Francis G. Graef v. Continental Indemnity Company

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
February 4, 2020
A party may file with the Supreme Court a
Sheila T. Reiff petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.

Appeal No. 2018AP1782 Cir. Ct. No. 2017CV73

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT III

FRANCIS G. GRAEF,

PLAINTIFF-RESPONDENT,

V.

CONTINENTAL INDEMNITY COMPANY,

DEFENDANT-APPELLANT,

ABC INSURANCE COMPANY,

DEFENDANT.

------------------------------------------------------------

FRANCIS G. GRAEF,

PLAINTIFF-RESPONDENT,

V.

APPLIED UNDERWRITERS, INC.,

DEFENDANT-APPELLANT,
No. 2018AP1782

ABC INSURANCE COMPANY,

DEFENDANT.

APPEAL from an order of the circuit court for Marinette County:
JAMES A. MORRISON, Judge. Reversed and cause remanded with directions.

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

¶1 SEIDL, J. Continental Indemnity Company appeals an order
denying its motion for summary judgment that sought to dismiss Francis Graef’s
personal injury lawsuit.1 The issue before us is whether an employee who has
undisputedly sustained an injury compensable under the Worker’s Compensation
Act (“the Act”), WIS. STAT. ch. 102 (2017-18),2 may bring a tort action against a
worker’s compensation insurance carrier when that action is based upon the carrier’s
allegedly negligent denial of benefits due under the Act.

¶2 We conclude that the exclusive remedy provision of the Act, WIS.
STAT. § 102.03(2), bars such actions. Our conclusion rests on the fact that to
successfully prosecute his or her claim, a plaintiff would necessarily have to show
that he or she was denied benefits to which he or she was entitled under the Act.
The Act, however, already provides a remedy for the wrongful denial of benefits.

1
By the November 1, 2018 order of the chief judge of the court of appeals, we granted
Continental leave to appeal a nonfinal order. By that same order, we granted Applied Underwriters,
Inc., permission to participate in the appeal as a co-defendant-appellant. For reasons explained
more fully below, we now conclude that we have no jurisdiction over Applied Underwriters
because the nonfinal order appealed from did not address any motion filed by Applied
Underwriters.
2
All references to the Wisconsin Statutes are to the 2017-18 version unless otherwise
noted.

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Thus, the plaintiff’s right to recovery exists under the Act, and the Act’s exclusive
remedy provision applies. We therefore reverse the circuit court’s decision and
remand with directions to dismiss the complaint against Continental.

BACKGROUND

¶3 The following facts are taken from Graef’s complaint and are
accepted as true for purposes of this appeal. See Cohn ex rel. Shindell v. Apogee,
Inc., 225 Wis. 2d 815, 817, 593 N.W.2d 921 (Ct. App. 1999). On November 1,
2012, a bull gored Graef while he was working in the livestock yard of his employer,
Equity Livestock. Continental, Equity Livestock’s worker’s compensation
insurance carrier, subsequently authorized and approved multiple payments for
duloxetine, a medication that Graef was prescribed to treat depression caused by
this workplace accident.

¶4 On May 12, 2015, Graef attempted to refill his duloxetine prescription
at the Oconto Falls Pharmacy. Continental, however, “initially rejected” the
pharmacy’s request for payment. Consequently, the pharmacy had to call
Continental for approval, which was eventually granted, and Graef received his
medication.

¶5 Approximately six weeks later, on June 23, 2015, Graef again
attempted to refill his duloxetine prescription at the Oconto Falls Pharmacy. Once
again, Continental rejected the pharmacy’s initial request for payment. On this date,
however, Continental did not approve payment before Graef left the pharmacy.
Accordingly, Graef did not pick up his prescription because he “could not afford to
purchase the medication on his own.”

