Judgment is offset by default, rules Wisconsin Court of Appeals.

• Date: 30 July 2007

Byline: David Ziemer

A defaulting tortfeasor can offset its judgment by medical expenses paid by a subrogated insurer that also defaulted, the Wisconsin Court of Appeals held on July 24. Dale Otto was a patient of Dr. Charles Folkestad beginning in the 1980s. Otto also began seeing Dr. Terrance Witt in 1999. Otto had been treated by both doctors for gastroesophageal reflux disease for this entire time period. Despite Otto's ongoing symptoms, the doctors allegedly failed to conduct any further testing to update or otherwise check that diagnosis. In September 2002, Otto was diagnosed with metastatic esophageal cancer. In 2003, Otto filed a medical malpractice complaint against Folkestad, Witt, the clinic where the doctors worked, the Wisconsin Patients Compensation Fund, and fictitious insurers. After Otto died from the cancer, an amended complaint was filed, naming Physicians Insurance Company of Wisconsin, Inc. (PIC), specifically as the insurer, and identifying Blue Cross Blue Shield of Nebraska as a subrogated party based on payments it made on Otto's behalf. Neither Blue Cross nor PIC filed a timely answer, and default judgment was entered against PIC. At the damages hearing, PIC asked that any judgment against it be offset by the amount the subrogated insurers had paid, arguing the statute of limitations had expired on their claims. The circuit court denied the motion and entered judgment for what it concluded were Otto's entire damages. PIC appealed, and the court of appeals reversed in a decision...