author: LUNDSTEN, J.

text:
    Gretchen G. Torres, Plaintiff-Appellant, v. Dean Health Plan, Inc., Defendant-Respondent.
    Court of Appeals

      No. 2003AP3274.

      Submitted on briefs May 6, 2004.

      Decided April 21, 2005.

    2005 WI App 89
    (Also reported in 698 N.W.2d 107.)

      On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Jordan M. Lewis and Wood R. Foster, Jr., of Siegel, Brill, Greupner, Duffy & Foster, P.A., Milwaukee, and Victor C. Harding of Warshafsky, Rotter, Tarnoff, Reinhardt & Bloch, S.C., Milwaukee.
    On behalf of the defendant-respondent, the cause was submitted on the brief of Richard L. Schmidt and Sarah A. Zylstra of Boardman, Suhr, Curry & Field, LLP, Madison.
    Before Deininger, EJ., Dykman and Lundsten, JJ.
   LUNDSTEN, J.

¶ 1. This is a subrogation dispute involving a health maintenance organization (HMO) and one of its enrollees. Dean Health Plan, Inc., is an HMO (Dean HMO). Gretchen Torres is a Dean HMO enrollee.

¶ 2. Torres was injured in an accident caused by a third-party tortfeasor. Dean HMO provided medical services to Torres that were covered by Torres's HMO contract with Dean. Torres negotiated a settlement with the tortfeasor. Dean HMO asserted a subrogation interest, and Torres paid Dean HMO $4,072.49 to "extinguish" that asserted subrogation interest. After paying Dean HMO, Torres sued Dean, arguing that Wisconsin statutes prohibit HMOs from exercising sub-rogation rights. Torres's argument is based on the fact that Dean is an HMO rather than a traditional non-HMO insurance company.

¶ 3. The circuit court granted Dean HMO's motion to dismiss for failure to state a claim. The court concluded that nothing in the statutes or case law prohibited Dean HMO's assertion of a contractual right to subrogation. The circuit court further concluded that Dean's assertion of a subrogation right is consistent with subrogation law in Wisconsin. We agree and affirm.

Background

¶ 4. This is an appeal of a motion to dismiss for failure to state a claim. Thus, for purposes of this review, we accept as true the following facts from Torres's complaint:

• Torres is a Wisconsin resident and is an enrollee in a Dean HMO health plan.
• Dean HMO is a for-profit health maintenance organization.
• Torres was injured in an accident that gave rise to liability on the part of a third party.
• As part of the treatment for the injuries she suffered, Torres was treated by a variety of medical providers that are part of the Dean HMO network of providers.
• These medically necessary services provided to Torres were expressly covered under the Dean HMO health plan.
• Torres negotiated a settlement with the tortfeasor responsible for her injuries.
• Dean HMO asserted a "subrogation interest" in the "Torres action."
• Dean HMO agreed to accept, and subsequently was paid by Torres, $4,072.49 to "extinguish" its purported subrogation interest.

¶ 5. There are a few additional facts that we assume to be true because the parties themselves make that assumption for purposes of Dean HMO's motion to dismiss. We mention these facts when appropriate in our discussion section.

Discussion

¶ 6. Torres argues that the circuit court erroneously dismissed her complaint for failure to state a claim. Our standard of review is well settled:

A motion to dismiss a complaint for failure to state a claim upon which relief can be granted tests the legal sufficiency of the complaint. All facts pleaded and reasonable inferences that may be drawn from such facts are accepted as true, but only for purposes of testing the complaint's legal sufficiency. Nevertheless, legal inferences and unreasonable inferences need not be accepted as true. A complaint should not be dismissed as legally insufficient unless it appears certain that a plaintiff cannot recover under any circumstances.

Beloit Liquidating Trust v. Grade, 2004 WI 39, ¶ 17, 270 Wis. 2d 356, 677 N.W.2d 298 (citations omitted).

¶ 7. The underlying legal question requires that we construe statutes and apply them to undisputed facts. We recently summarized the applicable principles of statutory construction:

When we are asked to construe a statute, we begin with the language of the statute and give it its common, ordinary, and accepted meaning, except that technical or specially defined words are given their technical or special definitions. We interpret statutory language in the context in which it is used, not in isolation, but as part of a whole, in relation to the language of surrounding or closely related statutes, and reasonably to avoid absurd or unreasonable results. We also consider the scope, context, and purpose of the statute insofar as they are ascertainable from the text and structure of the statute itself.

Wisconsin Comm'r of Ins. v. Fiber Recovery, Inc., 2004 WI App 183, ¶ 16, 276 Wis. 2d 495, 687 N.W.2d 755 (citations omitted).

¶ 8. The central question in this case is whether Wis. Stat. §§ 609.01 and 609.91 (2003-04) prohibit HMOs from asserting contractual subrogation rights with respect to actual medical expenses incurred by an HMO for medical care covered by the HMO's contract with its enrollee. Torres, a Dean HMO enrollee, presents several arguments why HMOs may not exercise contractual subrogation rights and why, in this particular case, Dean HMO has no right of subrogation. We first address the arguments that apply to HMOs and enrollees generally, and then address Torres's fact-specific argument.

A. Whether HMO Subrogation Rights Are Inconsistent with the Statutes Defining HMOs and Limiting Their Activities

1. The Statutes

¶ 9. Torres argues that Wis. Stat. §§ 609.01 and 609.91, working in combination, preclude HMOs from exercising contractual subrogation rights. She points to § 609.01(2), which defines an HMO as follows:

"Health maintenance organization" means a health care plan offered by an organization established under ch. 185, 611, 613 or 614 or issued a certificate of authority under ch. 618 that makes available to its enrollees, in consideration for predetermined periodic fixed payments, comprehensive health care services performed by providers participating in the plan.

(Emphasis added.) Torres focuses on the language that we have italicized, that is, the language defining an HMO as an entity that provides health care services in consideration for "predetermined periodic fixed payments." Torres then points to § 609.91(3), which provides:

Deductibles, copayments AND PREMIUMS. Subsections (1) to (2) do not affect the liability of an enrollee, policyholder or insured for any deductibles, copay-ments or premiums owed under the policy or certificate issued by the health maintenance organization insurer or by the insurer described in sub. (lm).

According to Torres, the interaction of these two statutes dictates that HMOs may not receive funds by the exercise of subrogation rights because this source of funds is not one of the three statutorily specified sources: premiums, copayments, or deductibles. The flaw in Torres's analysis is that the statutes she relies on do not limit the sources of funds available to HMOs to these three sources.

¶ 10. The definitional language Torres points to in Wis. Stat. § 609.01(2) simply says that an HMO is an entity "that makes available to its enrollees, in consideration for predetermined periodic fixed payments, comprehensive health care services." Subsection (2) of the statute does not put in place a general limitation on all sources of funds available to HMOs. The statutory language is plain as applied here; it does not even arguably state that HMOs may receive funds only in the form of "predetermined periodic fixed payments." Instead, this language differentiates HMOs from other traditional health care insurers by specifying, among other things, that HMOs must provide "comprehensive health care services" in return for "predetermined periodic fixed payments."

¶ 11. Adding Wis. Stat. § 609.91 to the mix does not help Torres. Nothing about the wording in that statute suggests that it is intended to more specifically limit all sources of funds available to HMOs. Section 609.91 does impose limits, but not any limits that conflict with an HMO's exercise of subrogation rights.