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¶6 On August 9, 2015, Graef suffered a self-inflicted gunshot wound to
the head. In 2017, he filed this action in Marinette County Circuit Court. In his
complaint, Graef alleged that Continental was “negligent in failing to continue to
authorize and pay for” his duloxetine prescription. In addition, he alleged his
suicide attempt “would not have occurred had [Continental] approved and paid for
the prescription,” because the duloxetine had been “effective in treating” the
depression (which was caused by the workplace injury) that caused him to attempt
suicide.3 He therefore sought to recover compensatory damages associated with his
suicide attempt, including “past and future medical expenses, personal injuries,
pain, suffering, [and] disability.”4

¶7 Continental moved for summary judgment, seeking dismissal of
Graef’s claim without prejudice. As grounds, Continental asserted that Wisconsin’s
worker’s compensation law provided the exclusive remedy for Graef’s claim.

¶8 At the summary judgment hearing, before addressing Continental’s
motion, the circuit court first granted Graef’s pending motion—filed one week

3
It is undisputed that Graef never challenged Continental’s alleged failure to authorize his
prescription refill by filing a worker’s compensation claim. To file such a claim, an employee must
follow the procedures set forth in the Act, including filing a claim application with the Department
of Workforce Development (DWD). See WIS. STAT. § 102.01(2)(ap); WIS. STAT. § 102.17. The
claim is then processed, and the proper benefits determined, pursuant to DWD procedures,
guidelines, and schedules. WIS. STAT. § 102.18. This standard procedure applies to claims which,
like here, seek compensation based upon the substantive rights conferred by WIS. STAT. § 102.42.
See Rock Tenn Co. v. LIRC, 2011 WI App 93, ¶15, 334 Wis. 2d 750, 799 N.W.2d 904.
4
In its brief-in-chief, Continental recognizes that we must accept all of the allegations in
Graef’s complaint as true for purposes of this appeal. Still, Continental notes that it “concede[s]
nothing” relating to the causal relationship between its allegedly negligent acts and Graef’s suicide
attempt.

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earlier—to amend his complaint to add allegations against Applied Underwriters.5
The court then orally denied Continental’s motion for summary judgment.

¶9 Approximately one month after the hearing, but before the circuit
court entered a written order denying Continental’s motion, Applied Underwriters
filed a motion to dismiss the amended complaint. The court subsequently entered a
written order, in which Continental and Applied Underwriters were named parties,
denying Continental’s motion. This order did not address Applied Underwriters’
pending motion. Continental and Applied Underwriters petitioned this court
requesting interlocutory review, and we granted leave to appeal.

DISCUSSION

I. Continental

¶10 Continental contends the circuit court erred by denying its motion for
summary judgment. We independently review a grant or denial of summary
judgment, using the same methodology as the circuit court. Hardy v. Hoefferle,
2007 WI App 264, ¶6, 306 Wis. 2d 513, 743 N.W.2d 843. Summary judgment is
appropriate when “the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.” WIS. STAT. § 802.08(2).

¶11 As such, the first step in reviewing a summary judgment order
requires us to examine the pleadings to determine whether a claim for relief has

5
The amended complaint alleged that Applied Underwriters “was associated with
Continental Indemnity, and asked to assist in processing the claims of [Graef] regarding his
worker’s compensation carrier.”

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been stated. Green Spring Farms v. Kersten, 136 Wis. 2d 304, 315, 401 N.W.2d
816 (1987). A complaint fails to state a claim upon which relief may be granted
only if “it is quite clear that under no conditions can the plaintiff recover.” Cohn,
225 Wis. 2d at 817 (citation omitted).

¶12 Here, Continental argues that there are no conditions under which
Graef can recover on his negligence claim because the Act’s exclusive remedy
provision bars Graef from recovering damages in tort that he could recover under
the Act. Whether the Act’s exclusive remedy provision prohibits a plaintiff from
bringing a tort claim is a question of law that we review independently. See Ehr v.
West Bend Mut. Ins. Co., 2018 WI App 14, ¶7, 380 Wis. 2d 138, 908 N.W.2d 486.

¶13 The Act represents the legislative compromise between the competing
interests of employers, employees, and the general public in resolving compensation
disputes regarding work-related physical or mental harms arising in our industrial
society. Id., ¶10. The terms of this compromise are that employees are statutorily
guaranteed compensation for their work-related injuries in exchange for their
relinquishment of common-law tort remedies. See id.

