Wisconsin Appeals Court Clarifies Subrogation Rights in Multi-State PIP Claims

The Wisconsin Court of Appeals recently issued an unpublished decision in Jaster v. Selective Insurance Company of South Carolina, clarifying the interaction between contractual and statutory subrogation rights in cases involving personal injury protection (PIP) benefits from out-of-state policies. The case involved a Minnesota resident who received PIP benefits under her Minnesota auto insurance policy following an accident in Wisconsin. After settling with the at-fault party, her insurer sought to recover PIP benefits under statutory subrogation rights, despite a contractual waiver of such rights in the policy.

The circuit court ruled that while the insurer waived its contractual subrogation rights through a policy endorsement, its statutory right to subrogation under the Minnesota No-Fault Act remained intact. This statutory right allowed recovery of duplicated benefits paid to the insured, with the court awarding the insurer over $21,000. The Court of Appeals affirmed this decision, emphasizing the legal distinction between contractual and statutory subrogation and underscoring that waiving statutory rights requires explicit, clear, and specific language, which was absent in the insurer’s policy.

The court noted that Minnesota law, reflected in the No-Fault Automobile Insurance Act, permits limited subrogation rights when accidents occur out-of-state, recognizing the risk of duplicated PIP benefits. Wisconsin law similarly requires an explicit waiver to relinquish statutory rights. This ruling highlights the importance for insurers to maintain compliance with statutory provisions independently of their contractual terms.

For insurance providers, this decision underscores the necessity of carefully structuring policy language and endorsements to preserve statutory subrogation rights even if contractual rights are waived. It also advises claims handlers to distinguish between these two types of subrogation in processing claims involving multiple jurisdictions. This clarification is pertinent for carriers operating in border states where conflicting state laws may apply.

Overall, the Jaster decision provides important legal guidance concerning subrogation rights in multi-state auto insurance claims involving no-fault benefits. It reaffirms the hierarchy of statutory protections over contractual agreements in certain cases and serves as a practical reference for insurers aiming to optimize recovery efforts while ensuring regulatory compliance.