The making of a claim for compensation against an employer or compensation insurer for the injury or death of an employee shall not affect the right of the employee, the employee's personal representative, or other person entitled to bring action to make claim or maintain an action in tort against any other party for such injury or death, hereinafter referred to as a 3rd party; nor shall the making of a claim by any such person against a 3rd party for damages by reason of an injury to which ss. 102.03
are applicable, or the adjustment of any such claim, affect the right of the injured employee or the employee's dependents to recover compensation. An employer or compensation insurer that has paid or is obligated to pay a lawful claim under this chapter shall have the same right to make claim or maintain an action in tort against any other party for such injury or death. If the department pays or is obligated to pay a claim under s. 102.66 (1)
or 102.81 (1)
, the department shall also have the right to maintain an action in tort against any other party for the employee's injury or death. However, each shall give to the other reasonable notice and opportunity to join in the making of such claim or the instituting of an action and to be represented by counsel.
If a party entitled to notice cannot be found, the department shall become the agent of that party for the giving of a notice as required in par. (a)
and the notice, when given to the department, shall include an affidavit setting forth the facts, including the steps taken to locate that party. Each shall have an equal voice in the prosecution of the claim, and any disputes arising shall be passed upon by the court before whom the case is pending, and if no action is pending, then by a court of record or by the department. If notice is given as provided in par. (a)
, the liability of the tort-feasor shall be determined as to all parties having a right to make claim and, irrespective of whether or not all parties join in prosecuting the claim, the proceeds of the claim shall be divided as follows:
After deducting the reasonable cost of collection, one-third of the remainder shall in any event be paid to the injured employee or the employee's personal representative or other person entitled to bring action.
Out of the balance remaining after the deduction and payment specified in subd. 1.
, the employer, the insurance carrier, or, if applicable, the uninsured employers fund or the work injury supplemental benefit fund shall be reimbursed for all payments made by the employer, insurance carrier, or department, or which the employer, insurance carrier, or department may be obligated to make in the future, under this chapter, except that the employer, insurance carrier, or department shall not be reimbursed for any payments made or to be made under s. 102.18 (1) (bp)
, 102.35 (3)
, or 102.60
Any balance remaining after the reimbursement described in subd. 2.
shall be paid to the employee or the employee's personal representative or other person entitled to bring action.
If both the employee or the employee's personal representative or other person entitled to bring action, and the employer, compensation insurer, or department, join in the pressing of said claim and are represented by counsel, the attorney fees allowed as a part of the costs of collection shall be, unless otherwise agreed upon, divided between the attorneys for those parties as directed by the court or by the department.
A settlement of a 3rd-party claim shall be void unless the settlement and the distribution of the proceeds of the settlement are approved by the court before whom the action is pending or, if no action is pending, then by a court of record or by the department.
In the case of liability of the employer or insurer to make payment into the state treasury under s. 102.49
, if the injury or death was due to the actionable act, neglect or default of a 3rd party, the employer or insurer shall have a right of action against the 3rd party to recover the sum so paid into the state treasury, which right may be enforced either by joining in the action mentioned in sub. (1)
, or by independent action. Contributory negligence of the employee because of whose injury or death such payment was made shall bar recovery if such negligence was greater than the negligence of the person against whom recovery is sought, and the recovery allowed the employer or insurer shall be diminished in proportion to the amount of negligence attributable to such injured or deceased employee. Any action brought under this subsection may, upon order of the court, be consolidated and tried together with any action brought under sub. (1)
Nothing in this chapter shall prevent an employee from taking the compensation that the employee may be entitled to under this chapter and also maintaining a civil action against any physician, chiropractor, psychologist, dentist, physician assistant, advanced practice nurse prescriber, or podiatrist for malpractice.