¶14 An “integral feature” of the Act’s compromise is the exclusive remedy
provision. Id., ¶12. It provides, in relevant part, that where the conditions for
liability under the Act exist, “the right to the recovery of compensation under this
chapter shall be the exclusive remedy against the employer, any other employee of
the same employer and the worker’s compensation insurance carrier.” WIS. STAT.
§ 102.03(2) (emphasis added).

¶15 Continental concedes that Graef’s initial injuries—i.e., those that he
suffered when he was gored by the bull—met the conditions for Equity Livestock’s
liability under the Act. It further concedes that, as Equity Livestock’s worker’s

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compensation insurance carrier, it had a statutory duty to make payments for Graef’s
duloxetine under WIS. STAT. § 102.42(1).6 Indeed, it is these very undisputed facts
which Continental asserts show that the exclusive remedy provision applies to bar
Graef’s claim. We agree with Continental’s assertion.

¶16 To begin, Graef’s claim that Continental is liable for the injuries
caused by his attempted suicide depends upon his ability to show that he was
wrongfully denied benefits due under the Act. Graef’s complaint alleges that:
(1) Continental engaged in negligent conduct by “failing to continue to authorize
and pay for the medication needed by [Graef] on June 23, 2015”; and (2) and that
his suicide attempt “would not have occurred” absent this negligent conduct (i.e.,
that Continental’s negligence caused the suicide attempt). The complaint also
explicitly alleges that Continental’s duty to pay for his prescription refill was
established “by Wisconsin Statute 102”—that is, by the Act.7

¶17 Consequently, the viability of Graef’s claim hinges upon his ability to
show that Continental breached its statutory duty under the Act, regardless of its
state of mind while doing so. Moreover, and put another way, no insurer can be

6
Continental also concedes that—if Graef is able to prove the allegations set forth in his
complaint—the damages he seeks are recoverable under the Act. This recognition rests upon the
longstanding rule that a suicide is compensable under the Act if a claimant can satisfy the
“chain-of-causation” test by “showing that the industrial injury caused the suicide.” Brenne v.
DILHR, 38 Wis. 2d 84, 92-93, 156 N.W.2d 497 (1968). We agree that Graef’s complaint clearly
alleges such a chain of causation, as it states that Graef suffered from depression caused by a
compensable workplace injury, and that Continental’s breach of its statutory duty to refill the
prescription necessary to treat that depression then caused Graef’s suicide attempt.
7
WISCONSIN STAT. § 102.42(1) provides that an employee who suffers an injury
compensable under the Act is entitled to “such medical, surgical, chiropractic, psychological,
podiatric, dental, and hospital treatment, medicines, medical and surgical supplies, … as may be
reasonably required to cure and relieve from the effects of the injury.” A worker’s compensation
insurance carrier is also liable for reasonable and necessary treatment “as required to prevent further
deterioration in the condition of the employee or to maintain the existing status of such condition
whether or not healing is completed.” Id.

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liable for failing to pay for an individual’s prescription medicine unless that insurer
has such a duty. Here, the only alleged reason Continental could have such a duty
is as Equity Livestock’s worker’s compensation carrier—and then only because
Graef was prescribed the medication to treat depression caused by his workplace
accident.

¶18 This connection between the Act and the viability of Graef’s claim is
critical, because when a claim “could not have [been] asserted” had a work-related
injury not occurred, the claim is necessarily “work-related and barred by the
exclusivity provisions of the … Act.” Messner v. Briggs & Stratton Corp., 120
Wis. 2d 127, 139, 353 N.W.2d 363 (Ct. App. 1984). In other words, when a claim
has its “origin in events that occurred because of [an] employment relationship,”—
as the allegations in Graef’s complaint do for the reasons set forth—the exclusive
remedy provision applies. See id.

¶19 The case upon which Messner based its “origin in events” test,
Jenkins v. Sabourin, 104 Wis. 2d 309, 311 N.W.2d 600 (1981), lends further
support for our conclusion that the exclusive remedy provision applies in this case.
See Messner, 120 Wis. 2d at 139. In Jenkins, our supreme court considered
whether the exclusive remedy provision “precludes a common-law cause of action
by an employee, who has sustained a compensable injury, against the employer for
negligently providing medical attention for that injury.” Jenkins, 104 Wis. 2d at
310-11. The Jenkins court concluded that the exclusive remedy provision did bar
such an action, as the employer was acting “in pursuance of its statutory duty as an
employer to provide medical attention” when its alleged negligence occurred. Id.
at 311.

