author: LOUIS B. BUTLER, JR., J. JON E WILCOX, J.

text:
    John J. Petta and Rachelle DeValk, Plaintiffs-Respondents-Petitioners, v. ABC Insurance Co., DEF Insurance Co., and GHI Insurance Co., Defendants, The Travco Insurance Co., Defendant-Appellant.
    Supreme Court

      No. 03-0610.

      Oral argument September 21, 2004.

    Decided February 24, 2005.

    2005 WI 18
    (Also reported in 692 N.W.2d 639.)

      For the plaintiffs-respondents-petitioners there was a brief by D. James Weis and Habush Habush & Rottier, S.C., Rhinelander, and oral argument by Dana J. Weis.

      For the defendant-appellant there were briefs (in the court of appeals) by Steven L. Theesfeld and Yost & Baill, Minneapolis, Minnesota, and oral argument by Gary L. Wickert and Matthiesen, Wickert & Lehrer, S.C., Hartford.
    An amicus curiae brief was filed by William C. Gleisner, III, and Law Offices of William C. Gleisner, III, on behalf of the Wisconsin Academy of Trial Lawyers.
   LOUIS B. BUTLER, JR., J.

¶ 1. Wrongful death plaintiffs John J. Petta and Rachelle DeValk ("John and Rachelle") seek review of a court of appeals decision that concluded (1) they were not entitled to retain damages for medical, funeral, and property damage expenses because they did not pay for these expenses; and (2) the "made-whole" doctrine recognized in Rimes v. State Farm Mutual Automobile Insurance Co., 106 Wis. 2d 263, 316 N.W.2d 348 (1982), did not preclude Travco Insurance Company's ("Travco") subrogation rights because John and Rachelle were not Travco's insureds.

¶ 2. John and Rachelle argue that equity requires that Rimes and the settlement procedure outlined in Schulte v. Frazin, 176 Wis. 2d 622, 500 N.W.2d 305 (1993), be extended to wrongful death plaintiffs. We agree. Our conclusion is driven by a wrongful death plaintiffs statutory right to waive and satisfy the estate's cause of action in connection with or as part of a settlement and discharge of the claim. A wrongful death plaintiff also has a statutory right to claim and recover medical and funeral expenses on behalf of himself or herself or any person who has paid or assumed liability for such expenses. We acknowledge that a wrongful death relative is not necessarily entitled to retain the proceeds for such claims under the statute unless the relative incurs the costs of those expenses. Nevertheless, because John and Rachelle settled with the tortfeasor for a lump sum of money that Travco stipulated did not make them whole, we conclude that Travco's subrogation rights against the tortfeasor are extinguished. Consequently, we reverse the court of appeals' decision.

hH

¶ 3. On November 14, 2001, John and Rachelle's mother, Dayle Petta, was killed in an automobile accident caused by Byron Schroeder. Dayle's former husband, Alfred, had an automobile insurance policy issued by Travco that insured Dayle's vehicle, the vehicle she was driving at the time of the accident. Travco paid in excess of $14,000 under its insurance policy for Dayle's funeral and medical expenses and for the damage to the wrecked vehicle.

¶ 4. Because Dayle was not married at the time of her death, Dayle's surviving adult children, John and Rachelle, commenced a wrongful death action against Schroeder, Whiplash Lake Resort (the owner of the vehicle Schroeder was driving), West Bend Insurance Company (Schroeder's and Whiplash's automobile liability insurer), and three fictitious insurance companies. Believing Travco had a subrogation interest due to the over $14,000 in benefits it already paid, John and Rachelle also named Travco as a nominal defendant pursuant to Wis. Stat. § 803.03(2)(a) (2001-02).

¶ 5. John and Rachelle claimed Schroeder's negligence was a proximate cause of Dayle's death and that as a result they have "incurred expenses relating to the death of their mother" and have been, and will continue to be, "deprived of the society and companionship of their mother." Travco cross-claimed against Schroeder, Whiplash Lake, and West Bend, asserting a subrogation claim for the $14,000 it previously paid.

¶ 6. In late August 2002, Travco notified the other defendants that John and Rachelle were not its insureds and thus contended that any settlement with or release by . John and Rachelle would not bar its subrogation claim. On September 30, 2002, John and Rachelle settled with these other defendants for $280,000 ($250,000 from West Bend and $30,000 from Schroeder), and released and agreed to indemnify them from any of Travco's claims.

¶ 7. Following the settlement, John and Rachelle moved for a Rimes hearing with Travco and sought an order extinguishing Travco's subrogation rights against the tortfeasor. John and Rachelle maintained that they were entitled to bring a claim for funeral and medical expenses pursuant to Wis. Stat. § 895.04(5), and that they had a claim for the value of the destroyed car as a "pecuniary injury" under Wis. Stat. § 895.04(4). However, they submitted that they nonetheless had not been made whole for their damages. Because Travco stipulated that the entire settlement did not make John and Rachelle whole, John and Rachelle argued that Travco no longer had subrogation rights.

¶ 8. Travco resisted, claiming that because John and Rachelle were not its insureds, Rimes and its progeny simply did not apply. The trial court disagreed. The trial court concluded that because the settlement did not make John and Rachelle whole, and because they agreed to indemnify the tortfeasors, Travco could not pursue a subrogation claim against the tortfeasors.

¶ 9. Travco appealed, and, in the published opinion of Petta v. ABC Insurance Co., 2003 WI App 241, 268 Wis. 2d 153, 672 N.W.2d 146, the court of appeals reversed. Although John and Rachelle did not pay for Dayle's medical or funeral expenses or for the damage to her vehicle, the court agreed that John and Rachelle owned claims for these damages, but concluded their ownership was not exclusive. Id., ¶ 9. The court concluded that John and Rachelle could bring these claims on behalf of the payor, Travco, and were not entitled to retain any recovery on these claims because they did not pay for the expenses. Id. According to the court of appeals, "[t]here should be no recovery where there is no injury." Id., ¶ 12.

¶ 10. The court of appeals also rejected John and Rachelle's argument that the Rimes made-whole doctrine precluded Travco's subrogation claims. The court held that Rimes applied only in situations of an insurer-insured relationship. Id., ¶¶ 13-14. Because it was undisputed that John and Rachelle were not Travco's insureds, the court concluded that the made-whole doctrine was inapplicable. Id. In closing, the court supposed that if Rimes were applied in this situation, it would set a dangerous precedent. Id., ¶ 16. The court posited:

If there were multiple plaintiffs against a common tortfeasor based on a single incident, the plaintiffs could "race" to settlement. The first to settle and indemnify the tortfeasor could show that he or she was not made whole and, if Rimes applied, extinguish not only subrogation claims but also the other plaintiffs' claims. This takes Rimes to a place it was never intended to go.

Id.

¶ 11. We accepted John and Rachelle's petition for review, and we reverse.

1 — 1 HH

¶ 12. Whether a party's subrogation rights limit a plaintiffs right to recovery is a question of law we review de novo. See Koffman v. Leichtfuss, 2001 WI 111, ¶ 20, 246 Wis. 2d 31, 630 N.W.2d 201. This case also requires interpretation of the wrongful death statute, as well as consideration of whether the made-whole doctrine applies to wrongful death plaintiffs. Both issues are questions of law we review de novo. See Ruckel v. Gassner, 2002 WI 67, ¶ 13, 253 Wis. 2d 280, 646 N.W.2d 11.

HH HH HH

¶ 13. As part of their wrongful death claim, John and Rachelle have asserted claims for medical and funeral expenses, and have disposed of a potential claim for property damage expenses. Travco has paid for all of these underlying expenses, and, accordingly, John and Rachelle agree that Travco has subrogated interests in these claims. They further agree that they are not Travco's insureds. Nevertheless, they argue that because subrogation and its antisubrogation counterpart embodied in Rimes are fundamentally equitable doctrines, Rimes should apply to preserve their settlement proceeds that all parties agree have not made them whole.

¶ 14. Travco counters by arguing that the Rimes made-whole doctrine applies only within the confines of an insurer/insured relationship. Because John and Rachelle are not its insureds, Travco contends that Rimes protections simply do not apply to extinguish its subrogation interests. Travco further argues that if Rimes is extended beyond an insurer/insured relationship, then in cases with multiple plaintiffs, those plaintiffs will be pitted against one another to race to settle with the defendant first in order to thwart the other plaintiffs' rights by asserting the settlement did not make the settling plaintiff whole.

¶ 15. We agree with John and Rachelle that equity requires extending Rimes to wrongful death plaintiffs. We begin with a discussion of the wrongful death statute and how that permits John and Rachelle to control the claim for property damage to Dayle's wrecked vehicle as well as to claim medical and funeral expenses even though they did not pay for these expenses. From there, we discuss subrogation principles and why the "antisubrogation" rule of the made-whole doctrine should be extended to wrongful death plaintiffs. And before closing, we comment on Travco's and the court of appeals' concern that extending Rimes outside the insurer/insured relationship will result in injustice.

A

¶ 16. A wrongful death action is purely a creature of statute, since at common law no such right to recovery existed. Weiss v. Regent Properties, Ltd., 118 Wis. 2d 225, 230, 346 N.W.2d 766 (1984). The purpose of the wrongful death statute, Wis. Stat. § 895.04, is "to compensate for loss of the relational interest existing between the beneficiaries and the deceased." See Chang v. State Farm Mut. Auto. Ins. Co., 182 Wis. 2d 549, 560-61, 514 N.W.2d 399 (1994) (citations omitted). To this end, § 895.04(4) allows wrongful death plaintiffs to recover pecuniary injury, as well as loss of society and companionship.