¶ 12. Rather than impose some sort of global limitation on all sources of funds available to HMOs, Wis. Stat. § 609.91 limits the liability of HMO enrollees. Section 609.91 prevents an HMO and its medical care providers from holding an enrollee liable for medical services covered by the HMO's medical plan and provided by the HMO or one of its providers, except in specified circumstances. Pertinent provisions of the statute read:

609.91 Restrictions on recovering health care costs. (1) Immunity of enrollees and policyholders. Except as provided in sub. (lm), an enrollee or policyholder of a health maintenance organization insurer is not liable for health care costs that are incurred on or after January 1, 1990, and that are covered under a policy or certificate issued by the health maintenance organization insurer, if any of the following applies:
(a) The health care is provided by a provider who satisfies [specified statutory criteria].
(lm) Immunity of medical assistance recipients. An enrollee, policyholder or insured under a policy issued by an insurer to the department of health and family services under s. 49.45(2)(b)2. to provide prepaid health care to medical assistance recipients is not liable for health care costs that are covered under the policy.
(2) Prohibited recovery attempts. No person may bill, charge, collect a deposit from, seek remuneration or compensation from, file or threaten to file with a credit reporting agency or have any recourse against an enrollee, policyholder or insured, or any person acting on their behalf, for health care costs for which the enrollee, policyholder or insured, or person acting on their behalf, is not hable under sub. (1) or (lm).
(3) Deductibles, copayments and premiums. Subsections (1) to (2) do not affect the liability of an enrollee, policyholder or insured for any deductibles, copay-ments or premiums owed under the policy or certificate issued by the health maintenance organization insurer or by the insurer described in sub. (lm).
(4) Conditions not affecting the immunity. The immunity of an enrollee, policyholder or insured for health care costs, to the extent of the immunity provided under this section and ss. 609.92 to 609.935, is not affected by [various conditions, such as an HMO breaching its agreement with a provider].

Wis. Stat. § 609.91. These provisions are written from the perspective of enrollees. They limit the personal liability of enrollees so that, if an enrollee receives medical services covered by an HMO's medical plan, the enrollee may not be held liable for the cost of such services, with specified exceptions, such as copayments. For example, subsec. (1) provides that "an enrollee ... is not liable for health care costs . .. that are covered under a policy or certificate issued by [an HMO] insurer" (emphasis added). Similarly, subsec. (2) states that "[n]o person may . . . have any recourse against an enrollee. . . for health care costs for which the en-rollee ... is not liable [as specified by the legislature elsewhere in § 609.91]" (emphasis added). Subsection (4) specifies that the statutorily provided "immunity of an enrollee .. . for health care costs ... is not affected by [various conditions, such as an HMO breaching its agreement with a provider]" (emphasis added).

¶ 13. Thus, Wis. Stat. § 609.91 is replete with language immunizing enrollees and limiting their liability. The statute does not speak to the sources of funds available to HMOs, except to the extent that it limits funds HMOs may obtain from enrollees.

¶ 14. Nonetheless, Torres argues that HMOs are collecting funds from enrollees when they enforce sub-rogation rights. We disagree.

¶ 15. We begin this part of our discussion with a clarification. Torres's argument does not implicate the Rimes "make whole" doctrine. Torres does not argue that permitting subrogation in cases like hers prevents enrollees from being made whole. Torres does not assert that paying Dean HMO $4,072.49 to extinguish its subrogation right cut into money from the tortfeasor she needs to be "made whole." See Rimes v. State Farm Mut. Auto. Ins. Co., 106 Wis. 2d 263, 272, 316 N.W.2d 348 (1982) (the "make whole" doctrine provides that "[s]ubrogation is to be allowed only when the insured is compensated in full by recovery from the tortfeasor. The insured is to be made whole, but no more than whole."). The specter of an HMO competing with an enrollee for a limited amount of funds from a tortfeasor is not raised by this case.

¶ 16. With this clarification in mind, we focus on Torres's argument that HMOs collect funds from en-rollees when they enforce subrogation rights, in violation of enrollee liability limitations in Wis. Stat. § 609.91. We conclude that Torres's argument is based on a mischaracterization of the underlying subrogation transaction.

¶ 17. The supreme court explained the concept of subrogation in Cunningham v. Metropolitan Life Insurance Co., 121 Wis. 2d 437, 360 N.W.2d 33 (1985). That explanation includes the proposition that one purpose of subrogation is to prevent the sort of double recovery Torres seeks here:

The doctrine of subrogation, when applied in the insurance context, deals with the right of the insurer to be put in the position of the insured in order to pursue recovery from third parties, legally responsible to the insured, for a loss paid by the insurer to the insured. If the insured has been compensated in full by the insurer for the loss sustained, and subsequently receives recovery from a third party, the insurer's right becomes a right to the proceeds if subrogation is found to apply.
The purpose of subrogation is to place the loss ultimately on the wrongdoers. It also prevents the insured from recouping a windfall double recovery.

Id. at 444 (citations omitted). In Koffman v. Leichtfuss, 2001 WI 111, 246 Wis. 2d 31, 630 N.W.2d 201, the court reiterated that subrogation serves to prevent an insured from obtaining double recovery:

By virtue and to the extent of payments made on behalf of another, a subrogated party obtains a right of recovery in an action against a third-party tortfeasor and is a necessary party in an action against such a tortfeasor. Subrogation exists to ensure that the loss is ultimately placed upon the wrongdoer and to prevent the subrogor from being unjustly enriched through a double recovery, i.e., a recovery from the subrogated party and the hable third party.

Id., ¶ 33 (citations omitted).

¶ 18. Torres does not deny that, if HMOs are prohibited from exercising subrogation rights, HMO enrollees like her would get the sort of double recovery discussed in Cunningham and Koffrnan. Instead, Torres —apparently believing that the best defense is a good offense — asserts that it is HMOs that will get double recovery if subrogation is permitted. She contends that Dean HMO has collected twice for the same service: once in the form of premiums, and a second time in the form of tort recovery. But Torres is describing nothing more than the usual subrogation arrangement. Moreover, in Cunningham, the court explained that insurers do not necessarily retain the funds obtained through subrogation. Rather, competition may force these funds to be recycled in the form of lower rates:

An additional purpose which underlies the doctrine of subrogation is that it prevents the policy holder from receiving more than he or she bargained for from the contract of insurance. Commentators in the field have suggested that if the insurer has only contracted to indemnify the insured for losses incurred, denying the insurer subrogation rights in effect rewrites the policy and allows the insured to retain benefits not contracted for. Other proponents of the subrogation doctrine assert that it returns the excess, duplicative proceeds to the insurer who can then recycle them in the form of lower insurance premiums.

Cunningham, 121 Wis. 2d at 445 (citations omitted). We are presented with no reason to think that the same reasoning does not apply to HMOs.

¶ 19. Finally, Torres argues that differences between HMOs and traditional insurers should persuade us to conclude that the legislature intended to treat HMOs differently for purposes of subrogation. For example, Torres says that HMOs, unlike traditional health care insurers, are created by statute. However, the fact that HMOs may be created by statute says nothing about whether HMOs may enforce contractual subrogation rights. And, we have already rejected Torres's specific statutory arguments.

¶ 20. Another "difference" argument Torres proffers is based on a 1989 letter in which the Wisconsin Commissioner of Insurance states that HMOs combine elements of health insurance and health care delivery, and that HMOs transfer some of their insurance risks by contracts with health care providers that include fee limits and loss sharing. Torres asserts that this risk-shifting, which she presumes is unavailable to traditional insurers, is central to the relationship between HMOs and health care providers and "bears directly on an HMO's right to subrogate." But so what if HMOs combine elements of health insurance and health care delivery? So what if HMOs bear less risk because they share risk with their providers? How do these differences tie in with contractual subrogation rights? There may be some connection, but Torres does not explain it, and none is apparent to us.