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¶20 Similarly, Graef is asserting that Continental acted negligently by
failing to satisfy a duty that was undisputedly created by, and existed exclusively
because of, the Act. The Act provides a remedy for such conduct—a worker’s
compensation claim. The exclusive remedy provision therefore applies, as the Act
provides the duty and it also provides the potential remedy.8 See id. at 311-12.

¶21 Graef argues that, regardless of whether his claim has its origin in a
work-related injury, treating a violation of the Act as an “independent intervening
cause” that “excuses liability [would be] wrong when Continental supplied that
cause.” The premise of this argument misapprehends the function of the exclusive
remedy provision. Rather than “excusing” liability for violations of the Act, the
provision merely supplants an employee’s right to bring an action for common-law
tort liability (and its related damages) with his or her right to recover under the Act,
which, of course, imposes strict liability upon the occurrence of a workplace injury.
See County of La Crosse v. WERC, 182 Wis. 2d 15, 32, 513 N.W.2d 579 (1994).
This function, which we have already explained is an “integral feature” of the Act,
represents a careful balancing of interests by the legislature—a balance that we must
“exercise care to avoid upsetting.” Weiss v. City of Milwaukee, 208 Wis. 2d 95,
102, 559 N.W.2d 588 (1997).

¶22 To that end, we conclude our case law counsels that allowing Graef’s
tort claim to proceed would upset the balance of interests that is embodied by the
exclusive remedy provision and the worker’s compensation scheme as a whole. In

8
Graef attempts to distinguish Jenkins v. Sabourin, 104 Wis. 2d 309, 311 N.W.2d 600
(1981), on the basis that it discussed the applicability of the exclusive remedy provision to a claim
made against an employer, as opposed to a worker’s compensation insurance carrier. However, we
have previously considered, and rejected, the argument that “different rules should be applied to
worker’s compensation carriers than to employers” under the exclusive remedy doctrine. See
Walstrom v. Gallagher Bassett Servs., Inc., 2000 WI App 247, ¶¶12-13, 239 Wis. 2d 473, 620
N.W.2d 223.

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particular, we refer to our supreme court’s decision in Coleman v. American
Universal Insurance Co., 86 Wis. 2d 615, 273 N.W.2d 220 (1979), and our
legislature’s response to that decision. As subsequently explained by our supreme
court:

[I]n Coleman, a worker’s compensation claimant alleged
that the defendants, the worker’s compensation insurer and
its adjusting company, acted in bad faith in arbitrarily and
capriciously denying him rightfully owed worker’s
compensation benefits, thereby injuring him by the bad faith
denial and delay of worker’s compensation payments. In
response, the defendants moved for summary judgment on
the ground that the claimant’s exclusive remedy was under
the Worker’s Compensation Act, and therefore, the courts
had no jurisdiction to entertain this tort action.

….

The Coleman court concluded that the bad faith “injury”
alleged in Coleman was separate and distinct from the
original job-related injury and thus was not addressed by the
Worker’s Compensation Act. Accordingly, the Coleman
court held that, under the circumstances of Coleman, “the
separate tort of bad faith may be alleged and proved in the
courts.” In other words, “where a worker’s compensation
insurer acts in bad faith in the settlement or payment of
compensation benefits, a separate tort is committed that is
not within the purview of the exclusivity provisions of the
worker’s compensation law ....”

The legislature was apparently unhappy with the Coleman
decision and revised the statutes to respond to Coleman. It
created WIS. STAT. § 102.18(1)(bp) in 1981 that specifically
and explicitly provided an “exclusive remedy” in the
Worker’s Compensation Act for bad faith claims against
employers and their insurers.

Aslakson v. Gallagher Bassett Servs., Inc., 2007 WI 39, ¶¶72-75, 300 Wis. 2d 92,
729 N.W.2d 712 (footnotes omitted).

