Francis G. Graef v. Applied Underwriters, Inc.

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.
April 9, 2024
A party may file with the Supreme Court a
Samuel A. Christensen 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. 2023AP420 Cir. Ct. Nos. 2017CV73
2018CV127
STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT III

FRANCIS G. GRAEF,

PLAINTIFF-APPELLANT,

V.

APPLIED UNDERWRITERS, INC.,

DEFENDANT-RESPONDENT.

APPEAL from an order of the circuit court for Marinette County:
JANE M. SEQUIN, Judge. Affirmed.

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

¶1 STARK, P.J. Francis G. Graef appeals from an order granting
Applied Underwriters, Inc.’s motion to dismiss Graef’s personal injury lawsuit.
Applied Underwriters had contracted with Graef’s worker’s compensation
insurance carrier, Continental Indemnity Company, to adjust its worker’s
No. 2023AP420

compensation claims. Graef sued Continental, and later Applied Underwriters,
seeking damages for injuries he claimed were caused by Applied Underwriters’
denial of medication under the Wisconsin Worker’s Compensation Act (the Act).

¶2 This case previously came before this court and our supreme court
on the question of whether the exclusive remedy provision in WIS. STAT.
§ 102.03(2) (2021-22)1 of the Act barred Graef’s tort action against Continental.
Our supreme court determined “that the Act provides Graef’s exclusive remedy
for the injuries alleged in his complaint,” and, accordingly, Continental was
dismissed from this suit. See Graef v. Continental Indem. Co., 2021 WI 45, ¶3,
397 Wis. 2d 75, 959 N.W.2d 628.

¶3 This appeal presents the same question as to Applied Underwriters,
and we reach the same conclusion. Our conclusion that the Act’s exclusive
remedy provision bars this tort action against Applied Underwriters is based on
this court’s previous decision in Walstrom v. Gallagher Bassett Services, Inc.,
2000 WI App 247, ¶13, 239 Wis. 2d 473, 620 N.W.2d 223, which held that WIS.
STAT. § 102.03(2) also applies to agents and representatives of a worker’s
compensation insurance carrier. Given Walstrom’s holding, Applied Underwriters
stands in the same shoes as Continental for the purpose of the exclusive remedy
provision. Therefore, our supreme court’s conclusion—that Continental is
immune from liability in tort—applies to Applied Underwriters as well.
Accordingly, we affirm the circuit court’s decision.

1
All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise
noted. Although the statutes at issue here have been amended since this case was originally filed
in 2017, the parties do not argue that any of the amendments are relevant to the issues on appeal,
and we independently see no relevance as well.

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No. 2023AP420

BACKGROUND

¶4 The operative facts underlying this appeal were outlined previously
by our supreme court. Graef, 397 Wis. 2d 75, ¶¶4-6. In summary, after a
workplace accident in 2012—for which Graef received worker’s compensation
benefits—he continued to suffer from both physical injuries as well as depression.
Graef alleged that Continental’s—and later Applied Underwriters’—refusal to
cover the cost of his depression medication in June 2015, a cost he was unable to
shoulder on his own, resulted in worsening depression and caused him to suffer a
self-inflicted, nonfatal gunshot wound to the head on August 9, 2015. These facts,
which were presented in Graef’s amended complaint, 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).

¶5 Graef filed suit against Continental alleging that it was “‘negligent in
failing to continue to authorize and pay for’ the June 2015” depression medication
refill. Graef, 397 Wis. 2d 75, ¶6. Thereafter, Continental moved for summary
judgment, claiming that Graef brought his claim in the wrong forum because the
Act provided his exclusive remedy. The circuit court2 denied Continental’s
motion, but we reversed—on the basis that Graef’s right to recovery existed under
the Act and was the exclusive remedy—and directed the court to grant summary
judgment in favor of Continental. Graef v. Continental Indem. Co.,
No. 2018AP1782, unpublished slip op. ¶¶2, 39 (WI App Feb. 4, 2020).3 Our
2
The Honorable James Morrison entered the order denying Continental’s motion for
summary judgment.
3
An unpublished opinion that is authored by a member of a three-judge panel and issued
on or after July 1, 2009, may be cited for its persuasive value. WIS. STAT. RULE 809.23(3)(b).
We cite to this unpublished case for background information and for the law of the case.

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supreme court affirmed. Graef, 397 Wis. 2d 75, ¶3. On remand, the circuit court
dismissed Graef’s complaint against Continental.

