President’s Column: The Year in Review
My term as president of Wisconsin Defense Counsel is coming to an end, so this is my last President's Column. Don't think you've heard the last from me, though, because I plan to remain active in the organization. As a personal mission, I pledge to continue our fight to reform Wisconsin's unfair default judgment rules.
What this year as president has taught me is that we can make a difference if we allow our voices to be heard. It takes time, effort and commitment, but the results benefit our clients, the legal profession and the civil justice system. During 2009 and 2010, numerous legislative proposals were submitted that would have had the effect of tilting the playing field in favor of the plaintiff's side. I am thinking here of the efforts to dismantle the current system of joint and several liability, to require a jury instruction on the effect of verdict findings, and to restrict a defendant's ability to obtain a personal injury claimant's medical records and to have that person undergo independent examination. I am proud to say that members of this organization, in conjunction with Andy Cook and Jim Hough at Hamilton Consulting, rallied to oppose and help defeat these legislative initiatives.
Resting on our laurels, however, is not an option. As new pieces of legislation develop, we need to be informed, even-handed and persuasive in opposing those proposals that could do real harm to our clients and the civil justice system.
One such proposal was embodied in Assembly Bill 938, a bill that died at the end of the legislative session in April 2010. The bill would have changed the procedure for handling claims authorized by Kontowicz v. American Standard Ins. Co., 2006 WI 48, to recover interest from insurance companies for untimely payment of claims under Wis. Stat. §628.46. Kontowicz held that a third-party claimant could seek recovery of interest from an insurance company under strictly limited circumstances. In doing so, Kontowicz acknowledged that an insurance company is entitled to debate a debatable claim and is not subject to an interest penalty if it does so.
Under Kontowicz, a claim for §628.46 interest does not lie unless three preconditions are satisfied. First, there can be no question of liability on the part of the insured. Second, the amount of damages must be in a sum certain amount. Third, the claimant must provide written notice of both liability and the sum certain amount owed. Kontowicz, 2006 WI 48. If the insurer has reasonable proof that it is not responsible for payment of the claim, the statute does not apply.
Beyond recognizing the limited circumstances that would support a claim for interest under §628.46, Kontowicz also held that an interest claim of this type may be bifurcated from the principal claim, pursuant to §805.05(2), in order to avoid prejudice. 2009 AB 938 was a clever attempt to undermine the bifurcation remedy legislatively while purporting to support it. The bill would have required all claims for interest under §628.46 to be tried before the same jury that decided the principal personal injury action. Moreover, AB 938 would have prevented the trial court from using bifurcation to delay discovery on the interest claim until the personal injury claim was resolved.
The mischief that AB 938 would have produced is not difficult to identify. This proposed legislation was a thinly veiled attempt to achieve two pro-plaintiff objectives: (1) to make the insurer's claim file immediately discoverable every time a plaintiff included in the complaint a claim for interest under §628.46; and (2) to move the focus of the litigation away from the accident and the resulting injuries and toward an examination of insurance company claim handling, with the hope that this change in focus would inflate damage awards.
The plaintiffs' bar association, WAJ, testified in support of AB 938, arguing that the bill would achieve judicial economy by sparing parties the extraordinary costs of a second jury trial to resolve a §628.46 interest claim several months after the trial of the principal claim had been completed. Representatives of the plaintiffs' bar did not fess up to their real goal, which was getting access to insurer claim files whenever and wherever possible and thereby undermining for Wisconsin insurers the work product privileges otherwise available to all other litigants in this state.
The opposition to AB 938 focused on the lack of data to support the need for a statutory amendment. The plaintiffs' bar had decried the significant costs of separate trials to resolve claims for interest under §628.46. When pressed, however, the legislation's supporters had no empirical evidence to prove that claims for interest under §628.46 had triggered the need for separate trials many times or even a few times. Perhaps the plaintiffs' bar will find some lawsuit somewhere where an interest claim caused a substantial delay, but they are unlikely to find a groundswell of such cases anytime soon.
There is little doubt that the plaintiffs' bar will try again to move this legislative initiative forward. Our voices in opposition were heard the first time, but the challenge is to make sure our voices continue to be heard as new proposals arise.
It has been a pleasure and an honor serving as president of WDC this past year. I turn over the reins to Bryce Tolefree with the calm and certain knowledge that he will provide great leadership to this organization in the coming year.