¶23 Graef attempts to downplay any applicability that the legislature’s
reaction to the Coleman decision has to this case by stressing that he is alleging only

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a negligent—as opposed to a bad faith—denial of worker’s compensation benefits.
We are not persuaded.

¶24 As Continental aptly notes, the short-lived, narrow exception created
by Coleman that allowed a worker’s compensation claimant to sidestep the
exclusive remedy provision by alleging bad faith would have been unnecessary if
“a mere [negligent] denial of a worker’s compensation claim … could be pursued
in tort.” More importantly, it would be incongruent to conclude that our legislature
intended for a claim that a worker’s compensation insurance carrier acted in bad
faith to be pursued exclusively under the Act while at the same time allowing a
claim alleging negligent conduct to proceed in civil court.

¶25 This conclusion follows because “bad faith is an intentional tort.”
Jones v. Secura Ins. Co., 2002 WI 11, ¶37, 249 Wis. 2d 623, 638 N.W.2d 575. As
such, a plaintiff pursuing a bad-faith claim bears a higher burden than one pursuing
a nonintentional tort (such as negligence)—the former must prove intent, whereas
the latter need not do so. See id. This distinction is notable, as a plaintiff pursuing
a nonintentional tort therefore is required to make a “lesser showing of culpability”
than one pursuing an intentional tort. See City of Milwaukee v. NL Indus., 2008
WI App 181, ¶53, 315 Wis. 2d 443, 762 N.W.2d 757. Accordingly, we conclude
that allowing the “lesser” tort of negligence to escape the ambit of the Act’s
exclusive remedy provision, while the intentional tort of bad faith could not do so,
would eschew our directive to “exercise care to avoid upsetting the balance of
interests achieved by the [Act].” Weiss, 208 Wis. 2d at 102. We decline to do so.

¶26 Graef advances a number of additional arguments in an attempt to
convince us that the exclusive remedy provision does not apply to his claim. We
address, and reject, each in turn.

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¶27 First, Graef argues that “principles of estoppel” should prevent
Continental from asserting that the exclusive remedy provision applies, while at the
same time “never actually acknowledg[ing] liability under the [Act.]” As an initial
matter, Graef’s argument in this regard is undeveloped, as he fails to cite or discuss
any of the elements of judicial estoppel. We could reject his argument on that basis
alone. See State v. Pettit, 171 Wis. 2d 627, 646, 492 N.W.2d 633 (Ct. App. 1992).

¶28 Nonetheless, we address Graef’s argument on its merits. Judicial
estoppel is an equitable doctrine that “precludes a party from asserting a position in
a legal proceeding and then subsequently asserting an inconsistent position.”
Salveson v. Douglas Cty., 2001 WI 100, ¶37, 245 Wis. 2d 497, 630 N.W.2d 182
(citation omitted). There are three elements required for a court to invoke the
doctrine: “(1) the later position must be clearly inconsistent with the earlier
position; (2) the facts at issue should be the same in both cases; and (3) the party to
be estopped must have convinced the first court to adopt its position.” Id., ¶38.

¶29 In this case, the third element cannot be met because Continental did
not convince “the first court to adopt its position.” In fact, the circuit court was the
forum in which the litigation arose, and so the third element could not, as a matter
of law, have been satisfied.

¶30 In addition to the inapplicability of the doctrine of estoppel, we also
reject the underlying premise of Graef’s argument—namely, that Continental is
trying to “have it both ways” by attempting to enforce the exclusive remedy
provision while at the same time refusing to concede liability under the Act. We
perceive nothing inconsistent about Continental maintaining that it is being
subjected to an action in the improper forum while at the same time refusing to
concede that it would be liable if the action was in the proper forum. On the

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contrary, we find Continental’s position consistent and permissible, because nothing
in its position that the exclusive remedy provision prohibits a separate tort claim for
failure to pay benefits due under the Act required it to concede it would be liable for
those benefits if the claim was brought in the proper forum.

¶31 Second, Graef contends that because “causation is invariably a factual
question,” the circuit court is the proper forum to resolve the dispute of whether his
work-related injury caused his suicide attempt and whether his claim for resulting
damages is barred by the Act. In support of his contention, he points to our decision
in Cohn.