¶ 17. A "pecuniary injury" is the loss of any benefit that a beneficiary would have received from the decedent if the decedent had lived. See Holt v. State Farm Fire & Cas. Co., 151 Wis. 2d 455, 460, 444 N.W.2d 453 (Ct. App. 1989). This includes claims for loss of support, contribution, and inheritance. See Schaefer v. Am. Fam. Mut. Ins. Co., 192 Wis. 2d 768, 792, 531 N.W.2d 585 (1995); Holt, 151 Wis. 2d at 460; 1 The Law of Damages in Wisconsin §§ 16.29 (Russell M. Ware ed., 3d ed. 2000). A lost inheritance is "the pecuniary value of the addition to the estate which the decedent in reasonable probability would have accumulated and left to his or her heirs had the decedent lived a natural life span." Schaefer, 192 Wis. 2d at 775.

¶ 18. Concerning the property damage, Travco notes that John and Rachelle did not establish that they would have derived a benefit from the vehicle had Dayle survived; nor did they establish a reasonable probability that Dayle would have left the vehicle to them. Thus, Travco argues John and Rachelle are not entitled to retain any settlement proceeds for the property damage expense.

¶ 19. John and Rachelle argue that they might have inherited the vehicle; they just have not established this yet. Alternatively, John and Rachelle argue that if this claim belonged to Dayle's estate, Wis. Stat. § 895.04(6) provides that where a person's wrongful death "creates a cause of action" in favor of both the decedent's estate and a spouse or relative, "such spouse or relatives may waive and satisfy the estate's cause of action in connection with or as part of a settlement and discharge of the cause of action of the spouse or relatives."

¶ 20. Wrongful death beneficiaries are not automatically entitled to recover for pecuniary loss resulting from a parent's wrongful death. Keithley v. Keithley, 95 Wis. 2d 136, 138, 289 N.W.2d 368 (Ct. App. 1980). It is well-established that "the survivors must prove their loss." Id. Travco correctly notes that John and Rachelle have not established they incurred any inheritance loss or loss of benefit due to the vehicle's destruction. But we agree with John and Rachelle that Wis. Stat. § 895.04(6) empowers them to control the settlement of any claims the estate had against the tortfeasor.

¶ 21. Here, the accident that caused Dayle's death clearly created a cause of action for property damage in favor of her estate. Consequently, to the extent that they have a cause of action, John and Rachelle were allowed to "waive and satisfy" that cause of action "in connection with or as part of' their wrongful death settlement. See Wis. Stat. § 895.04(6). Having apparently done so as part of their full settlement and release, the question is what happens to Travco's sub-rogated interest for the payments it made for the property damage.

¶ 22. Before answering that question, we must next turn to John and Rachelle's ability to claim the medical and funeral expenses Travco has already paid, for these claims also carry Travco's subrogated interests.

B

¶ 23. The wrongful death statute allows relatives of the deceased to seek more than the "loss of relational interest existing between the beneficiaries and the deceased." See Chang, 182 Wis. 2d at 560-61. The legislature has specifically provided the relative of a decedent a claim to recover expenses that the relative may not have incurred. Wisconsin Stat. § 895.04(5) states, "the relative may recover such medical expenses, funeral expenses, including the cost of a cemetery lot, grave marker and care of the lot." Recovery is not contingent on the relative having paid these expenses, as the claim can be made "on behalf of himself or herself or any person who has paid or assumed liability for such expenses." Id.

¶ 24. John and Rachelle agree they did not pay for the medical or funeral expenses, but claim that because the statute specifically gives them the right to claim funeral and medical expenses, they are nonetheless entitled to recover them. John and Rachelle are correct. In Chang, 182 Wis. 2d at 561, this court concluded that "[t]he right to sue and recover under the wrongful death statute is vested in the classes of beneficiaries listed in the statute." John and Rachelle are among the beneficiaries listed in the statute. See Wis. Stat. § 895.04(2). Thus, John and Rachelle have the right to claim and recover funeral and medical expenses,' even though they did not pay for them.

¶ 25. The right to sue under the wrongful death statute, however, is distinguished from the ownership of the recovery. Weiss, 118 Wis. 2d at 230; see also Chang, 182 Wis. 2d at 561. In Chang, this court noted that "[r]ecovery under the wrongful death statute is keyed to actual loss." Id. at 560. Thus, notwithstanding the wrongful death beneficiaries' vested right to claim and recover damages listed in the statute, and to "waive and satisfy" the estate's claim for property damage as part of their settlement, the actual ownership of that recovery requires the existence of damages, which in turn requires proof of loss. Id. at 561. In other words, wrongful death plaintiffs are not entitled to a windfall simply because the statute has provided them with a claim or ability to recover damages they have not incurred.

¶ 26. John and Rachelle agree that they did not pay for the medical, funeral, and property damage expenses, so they have no ownership rights to any proceeds on those claims. But concluding that John and Rachelle have no ownership interest in any recovery for these claims does not answer whether Travco can invade John and Rachelle's lump-sum settlement to recoup the payments it made. Travco has a subrogated interest in those claims. As such, if Travco is entitled to recovery from the settlement, that recovery must stem from subrogation. We now turn attention to that concept.

c

¶ 27. It has long been recognized that subrogation rests upon principles of equity. Equity generally grants that "one (other than a volunteer) who pays for the wrong of another should be permitted to look to the wrongdoer to the extent he [or she] has paid, and be subject to the defenses of the wrongdoer." Ruckel, 253 Wis. 2d 280, ¶ 14. However, the purpose of subrogation is to prevent an injured party from being unjustly enriched by obtaining double payment. Garrity v. Rural Mut. Ins. Co., 77 Wis. 2d 537, 541, 253 N.W.2d 512 (1977). Thus, subrogation ordinarily does not arise until the underlying debt or loss has been fully paid. Ruckel, 253 Wis. 2d 280, ¶ 16; Rimes, 106 Wis. 2d at 271; Garrity, 77 Wis. 2d at 541. This "antisubrogation rule" is commonly known as the Rimes made-whole doctrine. See Ruckel, 253 Wis. 2d 280, ¶ 16.

¶ 28. In Rimes, this court held that "one who claims subrogation rights, whether under the aegis of either legal or conventional subrogation, is barred from any recovery unless the insured is made whole." Rimes, 106 Wis. 2d at 272. The Rimes court reaffirmed the principle that a cause of action against a tortfeasor is indivisible. Id. at 275. "Accordingly, it is only when there has been full compensation for all the damage elements of the entire cause of action that the insured is made whole." Id. That is, the made-whole doctrine established a rule of priority, such that "only where an injured party has received an award by judgment or otherwise which pays all of his elements of damages, including those for which he has already been indemnified by an insurer, is there any occasion for subrogation." Id.

¶ 29. This court amplified Rimes in Schulte. In Schulte, this court recognized that "settling plaintiffs and subrogated insurers usually compete in a practical sense for limited settlement funds." Schulte, 176 Wis. 2d at 633. The reality of settlements, this court stated, was an equitable factor that could not be ignored. Id. Coupled with a policy recognition that "the injured party should have the right to settle on its own terms," id. at 634, this court outlined the settlement procedure plaintiffs were to utilize to determine how a settlement impacted an insurer's subrogation rights. Id. at 637. That procedure requires the plaintiff to (1) settle with the tortfeasor without resolving the subrogated insurer's claim; (2) request a Rimes hearing to determine if the settlement made the insured whole; and (3) provide the insurer an opportunity to participate in that hearing. Id. If the circuit court determines that the settlement did not make the settling plaintiff whole, then the insurer's subrogation rights are extinguished. Id.

¶ 30. Even though Rimes and Schulte used terminology including "settling plaintiff' and "injured party," we acknowledge that those terms were used interchangeably with "insured." Nonetheless, John and Rachelle contend equity requires extending these principles to wrongful death plaintiffs, while Travco clings to the insurer/insured relationship as vital to the application of the made-whole doctrine. We agree with John and Rachelle for the following reasons.

¶ 31. First, the Rimes doctrine is essentially one of priority, as it determines who gets paid first among competing claims. In this case, wrongful death plaintiffs' claims must take priority. If the made-whole doctrine was inapplicable to wrongful death plaintiffs, the wrongful death statute's purpose of compensating wrongful death beneficiaries for the loss of relational interest between the beneficiaries and the deceased would be impinged. See Chang, 182 Wis. 2d at 560. We have already established that John and Rachelle were statutorily entitled to manage a claim for property damage, as well as make claims for medical and funeral expenses as part of their wrongful death cause of action. Rimes confirmed that a cause of action against the tortfeasor is indivisible. Rimes, 106 Wis. 2d at 275. Thus, these claims are inseparable from John and Rachelle's claims for their own losses of pecuniary injury and loss of society and companionship.

¶ 32. Here, John and Rachelle disposed of these claims by fully settling and releasing the defendants (other than Travco), but they did so with a lump-sum settlement. Ordinarily, we have no way of knowing what damages the lump-sum, non-apportioned, settlement covers. That is why Rimes requires a hearing to prove up damages so that the settlement's reach in relation to actual damages can be determined. In this case, however, we do know that the entirety of the settlement insufficiently compensated John and Rachelle for their losses because Travco stipulated that the settlement did not make them whole. It would be contrary to the wrongful death statute's purpose to subject John and Rachelle to further loss by forcing them to pay out funds to another from a settlement that by itself is inadequate. Thus, their claim must take priority.

¶ 33. Second, we see no conceptual difference between a personal injury case involving a subrogated insurer, as in Rimes, and a wrongful death case involving a subrogated insurer. In a personal injury case where the plaintiff is insured, the plaintiffs insurer will ordinarily pay for any medical expenses and property damage. Travco did that here. In the personal injury plaintiffs suit against the tortfeasor, the plaintiff will claim as damages the medical expenses and property damage even though the plaintiff did not actually pay for those expenses. John and Rachelle did that here. In the personal injury plaintiffs settlement with the tort-feasor, there will usually be a full settlement and release. That was done here. And in the plaintiffs personal injury case, this court has said that the sub-rogated insurer cannot invade the plaintiffs settlement unless the plaintiff has received an award which pays "all of his [or her] elements of damages, including those for which he has already been indemnified by an insurer." Rimes, 106 Wis. 2d at 275. We see no reason why this conceptual framework does not apply to wrongful death plaintiffs.