2. This Case Is Not Controlled by Dorr

¶ 21. Torres relies on Dorr v. Sacred Heart Hospital, 228 Wis. 2d 425, 597 N.W.2d 462 (Ct. App. 1999). Torres argues that, as a matter of law under Dorr, enrollees like her personally pay funds to HMOs. She contends that if HMOs have contractual subrogation rights, Dorr must have been wrongly decided. Torres states: "Under Dean's formulation, Dorr would be wrongly decided, because § 609.91 does not expressly limit payment 'only' to deductibles, copayments and premiums." She asserts that in Dorr we resolved the precise issue in this case because in Dorr we held that HMO enrollees are not liable for health care costs. None of Torres's Dorr-based arguments have merit.

¶ 22. The issue in Dorr was whether a non-HMO medical provider (Sacred Heart Hospital) could forgo its contractual right to payment from an HMO (Group Health) and instead file a hospital lien under Wis. Stat. § 779.80 against the HMO's enrollee. Dorr, 228 Wis. 2d at 430-31, 433-35. We held that the medical provider had no right to a hen against the HMO enrollee with respect to medical services covered by the enrohee's HMO plan because the enrollee owed no debt to the provider. Id. at 442, 444. Under the provider's agreement with the HMO, payment by the HMO constituted payment in full for covered services rendered by the provider to enrollees of the HMO. Id. at 433. Moreover, the enrollee owed no debt to the provider because of the protection from liability that Wis. Stat. § 609.91 affords HMO enrollees with respect to medical services covered by the enrollees' HMO medical plan. Dorr, 228 Wis. 2d at 442, 444.

¶ 23. Contrary to Torres's persistent assertion, a decision in favor of Dean HMO here does not make Torres, or similarly situated enrollees, "liable" for medical expenses. The question here is simply whether an HMO may have contractual subrogation rights that permits the HMO to recover its actual medical expenses. We agree with Dean HMO that Dorr says nothing about HMO subrogation rights.

3. Torres's Misplaced Reliance on a Maryland Decision

¶ 24. Torres relies heavily on a Maryland case, Riemer v. Columbia Medical Plan, Inc., 747 A.2d 677 (Md. 2000). She goes so far as to structure her analysis of Wis. Stat. §§ 609.01 and 609.91 around this out-of-state decision. We agree with Torres that Riemer, in many pertinent respects, tracks the facts and statutes at issue in this case. We do not, however, find Riemer helpful or persuasive.

¶ 25. First, we agree with the circuit court that Wisconsin's statutory definition of an HMO is different from the Maryland definition at issue in Riemer. The Maryland statute defined HMOs, in pertinent part, as corporations that " '[e]xcept for any copayment or deductible arrangement, [are] compensated only on a predetermined periodic rate basis....'" Riemer, 747 A.2d at 683-84 (emphasis added in Riemer) (quoting Md. Code Ann., Health—Gen. Article § 19-701(f)(3)). According to Riemer, the term "only" unambiguously means that a Maryland HMO cannot receive funds from a source apart from the three sources specified in § 19-701(f)(3). Riemer, 747 A.2d at 685-87. To interpret "only" otherwise, said the Riemer court, would be contrary to "the proper construction of the English language." Id. at 686-87.

¶ 26. The Wisconsin counterpart statute does not limit HMOs' sources of funds. Rather than saying that HMOs may receive only three types of funds, the Wisconsin statute defines an HMO as an entity "that makes available to its enrollees, in consideration for predetermined periodic fixed payments, comprehensive health care services." Wis. Stat. § 609.01(2). At most, this phrasing might be read as limiting payments from enrollees to "predetermined periodic fixed payments." The statutory language says nothing about funds from sources other than enrollees.

¶ 27. Torres argues that the absence of "only" in the Wisconsin statute is "too slender a reed to support" a different construction from the one reached by the Riemer court. But Wisconsin's statute does not merely omit "only," it fails to use any language defining HMOs as entities that may receive funds solely from identified sources.

¶ 28. We also observe that some of the reasons the Riemer court provides for its construction of the Maryland statute are based on unsupported assumptions. For example, the Riemer court asserts that it is "evident from the wording included throughout this [statute] that it was the intent of the Legislature to promote health care services, which were both affordable and efficient," and that this goal is furthered by a construction of the statutes that prohibits subrogation. Riemer, 747 A.2d at 688. But the Riemer court fails to explain why the absence of HMO subrogation contributes to affordability of HMO services. It is at least as likely that denying HMOs subrogation increases premiums for enrollees. See Cunningham, 121 Wis. 2d at 445 ("Other proponents of the subrogation doctrine assert that it returns the excess, duplicative proceeds to the insurer who can then recycle them in the form of lower insurance premiums.").

¶ 29. Another unsupported assumption in Riemer relates to its repeated references to HMOs seeking payment from enrollees. The Riemer court states:

Section 19-710(h) requires a hold harmless clause in the contract between an HMO and its health care providers stating that a health care provider may not seek compensation, remuneration, or reimbursement from the member. Yet, in the case at bar, appellee seeks to do indirectly what providers cannot do directly. Because an HMO is a health care service, which is compensated "only" through a predetermined rate basis, copayment, or deductible arrangement, it stands to reason that the Legislature did not feel the need to address an HMO's right to pursue a member for payments for services already received: by the definition of an HMO, that type of reimbursement cannot occur.

Riemer, 747 A.2d at 689. This discussion wrongly assumes that subrogation somehow holds the enrollee liable for medical expenses. That assumption is demonstrably false. It is the tortfeasor who supplies the medical expenses money, not the enrollee. The enrollee pays not a penny more than if no tortfeasor and no subrogation were involved.

¶ 30. Finally, we question some of the "common sense" comparisons the Riemer court relies on. The Riemer court provides this reasoning:

If a member prepays the HMO for health care and receives what he or she has already paid for, a service received from a health care provider and covered by the health care contract, and the HMO does not pay the provider, the provider cannot then turn around and seek payment from the member. Under the same rationale, if a member prepays the HMO for health care and receives a service from a health care provider covered by the health care contract, and the HMO pays the provider, and then the member receives money from a third-party tortfeasor responsible for the injuries, the HMO cannot then seek payment from the member.

Id. at 689-90. The first sentence above is, essentially, a summary of our holding in Dorr. We explained in the previous section of this opinion why our holding in Dorr says nothing about whether HMOs have subrogation rights for actual medical expenses they incur when the target of subrogation is funds provided by a tortfeasor. Thus, in our view, the Riemer court uses faulty logic when it asserts that the "same rationale" supports its conclusion that an HMO may not recover medical expenses by way of subrogation.

¶ 31. For these reasons and others, we are not persuaded by Torres's reliance on Riemer.

B. Torres's Fact-Specific Argument: Did Dean HMO Run Afoul ofWis. Stat. § 609.91 by Obtaining Money Directly from Torres ?

¶ 32. An assertion of subrogation rights by an HMO may result in a tortfeasor paying medical expenses directly to the HMO. But here the complaint alleges that Dean HMO received the medical expenses money from Torres. The parties' arguments in the circuit court and in their briefs in this court make plain that it is undisputed that the parties construe the complaint as alleging that Dean HMO asserted its subrogation interest after Torres negotiated a settlement and received medical expenses money from the tortfeasor. That is, the $4,072.49 Torres paid Dean HMO to "extinguish" Dean's subrogation interest was less than or equal to the amount of money the tortfea-sor paid Torres for the medical expenses covered by Dean HMO.

¶ 33. Torres argues that the manner in which Dean HMO asserted its subrogation rights in this particular case conflicts with Wis. Stat. § 609.91 because here she personally paid the $4,072.49 to Dean HMO. Torres contends this payment was not permitted under the statute because it was not a premium, a copayment, or a deductible, the three permissible types of payments an HMO may obtain from an enrollee. See ¶¶ 9-13, supra. This argument ignores the substance of the transaction at issue.