¶32 In Cohn, an employee committed suicide after allegedly being
subjected to harassment in the workplace. Cohn, 225 Wis. 2d at 817-18. The
deceased employee’s family brought a wrongful death claim against the employer
and a co-employee. Id. at 819. We reversed the circuit court’s decision that the
exclusive remedy provision barred the claim, stating:

If “without the [work-related] injury, there would have been
no suicide,” the Act provides the exclusive remedy …. It is
possible, however, that Dr. Cohn’s suicide was
“intentionally self-inflicted,” as Brenne has glossed that
phrase, so as to remove the claim for Dr. Cohn’s death from
the purview of the Act. If so, the defendants might be liable,
at least in part.

Id. at 820 (citing Brenne v. DILHR, 38 Wis. 2d 84, 91, 94, 156 N.W.2d 497 (1968)).

¶33 The problem with Graef’s reliance on Cohn is twofold. First, we have
already concluded that the viability of Graef’s claim against Continental—based on
the allegations in his complaint—is dependent upon his ability to show that his
compensable work-related injury caused his suicide attempt. Again, this connection
exists because Continental’s duty to pay medication benefits, which Graef alleges

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Continental breached, is established by the Act. In contrast, the viability of the
plaintiff’s claim in Cohn was not dependent upon showing a violation of the Act,
as it was disputed whether a compensable workplace injury had even occurred in
the first instance. See id. at 821.

¶34 Second, the alleged wrongful conduct in Cohn, harassment, supported
the recognized common-law tort of wrongful death. See id. Conversely, here
Continental’s alleged wrongful conduct does not—by Graef’s own admission—
support a recognized common-law tort in Wisconsin (i.e., tortious denial of
worker’s compensation benefits).

¶35 Next, and relatedly, Graef argues that “[n]othing in [The Act] confers
such broad immunity” so as to insulate Continental “from liability for a new and
separate tort that it committed many years after the bull gored Graef.” Once again,
however, this argument misconstrues the exclusive remedy provision as shielding a
worker’s compensation insurance carrier from “liability.” To the contrary, the
exclusive remedy provision allows for an insurer to be held liable for an employee’s
new or aggravated injuries, regardless of fault, as long as those new injuries “relate[]
back to the original compensable event.” See Jenkins, 104 Wis. 2d at 315. It simply
does so under the Act itself, rather than in tort.

II. Applied Underwriters

¶36 Applied Underwriters argues that, as a worker’s compensation
insurance carrier’s agent, it is entitled to the same protections against tort liability
afforded by the exclusive remedy provision as Continental. By its own admission,
however, Applied Underwriters “has not appealed from a written order denying its

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own motion to dismiss or for summary judgment.” Nonetheless, it asks us to
address its argument “[t]o provide guidance on remand and to future litigants.”

¶37 We decline Applied Underwriters’ invitation for two reasons. First,
its answer to Graef’s amended complaint denied Graef’s allegation that it “had
authority and responsibility for authorizing worker’s compensation medical,
prescription and indemnity payments to [Graef].” Accordingly, the precise role
Applied Underwriters played in the events at issue is unclear.

¶38 Second, the only dispositive motion filed by Applied Underwriters
below was a motion to dismiss the amended complaint against it, and that motion
was filed over a month after the summary judgment hearing. Based on the appellate
record before this court, the circuit court has not taken any action on that motion,
and so—as admitted by Applied Underwriters—no written order addressing its
rights exists from which to appeal. We thus have no jurisdiction to address its
arguments. See Ramsthal Advert. Agency v. Energy Miser, Inc., 90 Wis. 2d 74,
75-76, 279 N.W.2d 491 (Ct. App. 1979).

¶39 In sum, we reverse the circuit court’s order denying Continental’s
motion for summary judgment and remand with directions for the court to grant
summary judgment to Continental. On remand, the court may also address Applied
Underwriters’ pending motion to dismiss the amended complaint against it.

By the Court.—Order reversed and cause remanded with directions.

Not recommended for publication in the official reports.

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