Co., No. 2018AP1782, unpublished slip op. ¶¶2, 39 (WI App Feb. 4, 2020).^[3] Our supreme court affirmed. Graef, 397 Wis.2d 75, ¶3. On remand, the circuit court dismissed Graef s complaint against Continental.

¶6 During this time, however, Graef also filed a separate lawsuit against Applied Underwriters in Marinette County case No. 2018CV127. That lawsuit was subsequently consolidated with the suit against Continental in Marinette County case No. 2017CV73. Graef also moved for leave to file an amended complaint to add the allegations against Applied Underwriters to its complaint against Continental, asserting that Applied Underwriters "was associated with Continental Indemnity, and asked to assist in processing the claims of [Graef] regarding his worker's compensation carrier." The circuit court granted Graef s motion, and Applied Underwriters thereafter moved to dismiss the amended complaint.^[4]

¶7 On remand from our supreme court, and after a nonevidentiary hearing, the circuit court granted Applied Underwriters' motion to dismiss Graef s amended complaint.^[5] Relying on this court's decision in Walstrom, the circuit court concluded that WIS. STAT. § 102.03(2)'s immunity applies "to employers and worker's compensation insurers and their respective agents and representatives." According to the court, pursuant to a "Management Services Agreement" (hereinafter, management agreement), "Applied [Underwriters] owed a contractual duty to Continental to handle claims" and "was acting on Continental's behalf as its agent and representative."^[6] Therefore, the court concluded that the facts alleged in the amended complaint did not support a claim upon which relief could be granted, and Graef s "allegations, if proven, would satisfy the conditions for worker's compensation liability." Graef appeals.

DISCUSSION

¶8 In Graef, our supreme court outlined the law under the Act applicable to this case. To summarize, WIS. STAT § 102.03 "sets forth the basic requirements for a compensable injury under the Act" and "provides a list of conditions that impose liability under the Act against an 'employer, any other employee of the same employer and the worker's compensation insurance carrier.'" Graef, 397 Wis.2d 75, ¶11 (quoting § 102.03(1)-(2)). Further, "employers and worker's compensation insurance carriers have a duty to pay for a subsequent injury that naturally flows from a covered workplace injury, including any injury caused or worsened by the treatment, or lack of treatment, of the original work-related injury." Graef, 397 Wis.2d 75, ¶12; see also Jenkins v. Sabourin, 104 Wis.2d 309, 316, 311 N.W.2d 600 (1981).

¶9 Pursuant to WIS. STAT. § 102.03(2), when the conditions of liability are present, the Act provides the exclusive remedy: "Where such conditions exist the right to the recovery of compensation under this chapter shall be the exclusive remedy against the employer, any other employee of the same employer and the worker's compensation insurance carrier." As our supreme court explained, "[w]orker's compensation laws are considered 'the grand bargain'" drafted by the legislature to "balance[] competing societal interests," where "[i]n exchange for receiving immunity from tort liability, employers must provide benefits regardless of fault." Graef, 397 Wis.2d 75, ¶10 (citation omitted); see also Mulder v. Acme-Cleveland Corp., 95 Wis.2d 173, 180-81, 290 N.W.2d 276 (1980). Graef reiterated that the exclusive remedy provision is "an integral feature of the compromise between the interest of the employer and the interest of the worker." Graef, 397 Wis.2d 75, ¶13 (citation omitted).

¶10 In Graef, our supreme court determined that the conditions of liability pursuant to Wis. STAT. § 102.03(1) had been met and that the Act provided Graef s exclusive remedy against Continental because "Graef s complaint establishe[d] an unbroken causal chain from his workplace injury to his suicide attempt." Graef, 397 Wis.2d 75, ¶¶14-21. In this appeal, we are likewise presented with a question as to the scope of the exclusive remedy provision under § 102.03(2), but the issue now before us is whether Graef's holding is also applicable to Applied Underwriters. For the reasons that follow, we conclude that the Act also prohibits this action against Applied Underwriters.

¶11 This case comes before us on Applied Underwriters' motion to dismiss. A motion to dismiss tests the legal sufficiency of the complaint, and we review de novo whether the complaint states a claim on which relief can be granted. Data Key Partners v. Permira Advisers LLC, 2014 WI 86, ¶¶17, 19, 356 Wis.2d 665, 849 N.W.2d 693. For the purpose of our review, "[a]ll facts pleaded and all reasonable inferences from those facts are admitted as true." Scott v. Savers Prop. & Cas. Ins. Co., 2003 WI 60, ¶5, 262 Wis.2d 127, 663 N.W.2d 715. "The pleadings are to be liberally construed and a claim will only be dismissed if the plaintiff cannot recover under any circumstances." Heinritz v. Lawrence Univ., 194 Wis.2d 606, 610-11, 535 N.W.2d 81 (Ct. App. 1995). The question before us on appeal is whether the Act's exclusive remedy provision prohibits Graef from filing this tort action against Applied Underwriters in the circuit court, which is a question of law that we review independently. See Ehr v. West Bend Mut. Ins. Co., 2018 WI.App. 14, ¶7, 380 Wis.2d 138, 908 N.W.2d 486.

I. Wis. Stat. § 102.03(2)

¶12 Graef's main argument is that WIS. STAT. § 102.03(2) "fails to immunize Applied Underwriters [from this tort action] for the simple reason that Applied Underwriters is neither Graef's employer, his employer's worker's compensation insurance carrier, nor a co-employee"-in other words, it is not one of the entities specifically listed in the statute. He claims that in interpreting the statute, we are "not free to supplement clear statutes or add terms the [legislature never incorporated"; therefore, "[n]othing in § 102.03(2) immunizes Applied Underwriters from this suit."

¶13 We disagree with Graef s contention that the text of WIS STAT. § 102.03(2) forecloses tort-liability immunity for Applied Underwriters because this court has previously...