¶ 34. Third, because "[e]quity does not lend itself to the application of black letter rules," subrogation "depends upon a just resolution of a dispute under a particular set of facts." Vogt v. Schroeder, 129 Wis. 2d 3, 12, 383 N.W.2d 876 (1986). The equitable considerations balanced by the made-whole doctrine are "an insurer's right to recoup benefits paid and an injured person's right to obtain full compensation." Schulte, 176 Wis. 2d at 630. Here, the two considerations being balanced are the wrongful death plaintiffs' right of full recovery and to manage their wrongful death action according to the wrongful death statute against an insurer's right to recoup benefits paid. What has traditionally tipped the balance in favor of an injured person's right to be made whole as the just resolution is that the insurer has been paid to accept the risk that it may go unpaid. Garrity, 77 Wis. 2d 542. We see no reason, and neither has Travco provided us with one, why John and Rachelle's lack of status as "insureds" shifts the equitable balance in Travco's favor. Although John and Rachelle have not paid Travco the premiums, Travco was nonetheless paid a premium to accept the risk that it would go unpaid. We therefore conclude that the equitable balance still tips in the injured person's favor, in this case the wrongful death plaintiffs right, to obtain full recovery.

¶ 35. Fourth, the Schulte court recognized that "settling plaintiffs and subrogated insurers usually compete in a practical sense for limited settlement funds." Schulte, 176 Wis. 2d at 633. That competition is just as real here. And as in Schulte, this competition is an equitable factor we cannot ignore. See Id.

¶ 36. Fifth, if Rimes did not apply, this state's policy of encouraging settlement would suffer in wrongful death actions. See Schulte, 176 Wis. 2d at 634 ("Wisconsin has a 'long-standing policy in favor of settlements.'") (citations omitted). Just as in personal injury contexts, a tortfeasor in a wrongful death action "may quite reasonably not be willing to offer the maximum amount possible to settle unless he receives a complete release." Id. We have already precluded a subrogated insurer's ability to frustrate an insured's attempts to settle disputes out of court on the insured's terms. Id. at 634-35. Travco has not provided us with any persuasive reason as to why wrongful death plaintiffs should be treated differently.

¶ 37. For these reasons, we conclude that the Rimes made-whole doctrine and the Schulte settlement procedure apply to wrongful death plaintiffs. Here, it is undisputed that John and Rachelle properly followed the Schulte procedure to determine the status of Travco's subrogation rights. Because Travco stipulated that the $280,000 settlement did not make John and Rachelle whole, its subrogation rights are consequently extinguished.

¶ 38. Before closing, we comment on Travco's, and the court of appeals', concern that our conclusion today will do harm in multiple plaintiff litigation. Our conclusion today addresses only the extension of Rimes to wrongful death actions that involve a subrogated insurer. To whatever extent that our reasoning can be construed as applying to multiple plaintiff litigation, we come full circle from where this part of the discussion began: subrogation and its antisubrogation counterpart are fundamentally equitable concepts. Thus, equity is the bulwark against the horribles that Travco and the court of appeals fear. Outside of situations where a person has a competing claim with a subro-gated insurer, the equities will vary dramatically.

IV

¶ 39. In conclusion, equity requires that Rimes and its progeny apply to wrongful death plaintiffs. Wrongful death plaintiffs are entitled to be made whole for their losses, but not more than whole. To the extent that wrongful death plaintiffs receive a portion of damages for expenses they have not incurred after having been made whole for their losses, they have been unjustly enriched. However, because of Travco's stipulation that John and Rachelle's lump-sum settlement did not make them whole, those circumstances are absent here. Therefore, Travco's subrogation rights are extinguished.

By the Court. — The decision of the court of appeals is reversed.

JON E WILCOX, J.

¶ 40. (concurring). I write separately to restate some basic rules of subrogation in order to address the court of appeals' concern over the application of the made-whole doctrine in this case. Further, I wish to state that in my view, the only reason the plaintiffs in this wrongful death action are allowed to defeat Travco's right of subrogation is because Travco stipulated that the plaintiffs were not made whole and Wis. Stat. § 895.04 (2001-02) allows the plaintiffs to assert and satisfy certain claims in which Travco has a subrogated interest that properly belong to the estate and could have been recovered as part of a survival action.

¶ 41. Subrogation occurs when a subrogee "steps into the shoes of the subrogor to the extent it has made payment as a result of [an] actionable event." Wilmont v. Racine County, 136 Wis. 2d 57, 63, 400 N.W.2d 917 (1987)(emphasis added). Thus, "[playment is the sine qua non for subrogation." Muchow v. Goding, 198 Wis. 2d 609, 626, 544 N.W.2d 218 (Ct. App. 1995). Without payment by one party on behalf of another, no subro-gation relationship exists between the two and no subrogation rights arise. Id. If a subrogation relationship exits, the subrogee does not possess an independent claim against the tortfeasor (whose injury of the subrogor necessitated payment); rather, it owns part of the liability of the tortfeasor separate from that part owned by the subrogor. Wilmont, 136 Wis. 2d at 63-64.

¶ 42. As the subrogee and subrogor each own part of the claim against a tortfeasor, they often are forced to compete for a limited pool of money. When this occurs, the made-whole doctrine establishes an equitable rule of priority that prevents the subrogee from asserting its right of subrogation until its subrogor has been made whole for all damages suffered. Paulson v. Allstate Ins. Co., 2003 WI 99, ¶¶ 21-26, 263 Wis. 2d 520, 649 N.W.2d 645. Thus, "the subrogee has no right to share in the fund recovered from the tort-feasor until the subrogor is made whole." Garrity v. Rural Mut. Auto. Ins. Co., 77 Wis. 2d 537, 547, 253 N.W.2d 512 (1977). Where there is a settlement between the tortfeasor and the subrogor, the subrogor may request a hearing in which the circuit court determines whether the subrogor has been made whole by the settlement amount. Rimes v. State Farm Mut. Auto. Ins. Co., 106 Wis. 2d 263, 278-79, 316 N.W.2d 348 (1982).

¶ 43. In order to foster settlements, allow injured parties to settle on their own terms, and ensure that subrogees participate in a Rimes hearing, this court approved the use of a settlement agreement whereby the tortfeasor settles with the plaintiff and the plaintiff grants the tortfeasor a full release and further agrees to indemnify the tortfeasor for any claim made by its subrogee. Schulte v. Frazin, 176 Wis. 2d 622, 633-35, 500 N.W.2d 305 (1993). Such an agreement calls for application of the made-whole doctrine because it "indirectly creates the prospect that the insurer will be competing with its own insured." Id. at 633-34.

¶ 44. I wish to emphasize that the Schulte settlement procedure is a means of ensuring application of the made-whole doctrine, which itself limits preexisting subrogation rights. Neither Schulte nor the made-whole doctrine as set forth in Garrity and Rimes create subrogation rights in the first instance. As such, their application is dependent upon the existence of a subrogation relationship between two parties, which, in turn, is dependent upon one party indemnifying the other for a loss. That is, the made-whole doctrine applies only where a subrogee and subrogor compete for a limited pool of money. Paulson, 263 Wis. 2d 520, ¶¶ 23-28.

¶ 45. I reiterate these basic tenets of the law of subrogation in response to the court of appeals' concern that operation of the made-whole rule in this case could result in a single plaintiff being able to extinguish the rights of other plaintiffs or insurers in a multi-plaintiff action against a common tortfeasor. See majority op., ¶ 10. Such a result should never occur under a proper application of established subrogation principles.

¶ 46. Assume plaintiff A settles with a tortfeasor and further agrees to indemnify that tortfeasor against claims brought by plaintiffs B and C or their insurers. Unless plaintiffs B or C or their insurers have paid part of the loss suffered by plaintiff A, there is no subrogation relationship between the parties. That is, unless some other party has indemnified plaintiff A, there is no relation of subrogee and subrogor and no subrogation rights exist. If there is no subrogation relationship in the first instance, then the made-whole doctrine has no relevance. In the absence of inter-plaintiff indemnification, each plaintiff possesses a separate independent claim against the tortfeasor. In contrast, the made-whole doctrine applies where two parties each own part of a single claim by virtue of a subrogation relationship and are forced to compete for limited funds. See Paulson, 263 Wis. 2d 520, ¶¶ 23-28. While a Schulte settlement forces a subrogee and subrogor to compete for limited funds, it does not create the subrogation relationship between the two.

¶ 47. Thus, the fact that multiple plaintiffs may compete for limited funds when pursuing a common tortfeasor does not trigger application of the made-whole doctrine unless they each own part of the other's claims. Where multiple plaintiffs each possess independent claims against a common tortfeasor and there is no subrogation relationship between them in the first instance, a Schulte settlement does not create subrogation rights and the made-whole doctrine has no application.

¶ 48. However, the result of the majority opinion is perfectly consistent with these basic subrogation principles. Here, Travco paid sums of money under its insurance policy for Dayle's funeral expenses, medical expenses, and damage.to her wrecked car. Majority op., ¶ 3. As these items of damages were incurred between the time of the tortious act and Dayle's death, they properly belong to the estate and could be asserted as part of a survival action under Wis. Stat. § 895.01(1). Weiss v. Regent Props. Ltd., 118 Wis. 2d 225, 233, 346 N.W.2d 766 (1984).