¶6 During this time, however, Graef also filed a separate lawsuit against
Applied Underwriters in Marinette County case No. 2018CV127. That lawsuit
was subsequently consolidated with the suit against Continental in Marinette
County case No. 2017CV73. Graef also moved for leave to file an amended
complaint to add the allegations against Applied Underwriters to its complaint
against Continental, asserting that Applied Underwriters “was associated with
Continental Indemnity, and asked to assist in processing the claims of [Graef]
regarding his worker’s compensation carrier.” The circuit court granted Graef’s
motion, and Applied Underwriters thereafter moved to dismiss the amended
complaint.4

¶7 On remand from our supreme court, and after a nonevidentiary
hearing, the circuit court granted Applied Underwriters’ motion to dismiss Graef’s
amended complaint.5 Relying on this court’s decision in Walstrom, the circuit

4
The circuit court did not address Applied Underwriters’ motion to dismiss before it
denied Continental’s motion for summary judgment. Nevertheless, Continental and Applied
Underwriters petitioned this court for leave to appeal a nonfinal order, which we granted.
See WIS. STAT. RULE 809.50(3). In our decision, however, we refused to rule on whether
Applied Underwriters “is entitled to the same protections against tort liability afforded by the
exclusive remedy provision as Continental” because “the precise role Applied Underwriters
played in the events at issue [was] unclear” and the circuit court had not “taken any action” on
Applied Underwriters’ motion to dismiss, meaning we lacked “jurisdiction to address its
arguments.” Graef v. Continental Indem. Co., No. 2018AP1782, unpublished slip op. ¶¶36-38
(WI App Feb. 4, 2020). Graef then filed a petition for review with our supreme court, but
Applied Underwriters did not seek review of our decision. Therefore, our supreme court did not
address the issue as to Applied Underwriters. See Graef v. Continental Indem. Co., 2021 WI 45,
¶7 n.6, 397 Wis. 2d 75, 959 N.W.2d 628.
5
The Honorable Jane M. Sequin entered the order granting Applied Underwriters’
motion to dismiss after Applied Underwriters moved for substitution of Judge Morrison.

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court concluded that WIS. STAT. § 102.03(2)’s immunity applies “to employers
and worker’s compensation insurers and their respective agents and
representatives.” According to the court, pursuant to a “Management Services
Agreement” (hereinafter, management agreement), “Applied [Underwriters] owed
a contractual duty to Continental to handle claims” and “was acting on
Continental’s behalf as its agent and representative.”6 Therefore, the court
concluded that the facts alleged in the amended complaint did not support a claim
upon which relief could be granted, and Graef’s “allegations, if proven, would
satisfy the conditions for worker’s compensation liability.” Graef appeals.

DISCUSSION

¶8 In Graef, our supreme court outlined the law under the Act
applicable to this case. To summarize, WIS. STAT. § 102.03 “sets forth the basic

6
As Graef does not appear to dispute that Applied Underwriters was acting as an agent
or representative of Continental, we will not delve into the specific details of the management
agreement, except to note that the agreement was signed in August 2015 and stated that Applied
Underwriters would “provide the necessary and appropriate investigation, adjustment, defense
and payment of claims arising from any [Continental] policy of insurance.”

We also note that the circuit court considered the management agreement, which was not
attached to Graef’s amended complaint, in its decision on the motion to dismiss. While it was not
attached to the complaint, the management agreement was included with an affidavit submitted by
Graef in response to Applied Underwriters’ motion to dismiss. There is no evidence in the record
demonstrating that the court converted Applied Underwriters’ motion to dismiss into one for
summary judgment. See Alliance Laundry Sys. LLC v. Stroh Die Casting Co., 2008 WI App
180, ¶14, 315 Wis. 2d 143, 763 N.W.2d 167 (“When the defendant attaches affidavits or other
matters outside the pleadings to its motion to dismiss and the court, in its discretion, considers
these outside matters, the court must convert the defendant’s motion into one for summary
judgment.”). However, neither of the parties appear to question the court’s reliance on the
management agreement on appeal. Therefore, in accordance with the incorporation-by-reference
doctrine, we will not address the issue further. See Soderlund v. Zibolski, 2016 WI App 6, ¶37,
366 Wis. 2d 579, 874 N.W.2d 561 (2015) (stating that a court may consider a document attached
to a motion to dismiss without converting the motion if the document was referenced in the
plaintiff’s complaint, is central to his or her claim, and its authenticity has not been disputed).

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requirements for a compensable injury under the Act” and “provides a list of
conditions that impose liability under the Act against an ‘employer, any other
employee of the same employer and the worker’s compensation insurance
carrier.’” Graef, 397 Wis. 2d 75, ¶11 (quoting § 102.03(1)-(2)). Further,
“employers and worker’s compensation insurance carriers have a duty to pay for a
subsequent injury that naturally flows from a covered workplace injury, including
any injury caused or worsened by the treatment, or lack of treatment, of the
original work-related injury.” Graef, 397 Wis. 2d 75, ¶12; see also Jenkins v.
Sabourin, 104 Wis. 2d 309, 316, 311 N.W.2d 600 (1981).