¶ 34. Even assuming that Torres, as a factual matter, paid $4,072.49 to Dean HMO, she did not, in substance, pay that amount out of her own pocket. Torres was not poorer after receiving funds from the tortfeasor and remitting $4,072.49 to Dean HMO. Torres had received that amount or more for medical expenses, and her complaint does not assert that she had any uncovered expenses or other related damages of any type. See ¶ 15, supra. We agree with Dean HMO that it did not seek to hold Torres personally liable for medical expenses. Instead, Dean HMO merely asserted its contractual subrogation right to funds from the tortfeasor to offset expenses Dean HMO incurred to provide medical care to Torres.

Conclusion

¶ 35. We agree with the circuit court that Wis. Stat. §§ 609.01 and 609.91 do not limit HMOs to receiving funds only from enrollees. Further, we con-elude that, when an HMO exercises contractual subro-gation rights, the HMO is not obtaining funds from an enrollee in violation of the enrollee's liability protections contained in § 609.91. It follows that the statutes do not prohibit HMOs from receiving funds by the exercise of contractual subrogation rights. Finally, we conclude that, even if Torres paid Dean HMO to satisfy Dean's right to subrogation, Torres was not held "liable" within the meaning of § 609.91, but instead merely passed along medical expenses money from the tortfea-sor to Dean HMO.

¶ 36. All of Torres's claims in her complaint are based on the proposition that HMOs in general, and Dean HMO in particular, cannot exercise their rights to subrogation for the reasons Torres has argued. We have rejected Torres's arguments and have concluded that Dean HMO may exercise its contractual subrogation right here. Therefore, we affirm the circuit court's order dismissing Torres's complaint for failure to state a claim.

By the Court. — Order affirmed.

       Torres sought to represent all similarly situated current and former Dean HMO enrollees in a class action. Because we conclude that Torres's action was properly dismissed, there is no need to address the class action aspect of this case.

       All references to the Wisconsin Statutes are to the 2003-04 version unless otherwise noted.

       We use the phrase "actual medical expenses" to refer to the amount an HMO seeks to recover via subrogation for the expenses it incurs for medical services provided under an HMO contract. We use this phrase to make clear that we are not talking about the "reasonable value of medical services." See Koffman v. Leichtfuss, 2001 WI 111, ¶ 27, 246 Wis. 2d 31, 630 N.W.2d 201; see also Paulson v. Allstate Ins. Co., 2003 WI 99, ¶ 30 n.5, 263 Wis. 2d 520, 665 N.W.2d 744 ("[T]oday the rule in Wisconsin is that a plaintiff is entitled to the reasonable value of the [medical] expenses paid, regardless of the actual payment.").

       "Subrogation may exist by operation of law, i.e., equitable subrogation, or may arise by contract of the parties, i.e. conventional subrogation." Cunningham v. Metropolitan Life Ins.

        Co., 121 Wis. 2d 437, 445, 360 N.W.2d 33 (1985). Torres argues that Dean HMO has no right to equitable subrogation because Dean HMO, not Torres, was primarily liable for the payment of medical expenses. We need not dwell on this argument because Dean HMO asserts that its subrogation right arises from contract, not from equity.

       We are cognizant that Cunningham addresses equitable, not contractual, subrogation. See Cunningham, 121 Wis. 2d at 450-55. But, as Dean HMO points out, the purposes supporting subrogation, whether equitable or contractual, are the same. See Ruckel v. Gassner, 2002 WI 67, ¶ 26, 253 Wis. 2d 280, 646 N.W.2d 11 (" '[S]ubrogation 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.'" (quoting Garrity v. Rural Mut. Ins. Co., 77 Wis. 2d 537, 543, 253 N.W.2d 512 (1977))); see also Jindra v. Diederich Flooring, 181 Wis. 2d 579, 604-05, 511 N.W.2d 855 (1994).

       A copy of the letter is part of the record in this case. The Commissioner of Insurance wrote:
      Health Maintenance Organizations (HMOs) differ from indemnity insurers in a number of ways. The most significant difference is that HMOs combine elements of health insurance and health care delivery. The HMO selects the providers of comprehensive health care services and directly pays those providers. Through the contractual agreements with providers, HMOs transfer some part of the insurance risk to providers. An important element of the operations of an HMO that differentiate[s] HMOs from indemnity health insurers is the extent that financial risk is assumed by providers. Financial risk is transferred from an HMO to providers through agreements which may include provisions for assessing providers, establishing capitated payments to providers, adjusting fee-for-service rates or sharing in the earnings or losses. This transfer of risk unique to HMOs is the basis for lower financial requirements for HMOs in comparison with indemnity insurers.

       We talk about the Maryland statute in the past tense because the Maryland legislature reacted to Riemer v. Columbia

        Medical Plan, Inc., 747 A.2d 677 (Md. 2000), by amending the Maryland statutes to expressly grant subrogation rights to HMOs. See Dua v. Comcast Cable of Md., Inc., 805 A.2d 1061, 1067-68 (Md. 2002).


source: Caselaw Access Project

author: KESSLER, J.

license: Public Domain

text:
    In re the Marriage of: Joy M. Winkler n/k/a Joy Capizzi, Petitioner-Appellant-Cross-Respondent, v. Robert W. Winkler, Respondent-Respondent-Cross-Appellant.
    Court of Appeals

      No. 2004AP1231.

      Oral argument April 05, 2005.

      Decided April 26, 2005.

    2005 WI App 100
    (Also reported in 699 N.W.2d 652.)

      On behalf of the petitioner-appellant-cross-respondent, the cause was submitted on the briefs and oral argument of Jane E. Probst of Ladd, Milaeger, Rebholz & Probst LLP of Waukesha.

      On behalf of the respondent-respondent-cross-appellant, the cause was submitted on the brief and oral argument of Phil Elliott Jr. of Elliott, Elliott & Stasku-nas of Milwaukee.
    Before Wedemeyer, RJ., Curley and Kessler, JJ.
   KESSLER, J.

¶ 1. Joy M. Winkler, formerly known as Joy Capizzi and now known as Joy Zablocki ("Zablocki"), appeals from orders denying her motions to reopen the property division of her divorce judgment and to award her a portion of new "backdrop" pension benefits her ex-husband will receive as a result of a post-divorce change in Milwaukee County's pension policy. She also appeals from an order denying her motion for reconsideration. We affirm the trial court's orders with respect to this issue.

¶ 2. Robert W Winkler ("Winkler") cross-appeals from orders that require him to pay increased child support based on the backdrop pension benefit. We affirm the trial court's conclusion that the backdrop benefit is income that must be considered for child support purposes. We also affirm the trial court's decision that this be paid as a lump sum.

BACKGROUND

¶ 3. The parties married in June 1974 and were divorced in November 1993, after nineteen-and-a-half years of marriage. They have two daughters, born in 1980 and 1987. At the time of the divorce, Winkler was forty-nine years old and was a long-time employee of Milwaukee County. Although he was eligible to retire effective January 1,1994, both parties understood that he intended to continue working.

¶ 4. One of the contested issues in the divorce was dividing Winkler's pension. The matter was scheduled for trial, but the parties resolved the contested issues by entering into a Marital Settlement Agreement, ("Agreement"), which was approved by the trial court and incorporated in the Judgment of Divorce ("Judgment"). The Agreement was obviously the product of substantial negotiation between the parties. Original provisions relating to the pension awarded Zablocki one-third of the gross monthly pension payments Winkler would receive from Milwaukee County. On the day of trial, these provisions were crossed out and initialed by the parties. In lieu of the fixed percentage of unknown future payments, the parties amended the Agreement to award Zablocki a fixed amount of Winkler's pension. They agreed that:

[Zablocki] is awarded one-half of the accrued monthly benefit that [Winkler] has with the Employees' Retirement System of the County of Milwaukee ["ERS"]. The administrator of [ERS], shall prepare an accrued monthly benefit calculation and schedule setting forth the present monthly benefit that [Winkler] would be eligible to receive per month for each year of the retirement age of 55 through 65, inclusive. [Zablocki] shall be awarded a wage assignment for one-half the present monthly annuity benefit as calculated by the plan administrator based upon the actual year [Win-kler] begins receiving his retirement benefits.