¶ 49. As such, there is no doubt that Travco obtained a subrogation right in claims belonging to the estate to the extent it made payment to or on behalf of the estate. However, the estate did not bring a survival action in this case; rather, the plaintiffs brought an action for wrongful death, claiming the above damages as well as losses stemming from the deprivation of society and companionship of their mother under § 895.04. Had the estate instead brought a cause of action, Travco's subrogation rights would certainly be contingent upon the estate being made whole for its damages.

¶ 50. While a "wrongful death action is separate and distinct from the survival action[,]" id., Wis. Stat. § 895.04(5) allows those bringing a claim for wrongful death to recover medical and funeral expenses. Further, Wis. Stat. § 895.04(6) allows a wrongful death plaintiff to "waive and satisfy the estate's cause of action" as part of a settlement agreement. Thus, § 895.04 allows the plaintiffs to essentially stand as proxies for the decedent's estate by allowing them to assert and control claims that properly belong to the estate.

¶ 51. As noted, a subrogated interest is not an independent claim, but instead represents part ownership of the subrogor's claim against the tortfeasor. Because of its payments to or on behalf of the estate, Travco owns part of the claims that the plaintiffs are able to assert and control by virtue of § 895.04. In essence, as a result of § 895.04, Travco has the same relationship with the plaintiffs (to the extent they are able to assert and satisfy claims belonging to the estate) as it would with the decedent's estate, had the estate sought recovery.

¶ 52. Thus, Travco's subrogated interest in claims belonging to the estate is rightly subject to the plaintiffs being made whole, vis-á-vis the claims they assert on behalf of the estate, the same as it would be had the estate itself asserted these claims. As Travco stipulated that the plaintiffs were not made whole, the made-whole doctrine appropriately limits its subrogation rights. Likewdse, because the plaintiffs are able to assert and satisfy claims that properly belong to the estate, use of the Schulte settlement procedure is just as appropriate here as it would be had the estate brought a cause of action and executed the same type of agreement.

¶ 53. I am authorized to state that Justice PATIENCE D. ROGGENSACK joins this opinion.

        Petta v. ABC Ins. Co., 2003 WI App 241, 268 Wis. 2d 153, 672 N.W.2d 146.

       Wis. Stat. §895.04(6) (2001-02). All references to the Wisconsin Statutes are to the 2001-02 version, unless otherwise noted.

       Wis. Stat. § 895.04(5).

       Wisconsin Stat. § 803.03(2) (a) provides:
      A party asserting a claim for affirmative relief shall join as parties to the action all persons who at the commencement of the action have claims based upon subrogation to the rights of the party asserting the principal claim, derivation from the principal claim, or assignment of part of the principal claim. For purposes of this section, a person's right to recover for loss of consortium shall be deemed a derivative right. Any public assistance recipient or any estate of such a recipient asserting a claim against a 3rd party for which the public assistance provider has a right of subrogation or assignment under s. 49.89 (2) or (3) shall join the provider as a party to the claim. Any party asserting a claim based upon subrogation to part of the claim of another, derivation from the rights or claim of another, or assignment of part of the rights or claim of another shall join as a party to the action the person to whose rights the party is subrogated, from whose claim the party derives his or her rights or claim, or by whose assignment the party acquired his or her rights or claim.

       Wisconsin Stat. § 895.04(5) states:
      If the personal representative brings the action, the personal representative may also recover the reasonable cost of medical expenses, funeral expenses, including the reasonable cost of a cemetery lot, grave marker and care of the lot. If a relative brings the action, the relative may recover such medical expenses, funeral expenses, including the cost of a cemetery lot, grave marker and care of the lot, on behalf of himself or herself or of any person who has paid or assumed liability for such expenses.

       Wisconsin Stat. § 895.04(4) provides:
      Judgment for damages for pecuniary injury from wrongful death may be awarded to any person entitled to bring a wrongful death action. Additional damages not to exceed $500,000 per occurrence in the case of a deceased minor, or $350,000 per occurrence in the case of a deceased adult, for loss of society and companionship may be awarded to the spouse, children or parents of the deceased, or to the siblings of the deceased, if the siblings were minors at the time of the death.

       Wisconsin Stat. § 895.04(4) caps John and Rachelle's damages at $350,000 for loss of society and companionship.

       Because of this conclusion, the court declined to consider whether "pecuniary injury" under Wis. Stat. § 895.04(4) includes the monetary value of Dayle's wrecked automobile. Petta, 268 Wis. 2d 153, ¶¶ 10-12.

       Wisconsin Stat. § 895.04(6) reads:
      Where the wrongful death of a person creates a cause of action in favor of the decedent's estate and also a cause of action in favor of a spouse or relatives as provided in this section, such spouse or relatives may waive and satisfy the estate's cause of action in connection with or as part of a settlement' and discharge of the cause of action of the spouse or relatives.

       Had Dayle not died, it is well-settled that she could have brought a claim for medical expenses. See Koffman v. Leichtfuss, 2001 WI 111, ¶ 46, 246 Wis. 2d 31, 630 N.W.2d 201.

       A wrongful death action is also designed to compensate for the loss of the relational interest existing between the beneficiaries and the decedent. Wurtzinger v. Jacobs, 33 Wis. 2d 703, 709-10, 148 N.W.2d 86 (1967); Weiss v. Regent Properties, Ltd., 118 Wis. 2d 225, 230, 346 N.W.2d 766 (1984).

       It is unclear on whose behalf John and Rachelle brought this claim. At oral argument, John and Rachelle initially suggested that they brought it on their mother's behalf, since the mother's estate would have brought the claim if they had chosen to fashion the wrongful death action on behalf of the estate. See Wis. Stat. § 895.04(1) (allowing a wrongful death action to be brought "by the personal representative of the deceased person or by the person to whom the amount recovered belongs"); § 895.04(5) (allowing personal representative to "recover the reasonable cost of medical expenses, funeral expenses ....). Later, John and Rachelle suggested that they brought the claim on Travco's behalf, as the "person" who "assumed liability for such expenses." See Wis. Stat. § 895.04(5); see also Estate of Cavanaugh v. Andrade, 191 Wis. 2d 244, 250, 528 N.W.2d 492 (Ct. App. 1995) (wrongful death plaintiff who has not paid for medical and funeral expenses may bring a claim for those expenses, but the claim is brought on behalf of the person who actually paid the expenses).
      Travco, on the other hand, at first conceded that John and Rachelle actually brought the claim on their own behalf, even though they had not paid the underlying expenses. After being pressed by this court, however, Travco withdrew from that position and argued, as the court of appeals concluded, that the claim was brought on its behalf.
      For purposes of this decision, it does not matter on whose behalf the claim was made. The pertinent inquiry is whether Travco can assert its subrogation interest against a lump-sum settlement when it concedes that John and Rachelle have not been made whole.

       As noted above, John and Rachelle did not establish that they had an inheritance interest in Dayle's vehicle.

       There are three types of subrogation: (1) legal (also known as equitable); (2) conventional (also known as contractual); and (3) statutory. See Ruckel v. Gassner, 2002 WI 67, ¶ 18, 253 Wis. 2d 280, 646 N.W.2d 11; 1 The Law of Damages in Wisconsin §§ 32.6-32.9 (Russell M. Ware ed., 3d ed. 2000). Because John and Rachelle were not Travco's insureds, there is no right to subrogation implicated by contract. And the wrongful death statute does not provide for subrogation. Thus, if Travco is entitled to subrogation, it must be through equity.
      Because there is no statutory right to subrogation here, we note that the court of appeals in this case erred by relying on Estate of Cavanaugh v. Andrade, 191 Wis. 2d 244, 528 N.W.2d 492 (Ct. App. 1995), for determining whether Travco was entitled to share the settlement proceeds.
      In Cavanaugh, the court of appeals concluded that a wrongful death plaintiff who brought a claim for medical expenses paid by Milwaukee County was prohibited from retaining any proceeds for that claim because the County had a subrogated interest in those expenses. Id. at 267. The County's subrogated interest for medical expenses stemmed from Wis. Stat. § 49.65 (1995-1996), now Wis. Stat. § 49.89. Cavanaugh, 191 Wis. 2d at 266. However, the court of appeals previously interpreted that statute to abrogate the common law subrogation made whole doctrine. See Waukesha County v. Johnson, 107 Wis. 2d 155, 320 N.W.2d 1 (Ct. App. 1982).
      In Waukesha County, the court of appeals observed that "[u]nder common law subrogation, the subrogor must be made whole before the subrogee may recover from a third-party tort-feasor." Id. at 160. The court nevertheless concluded "that sec. 49.65, Stats., on its face, renders the common law subrogation principles inapplicable to counties seeking reimbursement pursuant to that section." Id. at 161-62; See also Ruckel, 253 Wis. 2d 280, ¶ 42 n.7. ("In some instances, legislatively-sanctioned subrogation may override the made whole principles discussed in this case.").
      Because Travco has no statutory ground for asserting subrogation, Cavanaugh is not binding here.