¶9 Pursuant to WIS. STAT. § 102.03(2), when the conditions of liability
are present, the Act provides the exclusive remedy: “Where such conditions 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.” As our supreme court explained,
“[w]orker’s compensation laws are considered ‘the grand bargain’” drafted by the
legislature to “balance[] competing societal interests,” where “[i]n exchange for
receiving immunity from tort liability, employers must provide benefits regardless
of fault.” Graef, 397 Wis. 2d 75, ¶10 (citation omitted); see also Mulder v. Acme-
Cleveland Corp., 95 Wis. 2d 173, 180-81, 290 N.W.2d 276 (1980). Graef
reiterated that the exclusive remedy provision is “an integral feature of the
compromise between the interest of the employer and the interest of the worker.”
Graef, 397 Wis. 2d 75, ¶13 (citation omitted).

¶10 In Graef, our supreme court determined that the conditions of
liability pursuant to WIS. STAT. § 102.03(1) had been met and that the Act
provided Graef’s exclusive remedy against Continental because “Graef’s
complaint establishe[d] an unbroken causal chain from his workplace injury to his

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suicide attempt.” Graef, 397 Wis. 2d 75, ¶¶14-21. In this appeal, we are likewise
presented with a question as to the scope of the exclusive remedy provision under
§ 102.03(2), but the issue now before us is whether Graef’s holding is also
applicable to Applied Underwriters. For the reasons that follow, we conclude that
the Act also prohibits this action against Applied Underwriters.

¶11 This case comes before us on Applied Underwriters’ motion to
dismiss. A motion to dismiss tests the legal sufficiency of the complaint, and we
review de novo whether the complaint states a claim on which relief can be
granted. Data Key Partners v. Permira Advisers LLC, 2014 WI 86, ¶¶17, 19, 356
Wis. 2d 665, 849 N.W.2d 693. For the purpose of our review, “[a]ll facts pleaded
and all reasonable inferences from those facts are admitted as true.” Scott v.
Savers Prop. & Cas. Ins. Co., 2003 WI 60, ¶5, 262 Wis. 2d 127, 663 N.W.2d 715.
“The pleadings are to be liberally construed and a claim will only be dismissed if
the plaintiff cannot recover under any circumstances.” Heinritz v. Lawrence
Univ., 194 Wis. 2d 606, 610-11, 535 N.W.2d 81 (Ct. App. 1995). The question
before us on appeal is whether the Act’s exclusive remedy provision prohibits
Graef from filing this tort action against Applied Underwriters in the circuit court,
which 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.

I. WIS. STAT. § 102.03(2)

¶12 Graef’s main argument is that WIS. STAT. § 102.03(2) “fails to
immunize Applied Underwriters [from this tort action] for the simple reason that
Applied Underwriters is neither Graef’s employer, his employer’s worker’s
compensation insurance carrier, nor a co-employee”—in other words, it is not one
of the entities specifically listed in the statute. He claims that in interpreting the

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statute, we are “not free to supplement clear statutes or add terms the [l]egislature
never incorporated”; therefore, “[n]othing in § 102.03(2) immunizes Applied
Underwriters from this suit.”

¶13 We disagree with Graef’s contention that the text of WIS. STAT.
§ 102.03(2) forecloses tort-liability immunity for Applied Underwriters because
this court has previously concluded that § 102.03(2) extends immunity to agents
and representatives of the listed entities. See Progressive N. Ins. Co. v.
Romanshek, 2005 WI 67, ¶52, 281 Wis. 2d 300, 697 N.W.2d 417 (“This court has
long been committed to the principle that a construction given to a statute by the
court becomes a part thereof, unless the legislature subsequently amends the
statute to effect a change.” (citation omitted)). In Walstrom, Robert Walstrom
suffered a workplace injury, and his employer’s worker’s compensation insurer,
American Zurich Insurance Co., had contracted with an adjuster, Gallagher Basset
Services, Inc., to administer claims under the worker’s compensation policy.
Walstrom, 239 Wis. 2d 473, ¶¶2-3. Walstrom eventually brought a separate tort
action against Gallagher, claiming that its delay in authorizing neck surgery
resulted in permanent nerve damage. Id., ¶4. We affirmed the circuit court’s
summary judgment dismissal of the suit on the basis that the exclusive remedy
provision applies to agents and representatives of worker’s compensation carriers.
Id., ¶13.

¶14 In reaching that conclusion, we relied on Wasley v. Kosmatka, 50
Wis. 2d 738, 184 N.W.2d 821 (1971). In that case, the plaintiff had recovered
worker’s compensation benefits for her deceased husband’s injuries as a result of a
workplace accident that caused his death, but she also filed an independent tort
action against a corporate officer who had been involved in the accident because
“at the time of the accident he was acting in the capacity of a co[-]employee, not

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in his capacity as president of the corporate employer.” Id. at 740-41. At the trial
on liability, the circuit court denied the plaintiff’s request to provide the safe place
jury instruction, ruling that the instruction was not applicable because “the
‘safe[]place’ duty was the duty of the employer, not [the] defendant personally.”
Id. at 741.