¶ 5. Promptly after the November 1993 divorce, Zablocki moved the trial court for a more specific order indicating the specific amount of payments from the pension that would be due her whenever Winkler retired. In January 1994, ERS prepared a calculation of the monthly retirement benefits that Winkler would receive, depending on his age at retirement, over a period of ten possible retirement years. It appears that the trial court accepted the calculation of the monthly retirement benefits and included it in an order which reiterated that, pursuant to the Judgment, Zablocki would receive monthly one-half of the applicable listed amount for the year in which Winkler retired. For example, according to the order, if Winkler retired at age fifty-eight (which he ultimately did), Zablocki would receive one-half of $997.07 ($498.54) per month.

¶ 6. Seven years after the divorce, on January 1, 2001, Milwaukee County adopted a pension enhancement plan that has subsequently been the subject of significant litigation. See, e.g., Dunn v. Milwaukee County, 2005 WI App 27, 693 N.W.2d 82 (petition for review pending). The feature of the plan that brings the parties to court at this time is generally described as a "backdrop" provision. The "backdrop" has been explained as a mechanism to permit employees who stay beyond their earliest available retirement date to receive both a lump-sum payment and a monthly retirement benefit. The word "drop" in backdrop is an acronym for Deferred Retirement Option Program. It allows employees who stay longer than required to reach "back" to a prior date when they could have retired (but did not) and to collect a lump-sum payment equal to the total payments they could have collected between the selected "back" date and the actual date of retirement. This benefit first became available to Win-kler when it was adopted in January 2001. During oral argument, counsel for Zablocki acknowledged that neither party knew at the time of the divorce that this benefit would become available.

¶ 7. Winkler retired effective May 1, 2002, when he was fifty-eight years old. He elected to go "back" to January 1, 1994, for purposes of the retirement calculations and the lump-sum payment. As a result, he will receive a monthly pension of $1330 and a lump-sum payment of $168,168.40; he may choose to roll the latter into an IRA, and thereby defer paying taxes on that amount until he withdraws all or any part of the money.

¶ 8. In February 2002, Zablocki filed an order to show cause, asserting that Winkler had failed to pay her the pension benefits she believed were due, including her share of the lump-sum backdrop benefit. After a court commissioner denied Zablocki some of the benefits she was seeking, the trial court considered, during a series of hearings in 2003 and 2004, a host of issues raised by Zablocki and Winkler.

¶ 9. As relevant to this appeal, the trial court concluded that there were no grounds to reopen the Judgment under Wis. Stat. § 806.07 (2003-04) because the motion to reopen was not brought within one year after the Judgment was granted, and because there were no extraordinary circumstances that would justify the reopening. The trial court specifically found that the enhanced pension benefits do not constitute an extraordinary circumstance because the pension benefit changes did not occur until after the Judgment was granted. The trial court further found that the property division provision in the Judgment was unambiguous and was therefore not subject to modification under Wis. Stat. § 767.32.

¶ 10. Zablocki appealed the trial court's decision with respect to pension benefits. She argues that the trial court erroneously exercised its discretion when it denied her motion to reopen the Judgment and award her a share of the new backdrop benefit. She contends that the backdrop pension benefits are "marital property" because the backdate Winkler selected, January 1, 1994, was a mere six weeks after the divorce date, and thus reflected work he performed during the marriage.

¶ 11. With respect to child support, the trial court concluded that the backdrop payout was income for purposes of determining child support. The trial court ordered Winkler to pay child support in the amount of $22,870.90 from his backdrop pension benefits. This amount was seventeen percent of the gross payment, reduced by an estimated tax impact to Winkler of twenty percent.

¶ 12. Winkler cross-appealed the trial court's order that he pay any child support on the backdrop payment. He argues that enhanced pension benefits are not income for child support purposes. In the alternative, he argues that even if the enhanced benefits are income, the trial court erroneously exercised its discretion when it awarded Zablocki a lump-sum payment of child support.

¶ 13. We affirm the trial court's order denying Zablocki's motion to reopen the property division. We affirm the trial court's conclusion that the backdrop benefit is income that must be considered for child support purposes. We also affirm the trial court's decision to order that this be paid as a lump sum.

DISCUSSION

I. Reopening the property division

¶ 14. Zablocki seeks to reopen and modify the property division of the Judgment. On appeal, a trial court's order denying a motion for relief under Wis. Stat. § 806.07 will not be reversed unless there has been an erroneous exercise of discretion. State ex rel. M.L.B. v. D.G.H., 122 Wis. 2d 536, 541, 363 N.W.2d 419 (1985). An appellate court will not find an erroneous exercise of discretion if the record shows that the trial court exercised its discretion and that there is a reasonable basis for the court's determination. Howard v. Duersten, 81 Wis. 2d 301, 305, 260 N.W.2d 274 (1977). "The term 'discretion' contemplates a process of reasoning which depends on facts that are in the record or are reasonably derived by inference from the record, and yields a conclusion based on logic and founded on proper legal standards." Shuput v. Lauer, 109 Wis. 2d 164, 177-78, 325 N.W.2d 321 (1982).

¶ 15. Generally, a final division of property is fixed for all time and is not subject to modification. See Krieman v. Goldberg, 214 Wis. 2d 163, 173, 571 N.W.2d 425 (1997). Wisconsin Stat. § 767.32(1)(a) provides for modification of judgments with respect to maintenance and child support, but also states: "a judgment or order that waives maintenance payments for either party shall not thereafter be revised or altered in that respect nor shall the provisions of a judgment or order with respect to final division of property be subject to revision or modification." (Emphasis added.)

¶ 16. Rules of civil procedure applicable to divorce cases permit reopening of final judgments only in extraordinary circumstances. Wisconsin Stat. § 806.07 generally permits reopening within the shorter of one year of the judgment or a "reasonable time," and requires that a party show one of numerous enumerated reasons, including mistake, inadvertence, excusable neglect, new evidence which would entitle a party to a new trial, fraud or other misconduct, or "any other reasons justifying relief from operation of the judgment." Zablocki relies on the catchall reason — "other reasons justifying relief' — in support of her motion to reopen the Judgment as to the allocation of pension benefits, so that she may seek a share of the backdrop payment. See § 806.07(1) (h).

¶ 17. The supreme court has had occasion to apply Wis. Stat. § 806.07 to divorce cases in the context of property divisions, and has held that the trial court has the power to reopen property divisions, even if the judgment is based on a stipulation. See Conrad v. Conrad, 92 Wis. 2d 407, 413, 284 N.W.2d 674 (1979). When the motion is based on § 806.07(1)(h) ("other reasons justifying relief'), it must be made within a reasonable time. Conrad, 92 Wis. 2d at 414. Whether the motion to reopen was brought pursuant to § 806.07(1)(a) or (h), the test on review of the trial court's order refusing to reopen the judgment is still the same: Was such refusal an erroneous exercise of discretion? See Grodin v. Smith, 82 Wis. 2d 667, 673-74, 264 N.W.2d 239 (1978).