        See, e.g., Paulson v. Allstate Ins. Co., 2003 WI 99, ¶ 29, 263 Wis. 2d 520, 665 N.W.2d 744 ('Wisconsin case law has clearly provided that application of subrogation is controlled by equitable principles."); Ruckel, 253 Wis. 2d 280, ¶ 26 ("[S]ubro-gation is recognized or denied upon equitable principles without differentiation between 'legal subrogation' which arises by application of principles of equity and 'conventional subrogation' arising from contract or the acts of the parties.")(citation omitted); Ives v. Coopertools, 208 Wis. 2d 55, 71, 559 N.W.2d 571 (1997) (Geske, J., concurring) ("Application of the subrogation principle depended upon the equities, and thus upon the facts at hand."); Wisconsin Patients Comp. Fund v. Wisconsin Health Care Liab. Ins. Plan, 200 Wis. 2d 599, 620, 547 N.W.2d 578 (1996) (Subrogation " 'is proper in all cases to allow it where injustice would follow its denial.'") (citations omitted); Schulte v. Frazin, 176 Wis. 2d 622, 628, 500 N.W.2d 305 (1993) ("The doctrine of subrogation is based upon equitable principles."); Rimes v. State Farm Mut. Auto. Ins. Co., 106 Wis. 2d 263, 270-71, 316 N.W.2d 348 (1982) ("[T]he effect of 'conventional subrogation' was the same as 'legal subrogation,' which arises by application of the principles of equity, and that, accordingly, the contractual terms of subrogation agreements in an insurance policy were to be applied according to the rules of equity."); Garrity v. Rural Mut. Ins. Co., 77 Wis. 2d 537, 541, 253 N.W.2d 512 (1977); American Ins. Co. v. Milwaukee, 51 Wis. 2d 346, 352, 187 N.W.2d 142 (1971) ("Subrogation is recognized or denied upon equitable principles."); D'Angelo v. Cornell Paperboard Products Co., 19 Wis. 2d 390, 401, 120 N.W.2d 70 (1963).
      The only exception to this rule is legislatively-sanctioned subrogation that overrides subrogation's equitable foundation. As noted in Ruckel:

      In some instances, legislatively-sanctioned subrogation may override the made whole principles discussed in this case. Some examples include: (1) self-funded employee pension and benefit plans under The Federal Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461 (see FMC Corp. v. Holliday, 498 U.S. 62, 58-65 (1990); Petro v. D.W.G. Corp., 148 Wis. 2d 725, 727-28, 436 N.W.2d 875 (Ct. App. 1989)); (2) government subrogation rights for certain public assistance payments under Wis. Stat. § 49.89 (formerly Wis. Stat. § 49.65) (see Waukesha County v. Johnson, 107 Wis. 2d 155, 320 N.W.2d 1 (Ct. App. 1982)); and (3) subrogation rights in worker's compensation cases under Wis. Stat. § 102.29(1) {see Martinez v. Ashland Oil, 132 Wis. 2d 11, 390 N.W.2d 72 (Ct. App. 1986)).

        Ruckel, 253 Wis. 2d 280, ¶ 42 n.7.

       See Schulte, 176 Wis. 2d at 633 ("Given the realities of settlements, settling plaintiffs and subrogated insurers usually compete in a practical sense for limited settlement funds.").

       See Schulte, 176 Wis. 2d at 634 ("More importantly, we believe the injured party should have the right to settle on its own terms."); Rimes, 106 Wis. 2d at 275 ("[0]nly where an injured party has received an award by judgment or otherwise which pays all of his elements of damages, including those for which he has already been indemnified by an insurer, is there any occasion for subrogation."

        See Schulte, 176 Wis. 2d at 635 ("Given the differing incentives and motives of the insured, the subrogated insurer, and the tortfeasor and his insurer, it may be that only the injured party and the tortfeasor can reach an agreement to settle.").

        See also Wurtzinger, 33 Wis. 2d at 709. In Wurtzinger, this court held that the equitable doctrine of contribution could not be used against the beneficiaries of a wrongful death action. Id. This court stated, "The wrongful-death action does not belong to the deceased and the proceeds of the action should not be subject to his obligations." Id. at 710.

       All references to the Wisconsin Statutes are to the 2001-02 version unless otherwise noted.

        See also Rimes v. State Farm Mat. Auto. Ins. Co., 106 Wis. 2d 263, 271 316 N.W.2d 348 (1982) (" 'The primary reason for the adoption of subrogation is the principle of indemnity.'") (quoting Denenberg, Subrogation Recovery: Who is Made Whole, FIC Quarterly, Winter 1979 at 185-86).

        See also J. Ric Gass et al., 2 The Law of Damages in Wisconsin: Wrongful Death § 16.7, at 12 (Russell M. Ware ed., 3d ed. 2003) ("Medical, hospital, and funeral expenses are properly items of damages for the estate.").


source: Caselaw Access Project

author: N. PATRICK CROOKS, J. SHIRLEY S. ABRAHAMSON, C.J.

license: Public Domain

text:
    John D. Hess, Joan M. Hess, Adrienne V. Hess, and Emily M. Hess, a minor, by William Smoler, her Guardian ad Litem, Plaintiffs-Respondents-Cross-Appellants, Wausau Insurance Companies, Subrogated-Plaintiff, v. Juan Fernandez III, M.D., Defendant-Appellant-Cross-Respondent, Wisconsin Patients Compensation Fund, Defendant-Co-Appellant-Cross-Respondent.
    Supreme Court

      No. 03-0327.

      Oral argument December 13, 2004.

    Decided February 25, 2005.

    2005 WI 19
    (Also reported in 692 N.W.2d 655.)

      For the defendant-appellant-cross-respondent there were briefs (in the court of appeals) by Christopher R. Bandt and Nash, Spindler, Grimstad & McCracken, Manitowoc, and oral argument by Christopher R. Bandt.

    For the defendant-co-appellant-cross-respondent there were briefs by Jon G. Furlow, Mary C. Turke and Michael Best & Friedrich, LLP, Madison, and oral argument by Jon G. Furlow.

    For the plaintiffs-respondents-cross-appellants there were briefs by William Smoler and Smoler Law Office, LLC, Monona, and oral argument by William Smoler.

       Motion for reconsideration filed 3-9-2005.

   N. PATRICK CROOKS, J.

¶ 1. This case is before us on certification from the court of appeals pursuant to Wis. Stat. § (Rule) 809.61 (2001-02). Juan Fernandez, M.D. (Fernandez) and the Wisconsin Patients Compensation Fund (Fund) appeal from an order of the Marathon County Circuit Court, Thomas S. Williams, Judge, which granted Joan, John, Adrienne, and Emily Hess's (Hess) post-verdict motion to amend the pleadings to allow an award of costs and reasonable actual attorney fees pursuant to Wis. Stat. § 51.61(7)(a). The circuit court, relying on Wis. Stat. § 802.09(2), held that Fernandez and the Fund had impliedly consented to the trial of § 51.61 issues and that they were not prejudiced as a result of the amendment.

¶ 2. We conclude that the circuit court erroneously exercised its discretion by granting the motion to amend the pleadings to include Hess's new claim. In doing so, we determine that there was no express or implied consent by Fernandez or the Fund to try the issues raised by the Wis. Stat. § 51.61 claim, and that the circuit court did not properly apply the balancing test when it allowed the amendment of the pleadings.

¶ 3. Additionally, we hold that, irrespective of the amendment, the Fund cannot be liable for costs and reasonable actual attorney fees under Wis. Stat. § 51.61(7)(a). The Fund is not a "person," and therefore is incapable of violating any rights of a patient under the statute.

r-H

¶ 4. Joan Hess began counseling sessions with therapist Carolyn Decker (Decker) in August 1990. Decker employed hypnosis to regress her in order to learn more about her childhood. Her condition deteriorated, however, and she was hospitalized in May 1991. Fernandez was her admitting physician at the hospital. He had participated in her treatment since March 1991, and increased his role during her hospitalization. Fernandez authorized her continued treatment with hypnotherapy, and began personal sessions with her in November 1991. At some point during those treatments, Joan Hess began to recover memories of sexual abuse and other unusual scenarios, such as images of her father and other relatives participating in cult activities, like killing and eating babies, bestiality, and group sex. Eventually, she came to believe that her father had molested her as a child, and subsequently filed a lawsuit against him for sexual abuse.

¶ 5. Joan Hess's condition continued to deteriorate throughout 1992, forcing her to be hospitalized on five separate occasions. In May 1992, Fernandez diagnosed her with multiple personality disorder. In addition, Fernandez agreed that she should undergo a hysterectomy because she suffered anxiety at the sight of blood.

¶ 6. In July 1994, Joan Hess ended her care with Fernandez. Over the next couple of years, she came to realize that her memories, and the diagnosis of multiple personality, were false and caused by Fernandez. In March 1995, Hess filed a claim under Wis. Stat. ch. 655 against Decker and Fernandez, alleging negligence and failure to obtain informed consent before providing Joan Hess's psychiatric treatment. They named the Fund as a defendant pursuant to Wis. Stat. § 655.27(5)(a)2.

¶ 7. Hess retained an attorney for the malpractice claim, but did not contract with him on an hourly basis. Instead, they agreed to pay him on a contingent fee basis, which would amount to thirty-three and one-third percent (33 V3%) of any "lump sum amount" recovered after the commencement of trial. Fernandez and Decker each obtained separate representation. However, nearly 18 months into the lawsuit, Fernandez's counsel assumed additional representation for the Fund.

¶ 8. On September 2, 1999, a jury returned a verdict for Hess on the medical malpractice claims, finding that Fernandez had negligently treated Joan Hess and failed to obtain informed consent for her treatment. The jury awarded plaintiffs $861,538.46 in damages, including $450,000 for Joan Hess. The remainder was awarded to her husband and children for derivative claims.

¶ 9. After the verdict, Hess moved to amend the pleadings to recover costs and reasonable actual attorney fees under Wis. Stat. § 51.61(7)(a). Hess alleged that because Fernandez denied her "prompt and adequate treatment," as guaranteed under § 51.61(1)(f), they qualified, to receive payment under § 51.61(7)(a). Although their original pleadings did not include a claim under § 51.61, the circuit court granted the motion, concluding that Fernandez had violated Joan Hess's right to adequate treatment based on the jury's finding of negligence. However, the amount of costs and fees was to be determined at a later date.

¶ 10. After the circuit court granted the post-verdict motion, it awarded Hess $911,409.81 in reasonable actual attorney fees under Wis. Stat. § 51.61(7)(a), reducing the request by the time Hess's attorneys spent on derivative claims and other matters. The court also awarded Hess costs in the amount of $295,567.43, minus statutory costs that had already been paid. The court instructed the parties either to determine the actual amounts based on the decision or to mediate. Ultimately, the court entered a judgment on the § 51.61(7)(a) claim for Hess in the amount of $1,250,576.73, which included the costs and reasonable actual attorney fees in pursuing the post-verdict motion to amend.