¶15 Our supreme court affirmed, concluding that an injured worker
could not maintain a tort action against an employer’s corporate officer. Id. at
742. It explained that when considering the safe place statute and the Act
together, allowing an injured worker to maintain a tort action against a corporate
officer of an employer while also recovering worker’s compensation benefits
“would work a clear circumvention of the exclusive remedy provision of the
Workmen’s Compensation Law.” Id. at 742, 746.

¶16 We then applied Wasley’s reasoning to the facts in Walstrom. We
stated that if “a worker could not maintain a tort action against a corporate officer
of an employer” because “an injured worker recovering worker’s compensation
benefits directly from an employer, while at the same time recovering in tort
indirectly against the same employer” “would be a clear circumvention of the
exclusive remedy provision,” then that reasoning must necessarily apply to
worker’s compensation carriers as well. Walstrom, 239 Wis. 2d 473, ¶¶9, 13
(citing Wasley, 50 Wis. 2d at 746). We stated explicitly that “[i]f the exclusive
remedy doctrine applies to agents and representatives of the employer, then to be
consistent it must also apply to agents and representatives of the worker’s
compensation carrier.” Id., ¶13. Thus, since it was undisputed that Gallagher was
an agent of American Zurich, Gallagher was also immune under the exclusive
remedy provision. Id., ¶¶1, 11.

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¶17 Walstrom is on point and represents binding precedent on the issue
of law presented in this appeal. See Cook v. Cook, 208 Wis. 2d 166, 185-90, 560
N.W.2d 246 (1997) (the court of appeals is bound by published decisions of the
court of appeals). Here, based on the allegations in the complaint and the
management agreement, Applied Underwriters was acting in the same capacity as
Gallagher in Walstrom—as an agent of the worker’s compensation insurer
contracted “to administer claims under the worker’s compensation policy.”
See Walstrom, 239 Wis. 2d 473, ¶3. Thus, pursuant to Walstrom, Applied
Underwriters is covered by the exclusive remedy provision of WIS. STAT.
§ 102.03(2) as an agent of Continental. Accordingly, our supreme court’s holding
in Graef is the law of the case as to Applied Underwriters as well, and Applied
Underwriters is therefore entitled to dismissal of this suit.

¶18 We are not persuaded by Graef’s arguments that this court’s decision
in Walstrom is inapplicable. First, Graef argues that Walstrom was wrongly
decided and that its “rationale is fundamentally—and factually—flawed.”
According to Graef, “Walstrom’s very foundation—its presupposition that the
worker’s compensation insurer will pay twice, once in worker’s compensation and
again for the added injury in tort—is simply wrong: it receives reimbursement
from the tortfeasor for damages caused.” He further claims that WIS. STAT.
§ 102.29(1) “goes unaddressed and undiscussed in Walstrom, and this [c]ourt is
not bound by precedent it issues when arguments never presented there compel a
different conclusion when raised here.”7 See Wieting Funeral Home of Chilton,

7
As to Graef’s arguments regarding WIS. STAT. § 102.29(1), as we discuss below, we do
not read § 102.29(1) in the same manner that Graef presents, see infra ¶¶23-26, and, therefore, we
are not persuaded that Walstrom is inapplicable to this case based on that statute.

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Inc. v. Meridian Mut. Ins. Co., 2004 WI App 218, ¶14, 277 Wis. 2d 274, 690
N.W.2d 442.

¶19 Given our supreme court’s holding in Cook, Graef’s argument that
Walstrom was wrongly decided is best presented at a different time before a
different court. See Cook, 208 Wis. 2d at 189-90 (“[O]nly the supreme
court … has the power to overrule, modify or withdraw language from a published
opinion of the court of appeals.”). Regardless, we are not persuaded that
Walstrom was wrongly decided.

¶20 The grand bargain established by the Act is not disturbed by
extending immunity to agents and representatives of employers and worker’s
compensation insurers because the employer or the insurer remains liable. In
other words, Graef has a claim under the Act for the alleged denial of his
medication, which our supreme court affirmed in Graef. As Applied Underwriters
argued, “Graef is fully compensated under worker’s compensation whether that
claim is paid by Continental or its agent. Graef did not sustain any additional
damages based on the fact that his claim was allegedly denied by Continental’s
agent and not Continental itself.” We agree with Applied Underwriters that a
contrary decision in either Walstrom or Wasley would have undermined the grand
bargain by creating a loophole that would allow worker’s compensation claims

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against the insurer but then also allow tort recovery against agents of the insurer
involved in handling worker’s compensation claims.8

¶21 Second, to the extent that Graef asserts that Walstrom’s holding does
not apply based on factual differences between these cases—i.e. Walstrom
involved “delayed surgery and exacerbated an original, ongoing neck injury,
[while] Graef experienced new injuries to his face and head, parts of his body
never injured before”—we disagree. Any factual differences between the
respective employees’ injuries would have no impact on our interpretation of the
exclusive remedy provision in WIS. STAT. § 102.03(2), which requires only that