¶ 18. Zablocki relies substantially on Conrad in support of her request to reopen the Judgment because of "other reasons justifying relief." That reliance is misplaced in light of the facts in Conrad and here. In Conrad, the judgment incorporated a marital settlement agreement. The wife alerted her counsel and the trial court to her concerns about the judgment while it was still being drafted. 92 Wis. 2d at 411. Then, when the trial court nonetheless signed the proposed judgment to which the wife objected, she filed a motion for relief within two months of the judgment. Id. at 414. In short, the moving party in Conrad immediately and consistently claimed that she did not understand the agreement, did not agree with some terms her lawyer inserted in the findings, and that she was unwilling to accept the disparity in property division that the agreement disclosed. Id. at 411-12.

¶ 19. Here, the original Agreement was thoroughly understood by all parties. They agreed on the day of trial to significantly modify the terms at issue. In denying Zablocki's recent motion to reopen the Judgment, the trial court specifically found that there was no ambiguity in the Judgment regarding the pension benefits. We agree. The final modifications to the Agreement that were ultimately adopted as the Judgment were discussed on the record and were approved by both parties. Zablocki chose the certainty of receipt of a fixed dollar amount from Winkler's monthly pension payments, as reflected by the Judgment and supplemental order, rather than a fixed percentage of a dollar amount of monthly pension that could (and did) change over time. The facts here contrast those in Conrad, where the person directly affected by the disputed term objected promptly, openly, and consistently to the provision at issue. See id. at 411-12.

¶ 20. Nor, as Zablocki effectively concedes, is this a request that fits within the other provisions of Wis. Stat. § 806.07. There is no claim of mutual mistake or fraud; at the time of the divorce, no one knew the pension backdrop benefit was going to be available. This is not a situation where any evidence suggests Winkler had any part in creating the backdrop provisions, nor did he deceive either Zablocki or the trial court about the pension as it existed at the time of the divorce. The backdrop benefit provisions were an unanticipated windfall.

¶ 21. Zablocki argues that Winkler's employment created the pool from which he was able to elect the "backdrop" lump-sum payment. Those efforts, she correctly points out, were marital efforts. The fruits of marital efforts are generally subject to division. See Wis. Stat. § 767.25. What is also clear is that those efforts, to the extent they took the form of a pension, were thoroughly negotiated and divided at the time of the divorce in a manner satisfactory to the parties at that time, as reflected in the amended Marital Settlement Agreement and Judgment of Divorce. Were we to now conclude, as Zablocki urges, that post-divorce employer modification of pension payout terms, years after a divorce, compels reopening of the divorce Judgment, finality in division of retirement benefits would essentially evaporate. No logical reason suggests itself to limit such a reopening as is requested here to only those cases where the benefits improve; the named pension recipient would assert equally substantial claims should benefits be reduced or otherwise disadvantageously modified. We decline to take such a drastic leap into the pool of uncertainty where, as here, the enhanced benefits become available years after the divorce. We conclude that the trial court did not erroneously exercise its discretion when it declined to reopen the Judgment.

II. Child support

¶ 22. The trial court ordered Winkler to pay $22,870.90 in child support. This calculation was based on seventeen percent of the lump-sum backdrop payment, reduced by twenty percent to cover the estimated income taxes that Winkler must pay on the payment. Winkler raises several issues. He argues that backdrop pension benefit is not income for child support purposes. In the alternative, he argues that even if the enhanced benefits are income, the trial court erroneously exercised its discretion when it awarded Zablocki a lump-sum payment of child support. He also argues that the trial court should have imposed a trust on the portion of the backdrop benefit to be paid as child support.

¶ 23. At issue is the modification of an existing child support order. Whether support provisions should be modified is discretionary, but may be ordered only upon a finding of a substantial change in circumstances. Peters v. Peters, 145 Wis. 2d 490, 493, 427 N.W.2d 149 (Ct. App. 1988); Wis. Stat. § 767.32(1)(a). "The burden of showing that there has been a change in circumstances sufficient to justify a modification falls to the party seeking modification." Rottscheit v. Dumler, 2003 WI 62, ¶ 11, 262 Wis. 2d 292, 664 N.W.2d 525.

¶ 24. Once a substantial change in circumstances has been shown, the trial court must exercise its discretion as to modification of child support. See Sellers v. Sellers, 201 Wis. 2d 578, 585, 549 N.W.2d 481 (Ct. App. 1996). Wisconsin Stat. § 767.25 and Wis. Admin. Code § DWD 40 provide the framework for setting and modifying child support. The statute authorizes the Department of Workforce Development to establish income percentage standards from which to set child support. See § 767.25(1j). Essentially, a fixed percentage is applied to the gross income of the parent paying support; the percentage varies based on the number of children and the time the paying parent spends with the children. See § DWD 40.03. The applicable percentage here, for one child, is seventeen percent.

¶ 25. There has been no serious dispute that Winkler's financial circumstances changed substantially when he chose to accept the backdrop benefit. Thus, the issue is whether the trial court erroneously exercised its discretion when it modified the child support order to require Winkler to pay a portion of bis backdrop payment as a lump sum.

A. Whether the backdrop payment is "income"

¶ 26. The percentage standards are specifically required to be applied to gross income, which is defined by Wis. Admin. Code § DWD 40.02(13). Section DWD 40.02(13) provides in relevant part:

(a) "Gross income" means all of the following:
1. Salary and wages.
2. Interest and investment income.
3. Social Security disability and old-age insurance benefits under 42 USC 401 to 433.
4. Net proceeds resulting from worker's compensation or other personal injury awards intended to replace income.
5. Unemployment insurance.
6. Income continuation benefits.
7. Voluntary deferred compensation, employee contributions to any employee benefit plan or profit-sharing, and voluntary employee contributions to any pension or retirement account whether or not the account provides for tax deferral or avoidance.
8. Military allowances and veterans benefits.
9. Undistributed income of a corporation, including a closely-held corporation, or any partnership, including a limited or limited liability partnership ....
10.All other income, whether taxable or not, except that gross income does not include any of the following:
a. Child support.
b. Foster care payments under s. 48.62, Stats.
c. Kinship care payments under s. 48.57(3m) or (3n), Stats.
d. Public assistance benefits under ch. 49, Stats., except that child care subsidy payments under s. 49.155, Stats., shall be considered income to a child care provider.
e. Food stamps under 7 USC 2011 to 2036.
f. Cash benefits paid by counties under s. 59.53(21), Stats.
g. Supplemental Security Income under 42 U.S.C. 1381 to 1383f and state supplemental payments under s. 49.77, Stats.
h. Payments made for social services or any other public assistance benefits.

Winkler argues that the backdrop pension is not income, and that it cannot be counted for child support purposes because it fits in none of the categories described by § DWD 40.02(13)(a). In response, Zablocki notes, and it was not disputed during oral argument, that Winkler may choose to receive the backdrop in cash, subject to taxation, or he may roll it into an IRA to avoid immediate taxation. Whether this available payment is characterized as "deferred compensation" under § DWD 40.02(13)(a)7. or "other income" under § DWD 40.02(13)(a)10., we hold that it is gross income subject to the child support standards. Winkler's ability to defer receipt of the benefit, potentially until the child is an adult, cannot be used to deprive the child of the benefit of this support.

B. Whether the trial court erroneously ordered that Winkler pay support from the backdrop as a lump sum

¶ 27. Winkler disputes the application of the standard child support guidelines to the backdrop payment. "A trial court is not required to apply the percentage guidelines in every case, but it must articulate its reasoning process for the decision to remain within the support guidelines or to deviate from them." Rumpff v. Rumpff, 2004 WI App 197, ¶ 14, 276 Wis. 2d 606, 688 N.W.2d 699. The trial court has the discretionary authority to deviate from the percentage standards when it finds that the use of the presumptive child support amount "is unfair to the child or to any of the parties." Wis. Stat. § 767.25(1m). The party seeking a deviation from the established child support standards has the burden of proving that application of the standards in that case is unfair to the party or the child. See Randall v. Randall, 2000 WI App 98, ¶ 12, 235 Wis. 2d 1, 612 N.W.2d 737.