If the employer and the 3rd party are insured by the same insurer, or by the insurers who are under common control, the employer's insurer shall promptly notify the parties in interest and the department. If the employer has assumed the liability of the 3rd party, it shall give similar notice, in default of which any settlement with an injured employee or beneficiary is void. This subsection does not prevent the employer or compensation insurer from sharing in the proceeds of any 3rd-party claim or action, as set forth in sub. (1)
An insurer subject to sub. (4)
which fails to comply with the notice provision of that subsection and which fails to commence a 3rd-party action, within the 3 years allowed by s. 893.54
, may not plead that s. 893.54
is a bar in any action commenced by the injured employee under this section against any such 3rd party subsequent to 3 years from the date of injury, but prior to 6 years from such date of injury. Any recovery in such an action is limited to the insured liability of the 3rd party. In any such action commenced by the injured employee subsequent to the 3-year period, the insurer of the employer shall forfeit all right to participate in such action as a complainant and to recover any payments made under this chapter.
In this subsection, "temporary help agency" means a temporary help agency that is primarily engaged in the business of placing its employees with or leasing its employees to another employer as provided in s. 102.01 (2) (f)
No employee of a temporary help agency who makes a claim for compensation may make a claim or maintain an action in tort against any of the following:
Any employer that compensates the temporary help agency for the employee's services.
Any other temporary help agency that is compensated by that employer for another employee's services.
Any employee of that compensating employer or of that other temporary help agency, unless the employee who makes a claim for compensation would have a right under s. 102.03 (2)
to bring an action against the employee of the compensating employer or the employee of the other temporary help agency if the employees were coemployees.
No employee of an employer that compensates a temporary help agency for another employee's services who makes a claim for compensation may make a claim or maintain an action in tort against any of the following:
Any employee of the temporary help agency, unless the employee who makes a claim for compensation would have a right under s. 102.03 (2)
to bring an action against the employee of the temporary help agency if the employees were coemployees.
No leased employee, as defined in s. 102.315 (1) (g)
, who makes a claim for compensation may make a claim or maintain an action in tort against any of the following:
Any other employee leasing company, as defined in s. 102.315 (1) (f)
, that provides the services of another leased employee to the client.
Any employee of the client or of that other employee leasing company, unless the leased employee who makes a claim for compensation would have a right under s. 102.03 (2)
to bring an action against the employee of the client or the leased employee of the other employee leasing company if the employees and leased employees were coemployees.
No employee of a client who makes a claim for compensation may make a claim or maintain an action in tort against any of the following:
An employee leasing company that provides the services of a leased employee to the client.
Any leased employee of the employee leasing company, unless the employee who makes a claim for compensation would have a right under s. 102.03 (2)
to bring an action against the leased employee if the employee and the leased employee were coemployees.
No employee who is loaned by his or her employer to another employer and who makes a claim for compensation under this chapter may make a claim or maintain an action in tort against the employer who accepted the loaned employee's services.
No student of a public school, as described in s. 115.01 (1)
, or a private school, as defined in s. 115.001 (3r)
, who is named under s. 102.077
as an employee of the school district or private school for purposes of this chapter and who makes a claim for compensation under this chapter may make a claim or maintain an action in tort against the employer that provided the work training or work experience from which the claim arose.
No participant in a community service job under s. 49.147 (4)
or a transitional placement under s. 49.147 (5)
who, under s. 49.147 (4) (c)
or (5) (c)
, is provided worker's compensation coverage by a Wisconsin works agency, as defined under s. 49.001 (9)
, and who makes a claim for compensation under this chapter may make a claim or maintain an action in tort against the employer who provided the community service job or transitional placement from which the claim arose.
No participant in a food stamp employment and training program under s. 49.79 (9)
who, under s. 49.79 (9) (a) 5.
, is provided worker's compensation coverage by the department of health services or by a Wisconsin Works agency, as defined in s. 49.001 (9)
, or other provider under contract with the department of health services or a county department under s. 46.215
, or 46.23
or tribal governing body to administer the food stamp employment and training program and who makes a claim for compensation under this chapter may make a claim or maintain an action in tort against the employer who provided the employment and training from which the claim arose.