¶ 11. Fernandez and the Fund were unsuccessful in motions for reconsideration. The court of appeals certified the issues to this court. We accepted certification of all issues raised in the certification from the court of appeals, and we now reverse for the reasons set forth herein.

II

¶ 12. The first issue that we address is whether the circuit court erred in allowing Hess to amend the original pleadings to include a claim for costs and reasonable actual attorney fees under Wis. Stat. § 51.61(7)(a). Such a decision by the circuit court to grant leave to amend a complaint is discretionary. Finley v. Culligan, 201 Wis. 2d 611, 626, 548 N.W.2d 854 (Ct. App. 1996). A court misused its discretion if the court failed to exercise its discretion, the facts do not support the court's decision, or the court applied the wrong legal standard. Id. On review, we will not upset a discretionary decision unless such discretion was erroneously exercised. Stanhope v. Brown County, 90 Wis. 2d 823, 834, 280 N.W.2d 711 (1979). A circuit court has properly exercised its discretion when it has "examined the relevant facts, applied a proper legal standard, and, using a demonstrated rational process, reached a reasonable conclusion." Martindale v. Ripp, 2001 WI 113, ¶ 28, 246 Wis. 2d 67, 629 N.W.2d 698 (citations omitted).

¶ 13. When reviewing the legal standard in this case, we look first to Wis. Stat. § 802.09(2). This subsection, along with § 802.09(1), sets forth the applicable standards for the circuit court to apply in deciding if an amendment conforms to the evidence:

If issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure to so amend does not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice such party in maintaining the action or defense upon the merits. The court may grant a continuance to enable the objecting party to meet such evidence.

Wis. Stat. § 802.09(2). For our review, we interpret each of the parts of the statute as governing separate factual scenarios. State v. Peterson, 104 Wis. 2d 616, 629, 312 N.W.2d 784 (1981).

¶ 14. The first part of subsection (2) addresses a scenario where the unpleaded issues are tried by the express or implied consent of the parties. Zobel v. Fenendael, 127 Wis. 2d 382, 387, 379 N.W.2d 887 (Ct. App. 1985). We have interpreted this first section of the subsection to be mandatory. Peterson, 104 Wis. 2d at 629. If there is a determination that the issue was tried by the express or implied consent of the parties, the court must amend the pleadings to conform with the proof presented at trial. Id. To determine implied consent, the court must use the test of actual notice, and if it finds no actual notice, it should find no implied consent to try the unpleaded issue. Id. at 634. If, on the other hand, the circuit court finds that there was no consent to the trial of the unpleaded issue, it must apply a balancing test and make an "interests of justice" determination. Zobel, 127 Wis. 2d at 390.

Amendments. A party may amend the party's pleading once as a matter of course at any time within 6 months after the summons and complaint are filed or within the time set in a scheduling order under s. 802.10. Otherwise a party may amend the pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given at any stage of the action when justice so requires.

¶ 15. The second part of the statute addresses a scenario where the evidence presented at trial was objected to for failing to be included in the original pleadings. Id. at 388. This section of the statute grants the circuit court discretion to allow amendments. See Wis. Stat. § 802.09(2). In fact, the statute encourages the circuit court to amend liberally when presentation of the merits of the action is at stake, and if the objecting party fails to show that the amendment would be prejudicial to its continued maintenance of the case. Id.

¶ 16. The second part of Wis. Stat. § 802.09(2) does not appear to apply here. Because there is nothing in the record which demonstrates that Fernandez and the Fund objected to any evidence presented under Wis. Stat. § 51.61(7)(a), it seems clear that this case must be resolved under the first part of the subsection, as well as under § 802.09(1).

¶ 17. Hess makes three arguments as to why the circuit court correctly granted its motion for costs and reasonable actual attorney fees. First, Hess argues that the complaint was sufficient as drafted. Because Wisconsin is a notice pleading state, Hess argues that there was no requirement to set forth specifically each claim in the original complaint, but rather that a complaint requires only one cause of action. Second, Hess relies on the circuit court's decision that Fernandez and the Fund had given implied consent, as the elements of the Wis. Stat. § 51.61 claim were "fully aired" during the trial. Finally, Hess argues that Fernandez and the Fund failed in their burden of proving prejudice, as they did not sufficiently identify any hardship resulting from the amended § 51.61(7)(a) claim. Hess also argues that Fernandez and the Fund had opportunities to respond to the motion for costs and reasonable actual attorney fees, and that the failure to make such a response cannot now equate to prejudice.

¶ 18. Fernandez and the Fund, on the other hand, urge us to follow the interpretation of both Peterson and Zobel, and hold that the circuit court applied the wrong legal standard in allowing the amendment of the complaint. They first argue that the circuit court erred in finding implied consent. Specifically, they argue that because they did not receive actual notice that evidence was being presented on the unpleaded issue, there could not have been implied consent. Next, Fernandez and the Fund argue that the circuit court focused on whether they met their burden on prejudice, and neglected to consider, among other matters, why Hess delayed bringing a claim under Wis. Stat. § 51.61(7)(a) for four years. Additionally, Fernandez and the Fund claim that the circuit court was wrong and that they were in fact prejudiced.

¶ 19. In our analysis of Wis. Stat. § 802.09(2), we first address the issue of consent. Here, the record is quite clear that Fernandez and the Fund did not provide Hess with any express consent to try the unpleaded issues contained in Wis. Stat. § 51.61(7)(a). We have identified express consent to be that which "may be given by stipulation, or may be incorporated in a pre-trial order and rarely raises any serious fact question." Peterson, 104 Wis. 2d at 630, n. 17 (citation omitted). We, along with the parties, agree that no such consent was given here. Therefore, if Fernandez and the Fund consented to the trial of costs and reasonable actual attorney fees, the consent must be implied. See Peterson, 104 Wis. 2d at 630.

¶ 20. As stated above, the determination of whether a case was tried by implied consent is to be made by the circuit court. In this case, the circuit court held that there was implied consent, because the elements of the Wis. Stat. § 51.61(7)(a) claim, at least as to violation of the standard of care, were fully addressed at trial. The court articulated that the elements of a § 51.61(7)(a) claim would require proof that Joan Hess was a "patient" receiving services for mental illness, that her rights under § 51.61 were unlawfully denied or violated, and that she suffered damages as a result of such denial or violation. It concluded, therefore, that Joan Hess's right to adequate treatment was violated, because the jury found negligence based on Fernandez's failure to exercise reasonable care. Thus, the court was satisfied that the elements, at least as to the violation of the standard of care, were "fully aired" during the trial, and the amendment satisfied Wis. Stat. § 802.09(2).

¶ 21. From our review of the record, we disagree with the circuit court and conclude as a matter of law that there was no implied consent, since Fernandez and the Fund did not have actual notice of the unpleaded issue. For support on this conclusion, we look to Peterson. In that case, we held that implied consent exists where there is no objection to the introduction of evidence on the unpleaded issue and where the party not objecting is aware that the evidence goes to the unpleaded issue. Peterson, 104 Wis. 2d at 630. Thus, actual notice to the parties is the key factor in determining if there was implied consent. Id. Because we assume that relevant evidence was admitted here without timely objection, we must review the record to determine if Fernandez and the Fund had actual notice that the claim by Hess for costs and reasonable actual attorney fees was being raised during trial. See id.

¶ 22. We cannot conclude that, because the jury found negligence as to the standard of care, Fernandez and the Fund were fully aware that Hess was also trying a claim under Wis. Stat. § 51.61(l)(f), and that they could be liable for over $1 million in costs and reasonable actual attorney fees under § 51.61(7)(a). The circuit court erred when it failed to analyze the implied consent issue in terms of actual notice. It found that the issue was "fully aired," at least as to the violation of the standard of care, simply because it concluded a commonality of proof between the pleaded and unpleaded claims. The circuit court, despite finding implied consent without considering actual notice, pointed out matters that clearly lead to a determination of no actual notice: "[T]here was no specific prayer for relief under sec. 51.61(7), no discussion of which the court was aware of an award under that section until the filing of plaintiffs motion Number 1, and no request for instruction or inclusion of a specific verdict question as to sec. 51.61(7)." We therefore hold, as a matter of law, that under the circumstances presented here, there was not a valid determination that there was implied consent, since Fernandez and the Fund did not have actual notice. "The reasoning behind this view is sound since if evidence is introduced to support basic issues that already have been pleaded, the opposing party may not be conscious of its relevance to issues not raised by the pleadings unless that fact is made clear." 6 C. Wright & A. Miller, Federal Practice & Procedure, § 1493 at 32-35 (1990).

¶ 23. Although we conclude that Fernandez and the Fund did not give any consent to trial of the unpleaded issue, our analysis of Wis. Stat. § 802.09 is not complete. In Peterson, we decided to utilize a balancing approach in regard to the interests of the party benefiting from, and those of the party objecting to, the amendment, separate from the analysis of implied consent. Peterson, 104 Wis. 2d at 632; see also Zobel, 127 Wis. 2d at 891. Therefore, the circuit court has to determine if such an amendment is in the "interests of justice." Such analysis of the "interests of justice" often involves consideration of prejudice. Peterson, 104 Wis. 2d at 635. However, the United States Supreme Court in Foman v. Davis, 371 U.S. 178 (1962), held that the balancing test also can take into account a variety of factors including undue delay, motive, and prejudice. Foman, 371 U.S. at 182.

¶ 24. When determining the "interests of justice," we agree with the court of appeals' decision in Zobel that such a review presents a question of law. Zobel, 127 Wis. 2d at 391. We therefore review the decision of the circuit court de novo, although benefiting from its analysis. Meriter Hosp., Inc. v. Dane County, 2004 WI 145, ¶ 12, 277 Wis. 2d 1, 689 N.W.2d 627.

