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Court: Hudson-based firm not insured for injury claim filed in Minnesota

In a decision released Dec. 23, a Wisconsin Court of Appeals agreed that a Minnesota company has no obligation to pay a Minnesota worker's compensation claim under a policy issued to a Hudson company.

The District III Court of Appeals ruling affirms a decision by Judge Eric Lundell in a case brought by Wayne and Dianna Brown, doing business as Sky High Crane Rental, 1214 N. Trout Brook Road, Hudson, against the Sandeen Agency, 605 Second St., Hudson, and Tri-State Insurance Company of Minnesota.

According to background in the decision, although Sky High is based in Hudson, it does 80-90% of its business in Minnesota.

When Sky High contacted Sandeen to obtain worker's compensation insurance, a Sandeen employee helped submit an application to the Wisconsin Worker's Compensation Pool. The pool is a risk-sharing plan that helps employers who are unable to get insurance through ordinary means.

Sky High submitted its application in 2003, and the pool assigned Tri-State as the insurer.

In January 2005 Sky High employee Mathew Olson, who lives in Minnesota, broke his leg at a job site in Minnesota. Sky High filed the injury report in Wisconsin. Tri-State accepted the claim and paid about $90,000 in benefits.

Olson was cleared to return to work in October 2005. He went to work for a different company but had continuing difficulty with his leg.

In December 2005, Olson asked for temporary total disability benefits in Minnesota. Tri-State denied that claim because it wrote its policy for Wisconsin only and had already paid Wisconsin benefits.

Olson filed a worker's compensation claim against Sky High in Minnesota. Tri-State sought to be and was dismissed from that case.

The Minnesota judge found Olson was entitled to Minnesota benefits.

Sky High then filed a lawsuit in St. Croix County alleging Tri-State breached its insurance contract and that Sandeen was negligent in failing to arrange all the insurance coverage Sky High requested.

Tri-State asked to be dismissed from the case, arguing that it didn't breach the contract and that Sandeen was not its agent. Judge Lundell agreed.

In their arguments to the appeals court, Sandeen and Sky High insisted that the insurance policy requires Tri-State to pay Wisconsin worker's compensation benefits to an employee of a Wisconsin employer regardless of where the injury occurred or where the claim was filed.

Tri-State said it pays benefits only for claims filed under Wisconsin law, and Olson's claim was denied not because of where the injury occurred but because he made claim for benefits payable under Minnesota law.

"We conclude the policy is clear on its face and applies only to claims brought under Wisconsin law for Wisconsin benefits," wrote the Court of Appeals.

The decision called Sandeen and Sky High's interpretation of the policy "unreasonable."

"In fact," wrote the appeals court, "if we followed their interpretation, we would turn the insurance pool on its head. Sandeen and Sky High's interpretations amount to coverage for an employee's injury occurring in any state and a claim filed in any state.

"It is unreasonable to conclude this is a nationwide policy because it is meant to fulfill obligations under Wisconsin law only."

The court said the insurance pool was created to allow employers with Wisconsin obligations to obtain insurance to satisfy Wisconsin law, and employers who need insurance in other states must get it elsewhere.

The decision referred to the Wisconsin Insurance Pool handbook, which says in part, that coverage for all risks isn't automatic and that "other states' coverage" is intended as "limited, temporary coverage for Wisconsin employers for injury to an employee who regularly works in Wisconsin, but just happens to be in another state at the time the compensable injury occurs, and elects coverage in the other state."

The appeals court refused to find that Sandeen was negligent, noting that the agency said it quoted premiums for Minnesota coverage, but Sky High indicated the cost was too high and declined that coverage.

Sky High argues it told the Sandeen agent it had operations in Minnesota and needed coverage there and she indicated the Wisconsin pool would provide the necessary coverage.

The question of negligence is still in dispute and must be determined by the county court, said the appeals court.