8
Graef also challenges the applicability of Wasley v. Kosmatka, 50 Wis. 2d 738, 184
N.W.2d 821 (1971), on several bases. First, he claims that Wasley is inapplicable because the
court did not interpret either WIS. STAT. §§ 102.03(2) or 102.29. However, the Wasley decision
very clearly referenced both statutes, and the court further acknowledged that “the workmen’s
compensation statute contemplates that an employee can bring [a] third-party-negligence action,”
but the court noted that the question on appeal was “whether in suing a corporate officer in his
capacity as a co[-]employee, the plaintiff can impose on [a] defendant the increased standard of
care that the safe[]place law imposes on an ‘employer.’” See Wasley, 50 Wis. 2d at 742 &
nn.2-3. Thus, the question on appeal did not require the court to interpret §§ 102.03(2) or 102.29.

Second, Graef notes that “Wasley then dealt with immunity for corporate officers in their
capacity as co-employees, something WIS. STAT. § 102.03(2) expressly confers.” As Applied
Underwriters aptly observes, however, “when Wasley was decided in 1971, there was no statutory
immunity for co-employees. This was not added until 1977.” See Jenkins v. Sabourin, 104
Wis. 2d 309, 311 n.2, 311 N.W.2d 600 (1981). This difference in the statute is why, when
Wasley was decided, corporate officers were immune under § 102.03(2) when acting as
representatives of the employer but not immune when acting as a co-employee, and it is why
Wasley recognized that the president could be sued in tort as a “third party” under § 102.29.
See Wasley, 50 Wis. 2d at 742 & nn.2-3.

Finally, Graef argues that “neither Continental nor Graef’s employer compensate Applied
[Underwriters] for tort liability directly or indirectly[,] and [therefore] Wasley adds nothing to this
case.” Graef’s argument is not persuasive. Walstrom v. Gallagher Bassett Services, Inc., 2000
WI App 247, 239 Wis. 2d 473, 620 N.W.2d 223, cited Wasley for the proposition that our “case
law has interpreted WIS. STAT. § 102.03 as being the exclusive remedy against not only
employers, but agents of employers as well.” Walstrom, 239 Wis. 2d 473, ¶9. We then stated
that the same rules “should be applied to worker’s compensation carriers [as] to employers.” Id.,
¶¶12-13. Thus, Graef’s argument appears to challenge this court’s reliance on Wasley in
Walstrom. Again, this is an argument for a different court.

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the “conditions” in § 102.03(1) “exist.” As noted, our supreme court already
determined in Graef that “Graef’s tort action consists of allegations that, if proven,
would satisfy the conditions for worker’s compensation liability.” Graef, 397
Wis. 2d 75, ¶¶19, 21. Accordingly, any factual differences between Walstrom and
this case are inconsequential.

¶22 Finally, Graef argues that the holding in Walstrom does not apply
here because Applied Underwriters was not an “adjusting firm” like Gallagher was
in Walstrom. Instead, Graef claims that Applied Underwriters was acting as an
“insurer” because “doing an insurance business” under WIS. STAT. § 618.02(2)
includes “investigating and adjusting claims or assisting others in doing so.” We
disagree. Applied Underwriters and Gallagher were serving in the exact same role
for their respective worker’s compensation insurers: determining whether to
authorize payment of worker’s compensation benefits. Regardless of what title
Graef attempts to place on Applied Underwriters, the holding in Walstrom was
based not on Gallagher’s title, but on whether it was acting as a representative or
agent of an immune insurer.

II. WIS. STAT. § 102.29(1)

¶23 Graef next argues that WIS. STAT. § 102.29(1) “confirms that the
[l]egislature authorized this suit and never intended to immunize Applied
Underwriters.” Section 102.29(1)(a) provides, in pertinent part:

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 ….

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(Emphasis added.) Graef claims that “tort claims exist against every other party
besides the employer, its employees, and its worker’s compensation insurer,” and
therefore Applied Underwriters is a “3rd party” under the statute’s terms. In other
words, according to Graef, § 102.29 “informs what [WIS. STAT.] § 102.03(2)
means”: “Since § 102.03(2) never mentions agents, ‘any other party’ includes
them.”

¶24 We disagree with Graef’s reading of WIS. STAT. § 102.29. First,
nothing in § 102.29 explicitly states that agents or representatives of worker’s
compensation insurers are a “3rd party” or “any other party.” Second, Graef cites
no legal authority, beyond some general statutory interpretation principles, for the
proposition that because WIS. STAT. § 102.03(2) does not explicitly include agents
or representatives, § 102.29(1) must include them.

¶25 Next, Graef cites Candler v. Hardware Dealers Mutual Insurance
Co., 57 Wis. 2d 85, 91, 203 N.W.2d 659 (1973), for the proposition that “‘any
other parties’ are those against whom ‘no liability could be entailed under the
Act.’” He asserts that Applied Underwriters “modifies the term ‘any other party’
in WIS. STAT. § 102.29 to read ‘any other party except those dispensing
medication for the worker’s compensation insurer.’” According to Graef,
“[n]othing in [WIS. STAT. ch.] 102 or elsewhere justifies such a radical statutory
revision.” We disagree.