¶ 25. Here, the circuit court concluded that Fernandez and the Fund did not meet the burden of proof as to prejudice. The court denied the argument that there was prejudice because of the lack of notice of the remedy sought. It reiterated that because the claim was "fully aired" during trial, Fernandez and the Fund could not prove prejudice as to the lack of notice. On appeal, Hess seeks to uphold this ruling.

¶ 26. Fernandez and the Fund, on the other hand, make multiple arguments in opposition to the circuit court's holding that the pleadings could be amended in the "interests of justice." They argue that the circuit court erred by focusing almost exclusively on prejudice. While prejudice is clearly a factor to be considered in applying this standard, they claim that the court should also look to other factors, such as undue delay and improper motive, and "balance the interests of the party benefiting by the amendment and those of the party objecting to the amendment." Peterson, 104 Wis. 2d at 634. They conclude that while no one factor is disposi-tive in this balancing test, the circuit court erred in failing to apply the "interests of justice" standard properly.

¶ 27. In Peterson and Zobel, the courts held that the party objecting to the amendment could not claim prejudice if the circuit court offered an opportunity to offer additional evidence. Id. at 639; Zobel, 127 Wis. 2d at 391 n.8. In regard to the motion for costs and reasonable actual attorney fees under Wis. Stat. § 51.61(7)(a) in this case, Fernandez and the Fund never had the opportunity to present their positions on these matters at trial and have them heard by the jury. The parties apparently had an opportunity to brief the issue, take depositions, and retain experts, but this occurred in a post-verdict motion hearing. Being unable to present its position at trial and, thus, heard by the trier of fact may be prejudicial to the party objecting to the motion.

¶ 28. Furthermore, we are not blind to the unfairness inherent in permitting an amendment at such a late hour. See DRR, L.L.C. v. Sears, Roebuck & Co., 171 F.R.D. 162, 168 (Del. 1997). We agree with Fernandez and the Fund that in order to determine the "interests of justice," we must consider in the balance several more factors. In Peterson, we were able to make our "interests of justice" determination without much difficulty, because the court amended the complaint sua sponte, and did not give the objecting party any time to respond. However, we did not hold that this was the only situation in which a court can find that an amendment is not within the "interests of justice." Thus, when we balance the interests of both parties, as Peterson requires, we agree with Fernandez and the Fund that the circuit court should have considered such factors as undue delay and the motive of the moving party, as well as whether prejudice resulted for the Fund and Fernandez.

¶ 29. We find support for this approach from federal cases. Under the Federal Rules of Civil Procedure 15(a), the federal counterpart to Wis. Stat. § 802.09(1), federal courts have leave to amend a pleading "when justice so requires." Courts have expanded the interpretation of "interests of justice" beyond prejudice, however, and held that among the adequate reasons for denying leave to amend under such circumstances are "undue delay, bad faith or dilatory motive on the part of the movant. . . Foman, 371 U.S. at 182; Viernow v. Euripides Dev. Corp., 157 F.3d 785, 799 (10th Cir. 1998) ("we 'have often found untimeliness alone a sufficient reason to deny leave to amend'") (citation omitted); DRR, L.L.C., 171 F.R.D. at 167 ("a movant who offers no adequate explanation for its delay will ordinarily be denied leave to amend"); Zahra v. Town of Southold, 48 F.3d 674, 686 (2d. Cir. 1995) ("It was entirely reasonable for the district court to deny a request to amend a complaint that was filed two and one-half years after the commencement of the action"); Perrian v. O'Grady, 958 F.2d 192, 194 (7th Cir. 1992) (" 'the longer the delay, the greater the presumption against granting leave to amend'") (citations omitted). We see no reason not to extend this rationale to cases requiring "interests of justice" determinations under § 802.09(1). Accordingly, we hold that in situations such as this, where the amendment was not brought until after the jury verdict, and four years after the original pleadings were filed, the delay is a significant factor in applying the balancing test.

¶ 30. It is also argued that Hess had a dilatory motive in moving for amendment of the complaint. Hess did not move to amend the claim for costs and actual attorneys fees until after the jurors determined their award. Hess's motion requested $1,052,426.17, which is considerably more than the sum of $149,985, which was the amount that Hess's attorney had agreed to accept based on the contingent fee agreement.

¶ 31. Although Hess attempts to refute any allegation of improper motive, the argument seems to be of questionable merit. Hess contends that because a post-verdict motion for attorney fees was allowed in Gorton v. American Cyanamid Co., 194 Wis. 2d 203, 232, 533 N.W.2d 746 (1995), that the motion here should not be considered untimely and, thus, improper. In that case, we allowed a post-verdict motion for attorney fees under Wis. Stat. § 100.18. There were allegations that the defendant engaged in false and misleading advertising that resulted in pecuniary loss to the plaintiffs. Id. at 232. We held that these allegations were exactly the type of allegations that fall within the purview of § 100.18. Id. That case is distinguishable, however, because there was clear evidence of implied consent during trial from the party objecting to the amendment. The reason that this court allowed the post-verdict motion for attorney fees in Gorton was because the claim was "fully aired" at trial, the party objecting had actual notice.

¶ 32. Fernandez and the Fund argue that the plain language of Wis. Stat. § 51.61(7)(a) limits fee recovery to "actual attorney fees .. . incurred." Yet, as noted, Hess now claims fees and costs much greater than those permitted by the contingent fee agreement between Hess and counsel, and thus greater than the reasonable actual attorney fees incurred.

¶ 33. We conclude that the circuit court erroneously exercised its discretion in granting Hess's motion to amend the pleadings under either the theory of implied consent or the balancing test related to the "interests of justice." The circuit court should have considered factors other than just prejudice and should have given much more weight, in applying the balancing test, to the delay in bringing the motion to amend, the motive of the moving party, as well as the prejudice to Fernandez and the Fund, resulting from the hourly fee claim, and the lack of opportunity to present their positions at trial. It appears obvious that Fernandez and the Fund had relied on the fact that there was a contingent fee agreement involved here.

rH h-H HH

¶ 34. In light of our holding above, there is no need to address the remaining issues certified by the court of appeals, except the question of the Fund's liability in regard to future claims for costs and reasonable actual attorney fees under Wis. Stat. § 51.61(7)(a).

¶ 35. The legislature established the Fund when it enacted Wis. Stat. ch. 655 in 1975, in response to medical malpractice concerns. Wis. Patients Comp. Fund v. WHCLIP, 200 Wis. 2d 599, 606-07, 547 N.W.2d 578 (1996). The legislature created a new system for processing medical malpractice claims and created the Fund in order to "finance a portion of the liability incurred by health care providers in medical malpractice actions." Id. at 607.

¶ 36. In order to determine if the Fund's financing applies to claims brought under Wis. Stat. ch. 51 for violation of patients rights, we must examine Wis. Stat. §51.61. Again, we hold that the interpretation of a statute presents a question of law, which we review de novo. Meriter.; 277 Wis. 2d 9, 10, ¶ 12-13; see also State v. Williams, 198 Wis. 2d 516, 525, 544 N.W.2d 406 (1996). Although we consider this question independent of the decision of the circuit court, we nevertheless benefit from its analysis. Meriter, 277 Wis. 2d at 9, 10, ¶ 12-13; Meyer v. Sch. Dist. of Colby, 226 Wis. 2d 704, 708, 595 N.W.2d 339 (1999).

¶ 37. Our main objective in statutory interpretation "is to determine what the statute means so that it may be given its full, proper, and intended effect." State ex rel. Kalal v. Circuit Court, 2004 WI 58, ¶ 44, 271 Wis. 2d 633, 681 N.W.2d 110. As a result, the court's analysis should begin with the plain language of the statutory text. Id., ¶ 45. If the language of the statute is clear on its face, then we should apply the statute using the common and generally accepted meanings of the terms. Meriter, 277 Wis. 2d 10, ¶ 13. Thus, with an unambiguous statute, we need not consult any extrinsic sources. Id. (citing Kalal, 271 Wis. 2d 633, ¶ 46).

¶ 38. In addressing Wis. Stat. § 51.61, the circuit court held that claims for costs and reasonable actual attorney fees can apply to the Fund. For support, it looked to the court of appeals' decision in Wright v. Mercy Hospital, 206 Wis. 2d 449, 557 N.W.2d 846 (Ct. App. 1996). There, a patient brought suit against a nurse, hospital, and the hospital's insurer, after a nurse at the hospital developed a sexual relationship with the patient. The nurse and the insurer settled, but the court of appeals determined that the patient was entitled to costs and reasonable actual attorney fees from the hospital under § 51.61. The court of appeals allowed an award under a § 51.61 claim, even though the hospital was a corporation. The circuit court here held that the result in the Wright case gave tacit support to the statute's applicability to the Fund in this case.

¶ 39. We disagree with the circuit court's interpretation and its application of Wis. Stat. § 51.61 to the Fund. The Fund is clearly not a person "who violates the right in question," as § 51.61 requires. The Fund does not provide any treatment and could never violate any of the rights proscribed in § 51.61. As a result, there is no basis to conclude that it is subject to costs and reasonable actual attorney fees.

¶ 40. In so holding, we must clarify the court of appeals' decision in Wright, even though the chief holding in that case can be distinguished. While the hospital implied that no Wis. Stat. § 51.61 claims could apply to it or its insurer because they were corporations, that issue was not addressed by the court because the argument was not developed. Wright, 206 Wis. 2d at 449. The court of appeals also did not consider, in Wright, the issue of Wis. Stat. ch. 655 exclusivity. The court of appeals should have put much greater emphasis on the relationship between the contingent fee agreement and the claim for costs and reasonable actual attorney fees. When applying the balancing test, such a factor should be carefully considered.