No participant in a work experience component of a job opportunities and basic skills program who, under s. 49.193 (6) (a)
, 1997 stats., was considered to be an employee of the agency administering that program, or who, under s. 49.193 (6) (a)
, 1997 stats., was provided worker's compensation coverage by the person administering the work experience component, and who makes a claim for compensation under this chapter may make a claim or maintain an action in tort against the employer who provided the work experience from which the claim arose. This subsection does not apply to injuries occurring after February 28, 1998.
A practitioner who, under s. 257.03
, is considered an employee of the state for purposes of worker's compensation coverage while providing services on behalf of a health care facility, the department of health services, or a local health department during a state of emergency and who makes a claim for compensation under this chapter may not make a claim or maintain an action in tort against the health care facility, department, or local health department that accepted those services.
No security officer employed by the department of military affairs who is deputed under s. 59.26 (4m)
, who remains an employee of the state for purposes of worker's compensation coverage while conducting routine external security checks around military installations in this state, and who makes a claim for compensation under this chapter may make a claim or bring an action in tort against the county in which the security officer is conducting routine external security checks or against the sheriff or undersheriff who deputed the security officer.
NOTE: See cases annotated under 102.03 as to the right to bring a 3rd-party action against a coemployee.
In a 3rd-party action under s. 102.29, safe place liability under s. 101.11 cannot be imposed on officers or employees of the employer. Their liability must be based on common law negligence. Pitrowski v. Taylor, 55 Wis. 2d 615
, 201 N.W.2d 52
Members of a partnership are employers of the employees of the partnership. An employee cannot bring a 3rd-party action against a member of the employing partnership. Candler v. Hardware Dealers Mutual Insurance Co. 57 Wis. 2d 85
, 203 N.W.2d 659
Liability of a corporate officer in a 3rd-party action must derive from acts done in the capacity of coemployee, not as a corporate officer and supervisor. Kruse v. Schieve, 61 Wis. 2d 421
, 213 N.W.2d 65
Sub. (1) provides attorney fees are to be allowed as "costs of collection" and, unless otherwise agreed upon, are to be divided between the attorneys for both the employee and the compensation carrier pursuant to court direction. Diedrick v. Hartford Accident & Indemnity Co. 62 Wis. 2d 759
, 216 N.W.2d 193
The words "action commenced by the injured employee" in sub. (5) also encompass the bringing of wrongful death and survival actions. Ortman v. Jensen & Johnson, Inc. 66 Wis. 2d 508
, 225 N.W.2d 635
The 6-year limitation on 3rd-party actions for wrongful death provided in sub. (5) does not deny 3rd-party defendants equal protection although other wrongful death defendants are subject to the s. 893.205 (2) 3-year limitation. Ortman v. Jenson & Johnson, Inc. 66 Wis. 2d 508
, 225 N.W.2d 635
The extra-hazardous activity exception did not apply to an employee of a general contractor who was injured while doing routine work in a nuclear power plant. Snider v. Northern States Power Co. 81 Wis. 2d 224
, 260 N.W.2d 260
A "business pursuit" exclusion in a defendant coemployee's homeowner's policy did not offend public policy. Bertler v. Employers Insurance of Wausau, 86 Wis. 2d 13
, 271 N.W.2d 603
That sub. (2) denies 3rd-party tort-feasors the right to a contribution action against a negligent employer who was substantially more at fault does not render the statute unconstitutional. Mulder v. Acme-Cleveland Corp. 95 Wis. 2d 173
, 290 N.W.2d 276
The right to share in a jury award was not dependent on participation in the prosecution of the underlying action. Guyette v. West Bend Mutual Insurance Co. 102 Wis. 2d 496
, 307 N.W.2d 311
(Ct. App. 1981).
The provision by an employer of alleged negligent medical care to an employee injured on the job by persons employed for that purpose did not subject the employer to tort liability for malpractice. Jenkins v. Sabourin, 104 Wis. 2d 309
, 311 N.W.2d 600
An award for loss of consortium is not subject to the distribution formula under sub. (1). DeMeulenaere v. Transport Insurance Co. 116 Wis. 2d 322
, 342 N.W.2d 56
(Ct. App. 1983).