¶26 Graef’s argument is based on the faulty premise that WIS. STAT.
§ 102.03(2) does not include agents or representatives of the listed entities. As
noted above, both this court and our supreme court have interpreted § 102.03(2) as
extending immunity beyond the specific entities listed to include their agents and
representatives. See Walstrom, 239 Wis. 2d 473, ¶13; Wasley, 50 Wis. 2d at 746.

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Without belaboring the point, because Graef determined that “Graef’s tort action
consists of allegations that, if proven, would satisfy the conditions for worker’s
compensation liability,” Graef, 397 Wis. 2d 75, ¶21, there could be liability under
the Act against Continental and Applied Underwriters. WISCONSIN STAT.
§ 102.29 simply preserves causes of action that are not barred under § 102.03(2).
Here, immunity under § 102.03(2) applies; therefore § 102.29 does not advance
Graef’s argument.

III. Aslakson

¶27 Graef next argues that Walstrom and Wasley were implicitly
overruled by our supreme court’s decision in Aslakson v. Gallagher Bassett
Services, Inc., 2007 WI 39, 300 Wis. 2d 92, 729 N.W.2d 712. In Aslakson, the
court allowed a bad faith tort claim against Gallagher, which had been retained by
the Department of Workforce Development (DWD) as the third-party
administrator of the Uninsured Employers Fund (hereinafter, the Fund)—meaning
that Gallagher was an agent of the DWD. Id., ¶¶3-4, 6-7, 10; see also WIS. STAT.
§ 102.80. According to our supreme court, WIS. STAT. § 102.18(1)(bp)
“constitutes the ‘exclusive remedy’ for the bad faith conduct of an employer or an
insurance carrier,”9 but that statute “does not govern the conduct of the [DWD] or

9
The supreme court referenced its prior decision in Coleman v. American Universal
Insurance Co., 86 Wis. 2d 615, 273 N.W.2d 220 (1979), where the court concluded that a
worker’s bad faith claim, based on the denial and delay of worker’s compensation payments,
against the worker’s compensation insurer and its adjusting company was separate and distinct
from the job-related injury and was not addressed by the Act. Id. at 618-19, 623. According to
the court in Aslakson, “[t]he legislature was apparently unhappy with the Coleman decision and
revised the statutes to respond to Coleman” by creating “WIS. STAT. § 102.18(1)(bp) in 1981 that
specifically and explicitly provided an ‘exclusive remedy’ in the [Act] for bad faith claims against
employers and their insurers.” Aslakson v. Gallagher Bassett Servs., Inc., 2007 WI 39, ¶75, 300
Wis. 2d 92, 729 N.W.2d 712.

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its agent and does not impose any penalty on the [DWD] or its agent for bad faith
conduct.” Aslakson, 300 Wis. 2d 92, ¶¶45, 66. Accordingly, the Act “does not
provide any remedy to the plaintiff for his bad faith claim against [Gallagher] for
its alleged bad faith conduct in processing a worker’s compensation claim, let
alone an exclusive remedy.” Id., ¶¶66-67, 90.

¶28 We agree with Applied Underwriters that the holding in Aslakson
does not apply here. As Applied Underwriters explained,

While the Act did not provide any remedy for the bad faith
conduct of the Fund or [DWD’s] agent causing separate
and distinct bad faith damages [in Aslakson], the Act does
provide a remedy to Graef for what the [s]upreme [c]ourt
held was an exacerbation of his worker’s compensation
injury caused by the refusal to authorize his medication
refill.

In other words, because WIS. STAT. § 102.18(1)(bp) did not govern the Fund or the
DWD, as they were not an “employer or insurance carrier,” the statute likewise
did not apply to Gallagher as the DWD’s agent and the Fund’s administrator.
Here, Applied Underwriters is not the third-party administrator of the Fund or an
agent of the DWD. It is an agent or representative of a worker’s compensation
insurer, which is entitled to immunity under the exclusive remedy provision.
See WIS. STAT. § 102.03(2); Walstrom, 239 Wis. 2d 473, ¶¶1, 13.

¶29 Further, in Aslakson, our supreme court did not address or even cite
Walstrom or Wasley, let alone overrule those cases. Presumably, our supreme
court did not cite Walstrom or Wasley because the issues are not as aligned as
Graef suggests. The basis for Graef’s argument that Aslakson controls here is that
the court in that case “recognized a tort claim against the same worker’s
compensation adjusting firm when no statute forbade the suit, just as no statute
forbids it here.” But that reasoning is persuasive only if we agree that WIS. STAT.