¶ 28. The fact that the child will benefit from what numerous parties have termed a "windfall" does not permit the trial court to ignore the percentage standards. There is no "windfall" exception to the application of child support to gross income. Absent a finding of unfairness, grounded in the specific facts of the case, and after considering all fifteen enumerated factors set out in Wis. Stat. § 767.25(1m) and any other factors relevant to the particular case, a trial court is not authorized to deviate from the percentage standards. See Rumpff, 276 Wis. 2d 606, ¶ 14; see also Wis. Stat. § 767.25(1m). There was no such finding of unfairness in this case.

¶ 29. Winkler also argues that the trial court actually awarded Zablocki what was, in effect, "back support for a period prior to the time that the motion for child support modification had been made .. . The trial court correctly refused to award child support retroactively. See Wis. Stat. § 767.32(lm) ("[T]he court may not revise the amount of child support... due ... that has accrued, prior to the date that notice of the action is given to the respondent....). Although the trial court heard testimony concerning payments made by Zablocki in the past for both daughters, the trial court properly exercised its discretion when it specifically found:

that the needs of this child far exceed the reasonable needs, exceed the amount of child support that has been paid during the term of this case, and certainly since Mr. Winkler retired the $142.00 a month goes nowhere near supporting... a normal healthy child that's enjoyed a middle[-]class lifestyle which the children] of County workers do get to enjoy.

The factual finding supports the trial court's determination.

C. Whether the trial court erroneously refused to impose a trust

¶ 30. Winkler also objects to the refusal of the trial court to impose a trust on the portion of the backdrop benefit to be paid as child support. The authority of the court to impose a trust on child support is limited. That authority is found in Wis. Stat. § 767.25(2), which provides: "The court may protect and promote the best interests of the minor children by setting aside a portion of the child support which either party is ordered to pay in a separate fund or trust for the support, education and welfare of such children."

¶ 31. The imposition of a trust under Wis. Stat. § 767.25(2) is a matter within the trial court's discretion. See Cameron v. Cameron, 209 Wis. 2d 88, 98, 562 N.W.2d 126 (1997) ("The circuit court has discretion to determine and adjudge the amount a person should reasonably contribute to the support of his or her child, and shall also determine how that sum should be paid."). "Nonetheless, the custodial parent should not lightly be stripped of [his or] her ability to make decisions concerning rearing [the] child." Resong v. Vier, 157 Wis. 2d 382, 391-92, 459 N.W.2d 591 (Ct. App. 1990). Before imposing a trust over the objection of the custodial parent, the trial court must conclude that a trust "is in the best interests of the child." Cameron, 209 Wis. 2d at 105. This requires the trial court to find that the primary custodial parent "was incapable or unwilling to wisely manage the child support money." Id. at 106.

¶ 32. Here, Winkler failed to establish that Zablocki is "incapable or unwilling" to wisely manage the child support money she will receive from the backdrop payment. See id. The trial court did not erroneously exercise its discretion when it declined to impose a trust on the child support award.

By the Court. — Orders affirmed.

       Joy Winkler recently married and is now known as Joy Zablocki.

       The Honorable Gary A. Gerlach presided over the original divorce proceedings. Because of judicial assignment, the Honorable Michael J. Dwyer presided over the motions at issue in this appeal.

       Zablocki also sought a share of any payment Winkler received for unused sick allowance. In addition, there was an issue whether she was properly named as a survivor under his pension. Those issues are not before us on appeal and will not be addressed.

       All references to the Wisconsin Statutes are to the 2003-04 version unless otherwise noted.

       These benefits should more accurately be described as "property subject to division." The "marital property" concepts of Wis. Stat. ch. 766 do not control Wis. Stat. § 767.25, the provisions of the statutes dealing with division of property at divorce. See Haack v. Haack, 149 Wis. 2d 243, 255, 440 N.W.2d 794 (Ct. App. 1989).

       Zablocki did not appeal the decision to reduce the child support award for taxes to be paid, hence we do not address that aspect of the award although we note that Wis. Admin. Code § DWD 40, defining how child support is to be calculated, does not base child support on after-tax income.

       Wisconsin Stat. § 806.07 provides:
      Relief from judgment or order. (1) On motion and upon such terms as are just, the court, subject to subs. (2) and (3), may relieve a party or legal representative from a judgment, order or stipulation for the following reasons:
      (a) Mistake, inadvertence, surprise, or excusable neglect;
      (b) Newly-discovered evidence which entitles a party to a new trial under s. 805.15 (3);
      (c) Fraud, misrepresentation, or other misconduct of an adverse party;
      (d) The judgment is void;
      (e) The judgment has been satisfied, released or discharged;
      (f) A prior judgment upon which the judgment is based has been reversed or otherwise vacated;
      (g) It is no longer equitable that the judgment should have prospective application; or
      (h) Any other reasons justifying relief from the operation of the judgment.

        (2) The motion shall be made within a reasonable time, and, if based on sub. (1) (a) or (c), not more than one year after the judgment was entered or the order or stipulation was made. A motion based on sub. (1) ft)) shall be made within the time provided in s. 805.16. A motion under this section does not affect the finality of a judgment or suspend its operation. This section does not limit the power of a court to entertain an independent action to reheve a party from judgment, order, or proceeding, or to set aside a judgment for fraud on the court.

       The issue of Winkler's continuing child support obligation based on his current monthly income is not at issue in this appeal. We consider only whether he must pay additional child support based on the $168,168.40 he will receive as a backdrop lump-sum payment.

       Wisconsin Stat. § 767.25(1j) provides: "Except as provided in sub. (lm), the court shall determine child support payments by using the percentage standard established by the department under s. 49.22 (9)."

       The record reflects that ERS is holding Winkler's entire backdrop payment pending resolution of this litigation.


author: FINE, J.

text:
    In re the Commitment of Shermell G. Tabor: State of Wisconsin, Petitioner-Respondent, v. Shermell G. Tabor, Respondent-Appellant. [Case No. 2004AP1986.] In re the Commitment of Ronald Irvin Ryan: State of Wisconsin, Petitioner-Respondent, v. Ronald Irvin Ryan, Respondent-Appellant. [Case No. 2004AP1987.]
    Court of Appeals

      Nos. 2004AP1986, 2004AP1987.

      Submitted on briefs April 6, 2005.

    Decided April 26, 2005.

    2005 WI App 107
    (Also reported in 699 N.W.2d 663.)

      On behalf of the respondents-appellants, the cause was submitted on the consolidated briefs of Ellen Henak, assistant state public defender.
    On behalf of the petitioner-respondent, the cause was submitted on the brief of Peggy A. Lautenschlager, attorney general, and Warren D. Weinstein, assistant attorney general.
    Before Wedemeyer, PJ., Fine and Kessler, JJ.

       Petitions to review denied 7-28-05.

   FINE, J.

¶ 1. 2003 Wis. Act 187 modified, as material to this appeal, both the definition of "sexually violent person" and the threshold required to establish that a person whom the State seeks to commit under Wis. Stat. ch. 980 is "dangerous to others." 2003 Wis. Act 187, §§ 2,2m (codified in Wis. Stat. §§ 980.01(7) and 980.02(2)(c) (2003-04)). This is a consolidated permissive appeal from non-final trial-court orders holding that under 2003 Wis. Act 187, § 8 these modifications apply to trials to determine whether Shermell G. Tabor and Ronald Irvin Ryan should be committed, even though the ch. 980 petitions filed against them antedated the Act's effective date.