¶ 41. As previously noted, the liability of the Fund does not extend to Wis. Stat. § 51.61(7)(a), since the Fund is not a person under the plain language of that statutory section. Since we have determined that the Fund does not come within the plain language of § 51.61(7)(a), we need not determine whether the Fund's arguments concerning "damages" and the exclusivity of Wis. Stat. ch. 655 to the Fund are correct. It is enough for our purposes here that we find that the Fund is not a person within the meaning of § 51.61(7)(a) and, therefore, not subject to the provisions relating to costs and reasonable actual attorney fees.

¶ 42. Because we determine that the motion to amend was erroneously granted and that Fernandez and the Fund are not subject to an award of costs and reasonable actual attorney fees, we need not address the question of interest on such an award.

IV

¶ 43. In sum, we conclude that the circuit court erroneously exercised its discretion by granting the motion to amend the pleadings to include Hess's new claim. In doing so, we determine that there was no express or implied consent by Fernandez or the Fund to try the issues raised by the Wis. Stat. § 51.61 claim, and that the circuit court did not properly apply the balancing test when it allowed the amendment of the pleadings. Additionally, we hold that, irrespective of the amendment, the Fund cannot be liable for costs and reasonable actual attorney fees under § 51.61(7)(a). The Fund is not a "person," and therefore is incapable of violating any rights of a patient under the statute.

By the Court. — The judgment of the circuit court is reversed, and the cause is remanded for further proceedings consistent with this opinion.

¶ 44. ANN WALSH BRADLEY, J., did not participate.

SHIRLEY S. ABRAHAMSON, C.J.

¶ 45. (dissenting). I would affirm the judgment of the circuit court. The plaintiffs' complaint requested an award of costs and fees and such further relief as the court may find proper. The complaint did not set forth a specific prayer for relief under Wis. Stat. § 51.61(7).

¶ 46. I conclude that the circuit court properly exercised its discretion in granting the post-trial motion to amend the pleadings to include a claim for fees and costs. The burden of proof was on the defendants to show prejudice. They have not carried their burden.

¶ 47. We held in State v. Peterson, 104 Wis. 2d 616, 634, 312 N.W.2d 784 (1981), that the circuit court has "wide discretion regarding amendment of the pleadings to ensure that the entire controversy is presented and to ensure that the party opposing the amendment is not unfairly deprived of the opportunity to meet the issue created by the amendment."

¶ 48. The majority opinion fails to allow the circuit court any discretion, let alone wide discretion, regarding the post-trial amendment of the pleadings. Furthermore, the majority opinion does not determine prejudice but rather decides the case in "the interests of justice," thus looking far afield for indicia of prejudice. The most important factor in deciding when leave to amend may be denied in both pre- and post-trial motions to amend is whether the opposing party will be prejudiced.

¶ 49. As the Peterson court explained, prejudice does not mean that the party suffers a substantive harm but rather means that the party "was deprived of an opportunity to defend against the amended charge." The majority opinion ignores the facts and the circuit court's decision that the defendant had a full opportunity to defend against the amended charge, which had the same elements and proof as the original charge. Instead, the majority opinion stresses that here the defendants did not know they could be liable for over $1 million in costs and reasonable actual attorney fees.

¶ 50. The majority opinion despairs that attorney fees and costs were not presented to the jury. Yet attorney fees are determined only after a successful termination of the underlying claim. And here the parties had the opportunity to brief the issue of fees and costs, take depositions, and retain experts.

¶ 51. The circuit court carefully explored the facts and law applicable to the issue. The circuit court concluded that the standard of care applicable to both the allegations in the complaint and the amended pleadings was fully aired and that the defendants made no offer of proof that additional evidence could have been presented had they been aware of the amended pleadings. Accordingly, the defendants were not prejudiced.

¶ 52. Try as the majority might, the majority opinion cannot distinguish Gorton v. American Cyanamid Co. from the present case. Gorton was a negligent misrepresentation case tried before a jury. The court permitted the pleadings to be amended post-verdict to add a statutory misrepresentation claim pursuant to Wis. Stat. § 100.18 that permitted recovery of attorneys' fees. The Gorton court allowed the amendment because the allegations underlying both claims were fully aired at trial, the defendant was not prejudiced, and no other evidence could have been presented during trial to rebut the amended claim that was already at issue based on the complaint. The Gorton court allowed attorneys fees and costs to be determined post-verdict. I view Gorton as on all fours with the present case.

¶ 53. For the reasons set forth, I conclude that the circuit court judgment should be affirmed. The circuit court did not erroneously exercise its discretion.

¶ 54. I do not join the majority opinion regarding the Fund's liability for costs and reasonable actual attorney fees because the majority has delivered an unnecessary advisory opinion.

       Unless otherwise indicated all references to Wisconsin Statutes are to the 2001-02 edition.
      Wisconsin Stat. § (Rule) 809.61 states, in relevant part: "The supreme court may take jurisdiction of an appeal or other proceeding in the court of appeals upon certification by the court of appeals or upon the supreme court's own motion."

       For the purposes of argument before this court, Fernandez joined the response combined brief of the Fund.

       Wisconsin Stat. § 802.09(2) states:
      Amendments to conform to the evidence. If issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure to so amend does not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice such party in maintaining the action or defense upon the merits. The court may grant a continuance to enable the objecting party to meet such evidence.

       Decker settled the claim filed against her and was dismissed from the case with prejudice.

       Wisconsin Stat. § 51.61(7)(a) states, in relevant part:
      Any patient whose rights are protected under this section who suffers damage as the result of the unlawful denial or violation of any of these rights may bring an action against the person.... The individual may recover any damages as may be proved, together with exemplary damages of not less than $100 for each violation and such costs and reasonable actual attorney fees as may be incurred.

       Wisconsin Stat. § 51.61(l)(f) states that each patient shall:
      [h]ave a right to receive prompt and adequate treatment, rehabilitation and educational services appropriate for his or her condition, under programs, services and resources that the county board of supervisors is reasonably able to provide within the limits of available state and federal funds and of county funds required to be appropriated to match state funds.

       The motion for costs and reasonable actual attorney fees under Wis. Stat. § 51.61(7)(a) never directly asked the court to amend the pleadings pursuant to Wis. Stat. § 802.09(2). However, the circuit court treated the motion as one for an amendment in its decision to award costs and reasonable actual attorney fees.

       On October 7, 2002, Hess filed a motion for an award of interest under Wis. Stat. § 807.01. The circuit court denied their motion on December 12, 2002. On July 29, 2004, Hess filed a cross-appeal of that ruling.

       Wisconsin Stat. § 802.09(1) states, in relevant part:

       Hess argues that the Fund could not have shown prejudice under either the first or second part of Wis. Stat. § 802.09(2), and that, regardless of which part is selected, the amendment should stand.

       Although we recognize that Wisconsin does not require heightened specificity in pleadings, we do not accept Hess's argument that a party never needs to plead a claim for attorney fees, which requires the proof of different elements, in a claim for medical malpractice.

       In Peterson, this court noted that some federal courts had chosen to use a different test, in place of actual notice, to determine if there was implied consent. This alternative test, applied to amendments arising under Fed. R. Civ. E 15(b), was invoked to determine whether the defendant was prejudiced. Ultimately, we held that the best approach for Wis. Stat. § 802.09(2) would be to treat the concepts of implied consent and prejudice separately. Thus, if the court determines that there was no implied consent, it may sua sponte under § 802.09(1), (2) amend the pleadings to conform to the evidence if it is in the "interests of justice." State v. Peterson, 104 Wis. 2d 616, 634, 312 N.W.2d 784 (1981).

       The court in Zobel correctly acknowledges that the issue can, in other contexts, present a mixed question of law and fact. However, in cases such as this, where our review is limited to the undisputed facts of the record, the only question remaining is decided as a matter of law. Zobel v. Fenendael, 127 Wis. 2d 382, 391, 379 N.W.2d 887 (Ct. App. 1985).

       Although Peterson applied to an amendment made by the court sua sponte, the court of appeals in Zobel, 127 Wis. 2d at 390-91 n.7, correctly held that there is no reason why the rationale of Peterson could not apply to cases where a party has moved to amend the complaint. See Wheeler v. Gen. Tire & Rubber Co., 142 Wis. 2d 798, 817, 419 N.W.2d 331 (Ct. App. 1987). This is a logical extension, especially because our analysis in Peterson was also based on Wis. Stat. § 802.09(2), which governs a motion made by parties, not by the court. Zobel, 127 Wis. 2d at 390 n.7.

       Rule 15(a) states, in relevant part:
      (a) Amendments. A party may amend the party's pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, the party may so amend it at any time within 20 days after it is served. Otherwise a party may amend the party's pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires.

       When we formulated the "interests of justice" determination in Peterson, we used language from Rule 15(a), as well as Rule 15(b). We held that the circuit court may "under sec. 802.09(1)(2) amend the pleadings to conform to the evidence if the circuit court concludes that justice so requires." Peterson, 104 Wis. 2d at 634. This court in Peterson denied the amendment because we specifically determined that the objecting party was unfairly deprived of his opportunity to meet the issue and, therefore, prejudiced. As a result, we had no need to consider other factors upon which a court could deny leave to amend in the "interests of justice."

       6 Charles Alan Wright et al., Federal Practice and Procedure: Civil 2d § 1487 at 612-13 (1990).

        Peterson, 104 Wis. 2d at 635.

       Majority op., ¶ 22.

       M, ¶ 27.

        See Gorton v. Am. Cyanamid Co., 194 Wis. 2d 203, 230, 533 N.W.2d 746 (1995).

       Majority op., ¶ 27.

       Majority op., ¶ 31.

        Gorton, 194 Wis. 2d at 232-33.