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No. 2023AP420

§ 102.03(2) does not apply to agents of a worker’s compensation insurer such that
the statute does not forbid the suit, which we do not.10 The Aslakson court
presumably did not discuss Walstrom and Wasley because those cases addressed
situations where § 102.03(2) did apply to the insurer or employer, respectively, but
WIS. STAT. § 102.18(1)(bp) did not apply to the Fund or the DWD in Aslakson.
Thus, the holding in Aslakson does not apply here.

IV. Graef’s Additional Arguments

a. Independent Affiliated Corporation

¶30 Graef’s remaining arguments are also unpersuasive. First, Graef
argues that “Applied Underwriters, as an affiliated corporation of Continental
Indemnity (they shared a common ownership), owed a tort duty to employees of a
subsidiary or affiliate when it voluntarily assumed it.”11 In support of his position,
he cites Miller v. Bristol-Myers Co., 168 Wis. 2d 863, 485 N.W.2d 31 (1992).

10
Graef also argues that “[w]hile Walstrom holds that an adjusting firm working for a
worker’s compensation insurer might be immune (Aslakson contradicts that), Applied
Underwriters was no adjusting firm. It was an insurer” because WIS. STAT. § 618.02(2) “defines
doing an insurance business as investigating and adjusting claims or assisting others in doing so,
precisely what Applied Underwriters did here.” Graef asserts that Aslakson and Walstrom
involved adjusting firms, not insurers. We disagree that Applied Underwriters served in a
different role from Gallagher in Walstrom. In Walstrom, Gallagher was an adjusting agent,
which “administer[ed] claims under the worker’s compensation policy” for the worker’s
compensation insurer. Walstrom, 239 Wis. 2d 473, ¶3. In this case, based on the complaint,
Applied Underwriters served in an indistinguishable capacity for Continental, allegedly
determining whether to authorize payment of worker’s compensation benefits. In Walstrom, it
was not the title of the entity that was important but whether it was acting as the representative or
agent of an immune worker’s compensation insurer. See id., ¶¶8-12. Like in Walstrom, Graef
does not make a serious argument that Applied Underwriters was not an agent or a representative
of Continental. See id., ¶11.
11
As an independent reason to reject Graef’s argument here, we note that if Graef’s
proposition were true, Applied Underwriters would owe a tort duty to employees of Continental;
however, Graef was not an employee of Continental.

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No. 2023AP420

There, the court concluded that a parent corporation lacked tort immunity under
the Act when an employee of a subsidiary sued it for causing a fire that injured the
employee. Id. at 871-72. The court in Walstrom also discussed Miller in its
decision. Importantly, it specifically recognized that the “representative capacity
doctrine provides immunity to those who act in their capacity as a representative
for the employer from third party suits.” Walstrom, 239 Wis. 2d 473, ¶10
(quoting Miller, 168 Wis. 2d at 879). The Walstrom court further explained that
the Miller “court refused to apply the doctrine to the parent corporation of the
subsidiary employer,” observing “that the ‘entity claiming immunity must owe a
duty to the employer and have acted pursuant to that duty’” and “[t]he parent
corporation [in Miller] did not.” Walstrom, 239 Wis. 2d 473, ¶10 (quoting Miller,
168 Wis. 2d at 880).

¶31 Graef states that “Miller expressly holds that Applied Underwriters
enjoys no immunity from tort claims here.” Again, we disagree. Miller’s holding
was not so expansive. Unlike Applied Underwriters, the parent corporation in
Miller was not acting on behalf of the subsidiary, at the subsidiary’s request, or
making decisions on behalf of the subsidiary. Miller, 168 Wis. 2d at 880-81.
Miller does not expansively hold that a company can never act as an agent of an
affiliated company. Here, it is clear that Applied Underwriters assumed a duty to
Continental when it executed the management agreement, which fact was missing
in Miller.

¶32 In his reply brief, Graef argues that under basic Wisconsin law,
Applied Underwriters assumed a tort duty to Graef when it contracted to provide
him medication and “[t]his contract, which obligated Applied [Underwriters] to
safeguard Graef and others, imposed responsibility to avoid mistakes increasing
the risk of harm and left it liable in tort to those it hurt.” In support of his position,

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No. 2023AP420

Graef quotes the management agreement for the proposition that “Applied
[Underwriters] agreed to dispense Graef’s medications with ‘care, prudence and
diligence.’”

¶33 First, as referenced above, see supra note 11, Applied Underwriters’
contract was with Continental, not with Graef. Second, while that contract did
provide that Applied Underwriters would “perform the services under this
Agreement with the same standards of care, prudence and diligence which it
exercises in the performance of its own responsibilities,” the contract also states
that “the performance of the duties hereunder … will always be subject to the
direction and supervision of [Continental’s] Board of Directors, its Executive and
Investment Committees and the instruction of appropriate officers of” Continental
and that Continental “will retain the ultimate responsibility for all adjustments and
claim payments made on its behalf.” (Emphasis added.) Thus, the contract clearly
states that Continental retained all responsibility for any actions Applied
Underwriters took under the Act.