The trial court exceeded its authority under sub. (1) by applying an alternative allocation formula without the consent of all the parties. An award for pain and suffering is subject to allocation under sub. (1), but an award to a spouse for loss of consortium prior to the employee's death is not. Kottka v. PPG Industries, Inc. 130 Wis. 2d 499
, 388 N.W.2d 160
The distribution scheme under sub. (1) renders common-law subrogation principles inapplicable. Martinez v. Ashland Oil, Inc. 132 Wis. 2d 11
, 390 N.W.2d 72
(Ct. App. 1986).
When there are competing claims for insufficient insurance proceeds and one claim is subject to sub. (1) allocation, while the other is not, the formula set forth in this case is to be followed. Brewer v. Auto-Owners Ins. Co. 142 Wis. 2d 864
, 418 N.W.2d 841
(Ct. App. 1987).
The "dual persona" doctrine is adopted, replacing the "dual capacity" doctrine. A 3rd-party may recover from an employer only when the employer has operated in a distinct persona as to the employee. Henning v. General Motors Assembly, 143 Wis. 2d 1
, 419 N.W.2d 551
Unless he or she is affirmatively negligent with respect to the claimant, a person who employs an independent contractor may not be held vicariously liable to the independent contractor's employees. Wagner v. Continental Casualty Co. 143 Wis. 2d 379
, 421 N.W.2d 835
The legal distinction between a corporation/employer and a partnership/landlord that leased the factory to the corporation, although both entities were composed of the same individuals, eliminated the partners' immunity as individuals under the exclusivity doctrine for negligence in maintaining the leased premises. Couillard v. Van Ess, 152 Wis. 2d 62
, 447 N.W.2d 391
(Ct. App. 1989).
In structured settlement situations, the "remainder" under sub. (1) from which an employee must receive the first one-third is the remainder of the front payment after deduction of collection costs. Skirowski v. Employers Mutual Casualty Co. 158 Wis. 2d 242
, 462 N.W.2d 245
(Ct. App. 1990).
Sub. (6) does not require a temporary employer to control or have the right to control the details of the work being performed. The temporary employer need only control the work activities of the temporary employee; it need not have exclusive control over the employee's work. Gansch v. Nekoosa Papers, Inc., 158 Wis. 2d 743
, 463 N.W.2d 682
An employee's cause of action created by a 3rd-party's negligence does not relate back to the initial work injury, but creates a separate cause of action; the cause of action and the employer's rights of subrogation accrue at the time of the 3rd-party negligence. Sutton v. Kaarakka, 159 Wis. 2d 83
, 464 N.W.2d 29
(Ct. App. 1990).
A parent corporation can be liable to an employee of a subsidiary as a 3rd-party tort-feasor when the parent negligently undertakes to render services to the subsidiary that the parent should have recognized were necessary for the protection of the subsidiary's employees. Miller v. Bristol-Myers, 168 Wis. 2d 863
, 485 N.W.2d 31
Rights under sub. (1) are not a type of subrogation, but provide a direct cause of action. Campion v. Montgomery Elevator Co. 172 Wis. 2d 405
, 493 N.W.2d 244
(Ct. App. 1992).
An insurer must be paid under sub. (1) in a 3rd-party settlement for an injury that it concluded was noncompensable but was consequential to the original injury. Nelson v. Rothering, 174 Wis. 2d 296
, 496 N.W.2d 87
A worker's compensation insurer cannot bring a 3rd-party action against an insurer who paid a claimant under uninsured motorist coverage; uninsured motorist coverage is contractual and this section only applies to tort actions. Berna-Mork v. Jones, 174 Wis. 2d 645
, 498 N.W.2d 221
Sub. (1) does not require an interested party receiving notice of another's 3rd-party claim to give a reciprocal notice to the party making the claim in order to share in the settlement proceeds. Elliot v. Employers Mut. Cas. Co. 176 Wis. 2d 410
, 500 N.W.2d 397
(Ct. App. 1993).
