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Drinkwater v. American Family Mutual Ins. Co.

Citation. 290 Wis.2d 642, 714 N.W.2d 568 (2006)
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Brief Fact Summary.

Plaintiff sued Defendants for personal injuries suffered following a car accident. Plaintiff named his health insurance plan as a subrogated party, and the plan counterclaimed and crossclaimed for full reimbursement of Plaintiff’s healthcare expenses.

Synopsis of Rule of Law.

Under Wisconsin law, a choice of law provision in a contract is not enforceable when the chosen law is contrary to important public policies of the state whose law would otherwise apply. Additionally, the law of the state with contacts of greater significance to the litigation should apply.


Shane Drinkwater (Plaintiff), a Wisconsin resident, sustained injures in a car accident in Wisconsin. Plaintiff sued the other driver and the driver’s insurance (Defendants) for personal injuries. He also named Medical Associates Health Plan (Third Party), an Iowa non-profit who paid Plaintiff’s healthcare expenses pursuant to Plaintiff’s employer’s group health insurance contract, as a potential subrogated party. The Third Party counterclaimed and crossclaimed alleging subrogated interest in the Plaintiff’s damages. The Third Party argued that the Plaintiff’s health insurance contract had a choice of law provision stating Iowa law governed, and under Iowa law the Plan was entitled to full reimbursement. Under Wisconsin’s made-whole doctrine, the Plan would not be entitled to full reimbursement.


Is the Third Party’s subrogation right governed by Iowa law, per the choice of law provision in the insurance contract? Is the Third Party’s subrogation right governed by Iowa law, as the state with the most significant contacts with the litigation?


No, Iowa law does not govern under either theory. The circuit court judgment is affirmed.


Justice Prosser

Judge Prosser argues that the Court applied irrelevant facts to support its conclusion and did not anticipate the consequences of the holding, like how the analysis will apply to out-of-state tourists visiting Wisconsin.


The Court first determined that the contracts choice of law provision did not control the Third Party’s subrogation right because Wisconsin’s made-whole doctrine trumps contrary contract provisions, the contract was not enforceable against Plaintiff because it was not negotiated with him but with his employer, and the issue before the court is one of torts and not contracts. Applying Wisconsin’s choice of law doctrine, the Court then determined that Wisconsin had more significant contacts with the litigation because (1) application promotes predictability for Wisconsin residents, (2) application of either law does not hinder interstate order (3) its application is no more complex than Iowa law, (4) Wisconsin has a significant interest in compensating its residents who suffer a tort, and (5) the Court determined the Wisconsin made-whole doctrine was more equitable than Iowa law.

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