¶ 2. 2003 Wis. Act 187, § 8 says that its provisions "first apply to hearings, trials, and proceedings that are commenced on the effective date of this subsection." The Act was published on April 21, 2004. Thus, because there is no other effective date provided for in the Act, it became effective on the day after publication, April 22, 2004. See Wis. Stat. § 991.11. The Wis. Stat. ch. 980 petitions seeking to commit Tabor and Ryan were filed in 2001 and 2003 respectively, but they have not yet had their trials under Wis. Stat. § 980.05. The trial court held that the modifications were thus applicable to both Tabor and Ryan. We agree and affirm.

¶ 3. None of the facts material to this appeal is disputed. Accordingly, our review is de novo. State v. Swiams, 2004 WI App 217, ¶ 5, 277 Wis. 2d 400, 404, 690 N.W.2d 452, 454. Absent constitutional infirmity, we apply statutes as they are written because the legislature expresses its intent through the words it uses. Id., 2004 WI App 217, ¶ 5, 277 Wis. 2d at 404-405, 690 N.W.2d at 454. Tabor and Ryan contend that the clear command of 2003 Wis. Act 187 to the contrary notwithstanding, the modifications should not apply to them. We will analyze their contentions after we look at what 2003 Wis. Act 187 did to Wis. Stat. ch. 980 as material to this appeal.

2003 Wis. Act 187, § 2: Before the legislature enacted § 2, a person was a "sexually violent person" for the purposes of Wis. Stat. ch. 980 if, in addition to the other predicate elements, that person "is dangerous because he or she suffers from a mental disorder that makes it substantially probable that the person will engage in acts of sexual violence." Wis. Stat. § 980.01(7) (2001-02). State v. Curiel, 227 Wis. 2d 389, 406, 597 N.W.2d 697, 704 (1999), defined " 'substantially probable' as meaning 'much more likely than not.'" Section 2 of 2003 Wis. Act 187 substituted "likely" for the words "substantially probable." See also 2003 Wis. Act 187,
§ 1 (" 'Likely' means more likely than not.") (codified in Wis. Stat. § 980.01(lm) (2003-04)).
2003 Wis. Act 187, § 2m: Before the legislature enacted § 2m, a person was "dangerous to others" if that person's "mental disorder creates a substantial probability that he or she will engage in acts of sexual violence." Wis. Stat. § 980.02(2)(c) (2001-02). Section 2(m) of 2003 Wis. Act 187 substituted "makes it likely" for the words "creates a substantial probability."

As we have seen, § 8 of 2003 Wis. Act 187 made these modifications effective "to hearings, trials, and proceedings that are commenced" on or after April 22, 2004. Nevertheless, Tabor and Ryan contend that the modifications should not apply to their trials. We examine their contentions in turn.

¶ 4. Tabor and Ryan first contend that even though they have not yet been tried their trials really "commenced" when the petitions seeking their commitment were filed and served on them. Their rationale is two-fold: (1) that under Wis. Stat. § 980.05(3)(a) the "trial" is "on a petition," which, by virtue of Wis. Stat. § 980.02(2), must be filed within ninety days of the person's release from custody imposed for the underlying crime of sexual violence; and (2) the petitions filed against both Tabor and Ryan alleged what the statute required at the time the petitions were filed, namely that there was a "substantial probability" that they "will engage in acts of sexual violence," and that the State must thus still meet that level of proof. We disagree.

¶ 5. First, Wis. Stat. § 980.05(3)(a) reads in full: "At a trial on a petition under this chapter, the petitioner has the burden of proving the allegations in the petition beyond a reasonable doubt." There is nothing in this provision that indicates legislative intent to limit the nature of the proof to that alleged in the petition; rather, the subsection merely sets the State's burden of proof at "beyond a reasonable doubt." Moreover, if the legislature had intended in 2003 Wis. Act 187 to read the phrase "trial on a petition" as does Tabor and Ryan, it could have very easily worded the language of § 8 to so provide by making the Act generically "first apply to hearings^ trials, and proceedings that are commenced on the effective date of this subsection." It did not. That it did not is clarion of its intent to change (and lower) the dangerousness threshold for everyone because under Wis. Stat. ch. 980 the issue is whether the person is dangerous at the time of the trial. State v. Carpenter, 197 Wis. 2d 252, 274, 541 N.W.2d 105, 113 (1995) ("The focus of the statute is on the offender's current mental condition and the present danger to the public, not punishment."); State v. Williams, 2001 WI App 263, ¶¶ 21-23, 249 Wis. 2d 1, 20-21, 637 N.W.2d 791, 801-802. The petitions filed against Tabor and Ryan did not vest in them any immutable right to be tried under the then-existing standard for dangerousness; just as the legislature was empowered to provide for the commitment of those persons found to be "dangerous to others" because they are "sexually violent persons" even though they had already served their sentences for the predicate crimes (thus subjecting them to a post-sentence commitment that was for many of them impossible at the time they either committed the underlying crimes or were convicted of those crimes), Carpenter, 197 Wis. 2d at 274, 541 N.W.2d at 113-114, the legislature may modify the threshold for dangerousness so long as the applicable criteria remain relevant to ch. 980's underlying purposes of both protecting society and providing needed treatment to persons whose mental disorder makes them dangerous, see id., 197 Wis. 2d at 271, 541 N.W.2d at 112 ("[T]he principal purposes of ch. 980 are the protection of the public and the treatment of convicted sex offenders who are at a high risk to reoffend in order to reduce the likelihood that they will engage in such conduct in the future."). Tabor and Ryan do not argue that the modifications at issue here do not pass that relevance test.

¶ 6. Tabor and Ryan also argue that applying 2003 Wis. Act 187 to them violates their rights to due process by retroactively negating what they contend were their vested rights in the definitions extant when the petitions against them were filed and served. But, unlike the situations in the vested-rights cases upon which they rely, where the causes of action accrued before the legislative action, Martin v. Richards, 192 Wis. 2d 156, 531 N.W.2d 70 (1995) (reduction of damage caps in tort cases), and Neiman v. American National Property and Casualty Co., 2000 WI 83, 236 Wis. 2d 411, 613 N.W.2d 160 (increase of damage caps in tort cases), the dangerousness of persons for whom commitment is sought is determined, as we have already seen, at the time of the trial and not at some earlier time. See Carpenter, 197 Wis. 2d at 274, 541 N.W.2d at 113; Williams, 2001 WI App 263, ¶¶ 21-23, 249 Wis. 2d at 20-21, 637 N.W.2d at 801-802. Thus, just as those sex offenders who committed their crimes and were convicted and sentenced before the enactment of Wis. Stat. ch. 980 were nevertheless subject to its provisions, Carpenter, 197 Wis. 2d at 262-274, 541 N.W.2d at 109-114 (double-jeopardy and ex-post-facto challenges), Tabor and Ryan are constitutionally subject to the legislature's modification of what constitutes dangerousness under ch. 980. Further, their claim that the legislature unfairly "unsettle[d] expectations that they reasonably relied upon in setting up their defenses to the petitions," does not assert the deprivation of any recognized right. See State v. Burks, 2004 WI App 14, ¶ 16, 268 Wis. 2d 747, 760, 674 N.W.2d 640, 647 (trial court may require defendant to be tried by a jury even though defendant prefers a bench trial for strategic reasons).

By the Court. — Orders affirmed.

       Wisconsin Stat. § 980.01(7) (2003-04) reads in full:
      "Sexually violent person" means a person who has been convicted of a sexually violent offense, has been adjudicated delinquent for a sexually violent offense, or has been found not guilty of or not responsible for a sexually violent offense by reason of insanity or mental disease, defect, or illness, and who is dangerous because he or she suffers from a mental disorder that makes it likely that the person will engage in acts of sexual violence.

       Wisconsin Stat. § 980.02(2)(c) (2003-04) reads in full: "The person is dangerous to others because the person's mental disorder makes it likely that he or she will engage in acts of sexual violence."