The "dual persona doctrine" that allows an employee to sue an employer in tort when the employer was acting in a persona distinct from its employer persona is available to a temporary employee subject to sub. (6). Melzer v. Cooper Industries, Inc. 177 Wis. 2d 609
, 503 N.W.2d 291
(Ct. App. 1993).
Third-party claims under sub. (1) include wrongful death actions; settlement proceeds are subject to allocation under sub. (1). Stolper v. Owens-Corning Fiberglass Corp. 178 Wis. 2d 747
, 505 N.W.2d 157
(Ct. App. 1993).
An insurer had no right to reimbursement from legal malpractice settlement proceeds arising from a failure to file an action for a work related injury. The employee's injury from the malpractice was the loss of a legal right not a physical injury. Smith v. Long, 178 Wis. 2d 797
, 505 N.W.2d 429
(Ct. App. 1993).
Damages for a child's loss of a parent's society and financial support are not subject to allocation under sub. (1). Cummings v. Klawitter, 179 Wis. 2d 408
, 506 N.W.2d 750
(Ct. App. 1993).
The traditional 4-prong Seaman
test for determining whether a person was a "loaned employee" subject to the exclusive remedy provisions of this chapter applies to temporary employees not covered by sub. (6). Bauernfeind v. Zell, 190 Wis. 2d 701
, 528 N.W.2d 1
Pecuniary damages recovered in a 3rd-party wrongful death action are subject to distribution under this section. Johnson v. ABC Insurance Co. 193 Wis. 2d 35
, 532 N.W.2d 130
An insurer is entitled to reimbursement under sub. (1) from an employee's settlement with his or her employer when the employer's basis for liability is an indemnification agreement with a 3rd-party tort-feasor. Houlihan v. ABC Insurance Co. 198 Wis. 2d 133
, 542 N.W.2d 178
(Ct. App. 1995), 95-0662
Sub. (5) extends the statute of limitations only when s. 893.54 is the applicable statute; it does not extend the statute of another state when it is applicable under s. 893.07. That sub. (5) only applies to cases subject to the Wisconsin statute is not unconstitutional. Bell v. Employers Casualty Co. 198 Wis. 2d 347
, 541 N.W.2d 824
(Ct. App. 1995), 95-0301
loaned employee test has 3 elements but is often miscast because the Seaman
court indicated that there are four "vital questions" that must be answered. The 3 elements are: 1) consent by the employee; 2) entry by the employee upon work for the special employer; and 3) power in the special employer to control details of the work. When an employee of one employer assists the employees of another employer as a true volunteer, a loaned employee relationship does not result. Borneman v. Corwyn Transport, Ltd. 212 Wis. 2d 25
, 567 N.W.2d 887
(Ct. App. 1997), 96-2511
The allocation of a settlement to various plaintiffs cannot be contested by an insurer who defaults at the hearing to approve the settlement. An insurer does not lose its right to share in the proceeds by defaulting, but it does forfeit its right to object to the application of settlement proceeds to specific claims. Herlache v. Blackhawk Collision Repair, Inc. 215 Wis. 2d 99
, 572 N.W.2d 121
(Ct. App. 1997), 97-0760
In a 3rd-party action filed by an insurer under sub. (1), the insurer has the right to maintain an action for payments it has made or will make to the employee by making a claim for all of the employees' damages, including pain and suffering. Threshermens Mutual Insurance Co. v. Page, 217 Wis. 2d 451
, 577 N.W.2d 335
Under the "dual persona" doctrine, the employer's second role must be so unrelated to its role as an employer that it constitutes a separate legal person. St. Paul Fire & Marine Insurance Co. v. Keltgen, 2003 WI App 53
, 260 Wis. 2d 523
, 659 N.W.2d 906
A "temporary help agency" requires: 1) an employer who places its employee with a 2nd employer, 2) the 2nd employer controls the employee's work activities, and 3) the 2nd employer compensates the first employer for the employee's services. Placement turns not on the physical proximity of the employee to an employer, but upon the purpose of the employee's work. It is a matter of whose work the employee is performing, not where the work is being performed. Control requires some evidence of compulsion or specific direction concerning the employee's daily activities. Peronto v. Case Corporation, 2005 WI App 32
, 278 Wis. 2d 800
; 693 N.W.2d 133
Any activities that the attorney takes to bring the claim to court on behalf of his or her client, as enumerated in Zentgraf
, constitute a cost of collection amenable to recovery under sub. (1). Sub. (1) does not require a worker's compensation attorney to demonstrate that his or her activities substantially contributed to obtaining recovery from the third party, or that the activities were taken on behalf of the employee, in order to join in the pressing of a claim. Anderson v. MSI Preferred Insurance Company, 2005 WI 62
, 281 Wis. 2d 66
, 697 N.W.2d 73
The deduction for costs of collection under sub. (1) must be reasonable. The circuit court must consider all of the circumstances to determine whether a contingency fee figure is reasonable and look to the factors in SCR 20:1.5(a)
that help determine the reasonableness of an attorney's fee. For hourly attorney fees the court must follow the lodestar approach under which the circuit court must first multiply the reasonable hours expended by a reasonable rate then make adjustments using the SCR 20:1.5(a)
factors. The sum of all the attorneys' reasonable fees and costs may, but need not, equal a reasonable cost of collection. The court must evaluate the total cost of collection and determine whether that sum is reasonable, in light of, among other things, the recovery. Anderson v. MSI Preferred Insurance Company, 2005 WI 62
, 281 Wis. 2d 66
, 697 N.W.2d 73
The pro rata distribution formula under Brewer, 142 Wis. 2d 864
, applies whenever the insurance proceeds are insufficient to satisfy all claims regardless of the reason for that insufficiency, including a settlement by the parties. Allocating a disproportionate amount of the total settlement to claims that are exempt from sub. (1) circumvents legislative intent. The Brewer
formula prevents the parties from using settlement as an end-run around the purposes of the worker's compensation scheme. Green v. Advance Finishing Technology, Inc. 2005 WI App 70
, 280 Wis. 2d 743
, 695 N.W.2d 856
Sub. (1) transforms a worker's compensation insurer's right of subrogation into a right to bring direct claims against 3rd-party tortfeasors. The insurer is entitled to prosecute the action along with the employee by virtue of sub. (1). Sub. (1) gives the trial court the right to settle a dispute between the two plaintiffs, as to whether or not a compromise settlement offered by the defendant should be accepted and does not differentiate between the employee and the worker's compensation insurer. Dalka v. American Family Mutual Insurance Co. 2011 WI App 90
, 334 Wis. 2d 686
, 799 N.W.2d 923
A circuit court may compel an employee to accept settlement of a claim against a 3rd party under sub. (1). This result does not violate the employee's right to a jury trial because the claim sub. (1) creates is not the counterpart of a cause of action at law recognized at the time of the adoption of the Wisconsin Constitution. The circuit court's authority to compel an employee to accept settlement does not violate procedural due process because judicial resolution of disputes is part of the statutory claim. Adams v. Northland Equipment Company, Inc. 2014 WI 79
, ___ Wis. 2d ___, ___ N.W.2d ___, 12-0580
This section preserves an existing common law right. It does not create a new right to tort claims against a third party and it does not permit a party to bypass a statute of repose. Crisanto v. Heritage Relocation Services, Inc. 2014 WI App 75
, ___ Wis. 2d ___, ___ N.W.2d ___, 13-1369
Problems in 3rd-party action procedure under the Wisconsin worker's compensation act. Piper. 60 MLR 91.
Impleading a negligent employer in a third-party action when the employer has provided workman's compensation benefits. 1976 WLR 1201.
Product liability in the workplace: The effect of workers' compensation on the rights and liabilities of 3rd parties. Weisgall. 1977 WLR 1035.
Preoccupation with Work Defense to Contributory Negligence. Parlee. Wis. Law. May 1995.
Worker's Compensation Act No Longer Protects Against Employment Discrimination Claims. Skinner. Wis. Law. March 1998.
"Equal Voice" Confirmed: Worker's Comp Carriers Can Compel Settlement. Weiss. Wis. Law. May 2012.