¶34 Third, even if we assume that Applied Underwriters owed Graef a
tort duty, we would have to also assume that Applied Underwriters owed Graef the
same tort duty that Continental owed Graef because Applied Underwriters could
not have acted as it allegedly did unless it did so as Continental’s agent under the
Act. Thus, if WIS. STAT. § 102.03(2) prevents a tort claim against Continental,
then it should also apply to Applied Underwriters. The same duty results in the
same immunity: Graef is only entitled to the same claims against Applied
Underwriters as he would be against Continental. A contrary result would
undermine the Act’s grand bargain.

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No. 2023AP420

¶35 Graef also cites Couillard v. Van Ess, 152 Wis. 2d 62, 447 N.W.2d
391 (Ct. App. 1989). There, Couillard was conducting demolition when he
stepped onto a plastic-covered hole and fell eleven feet, resulting in his death two
days later. Id. at 65. Couillard’s employer paid worker’s compensation benefits
to Couillard’s widow and his estate, but his widow also brought a third-party
liability action against the Van Esses as owners-lessors of the factory premises for
common-law negligence and a violation of the safe place statute for failure to
cover or guard the hole. Id. We refused to apply the exclusive remedy provision
to the Van Esses, stating that “it is beyond dispute that a corporation is a separate
entity from those who own it,” and, “[t]hus, the legal distinction between the
corporation/employer and the Van Ess partnership that leased the factory to the
corporation eliminates the Van Esses’ immunity as individuals.” Id. at 66.

¶36 Graef contends that Couillard stands for the proposition that
“affiliated companies are not vicariously responsible for each other’s misconduct,
so if affiliates share no liabilities for the other’s mistakes, they share no
immunities from tort liability either.” He claims that “Applied Underwriters and
Continental Indemnity are affiliated, but independent, companies. If Applied
Underwriters carries no liability under [WIS. STAT.] ch. 102, it enjoys no immunity
there either, just as Couillard holds.”

¶37 Again, we conclude that Couillard is inapplicable. Although
Applied Underwriters admits that it and Continental “are affiliated corporations,”
it explained that it “is not arguing that it is immune because it is so closely related
to Continental so as to be indistinguishable.” Applied Underwriters claims it is
immune because it acted as an agent of Continental and “[w]hether the companies
are related is completely irrelevant.” Couillard did not address immunity for

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No. 2023AP420

agents of employers and worker’s compensation insurers; thus, it does not dictate
a specific result here.

¶38 Finally, Graef claims that like the parties in Miller and Couillard,
Applied Underwriters should not benefit from the representative capacity doctrine
because “[t]he doctrine actually only protects those who owe employees no duty.”
See Miller, 168 Wis. 2d at 880 (“[T]he basis for granting immunity under this
doctrine is that the person is granted immunity from suits by employees because
such person owes a duty to the employer, not the employee.”). We believe the
representative capacity doctrine is applicable here because, for the reasons stated
above, we disagree that Applied Underwriters had a separate and distinct duty to
Graef under its contract with Continental. Applied Underwriters was not an
independent affiliated corporation.

b. Medical Malpractice

¶39 Next, Graef suggests that a “guiding principle is that those like
Applied Underwriters who further injure already vulnerable workers by providing
faulty medical care answer in tort for it.” In essence, Graef asserts that “injuries
aggravated by medical malpractice entitle employees to additional compensation
under the Act, but nothing relieves careless physicians from civil liability”;
therefore, “[i]t makes no sense to immunize Applied Underwriters for making
similar misjudgments that interfere with sound and successful medical treatment.”
Graef argues that Applied Underwriters’ “mistakes produced entirely new injuries,
and none of those mistakes can be attributed to the employer when Graef left its
employment years before.”

¶40 Graef’s position is not supported by the law. First, Applied
Underwriters did not provide medical care; thus, the reasons supporting liability

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No. 2023AP420

for medical malpractice claims simply do not apply. Second, our supreme court’s
decision in Graef forecloses Graef’s argument, as the court explained that “the
legislature indicated that any denial-of-benefits claim, whether negligent or in bad
faith, must be brought as a worker’s compensation claim.” Graef, 397 Wis. 2d 75,
¶23 (citing WIS. STAT. § 102.18(1)(bp)). Graef attempts to distance this case from
worker’s compensation and maneuver it outside the Act by claiming that Applied
Underwriters’ alleged “mistakes” produced “new injuries” that could not be
“attributed to [his] employer,” but Applied Underwriters could not have made this
alleged mistake—the refusal to authorize benefits—unless it was acting on behalf
of and under the authority of Continental. Graef concluded that Graef’s
“complaint presents an unbroken chain of events” from the workplace injury to his
self-inflicted gunshot wound and that the gunshot wound “grew out of his original
workplace injury, because Continental failed to authorize and pay for the
medication”; therefore, Graef’s “allegations …, if proven, would satisfy the
conditions for worker’s compensation liability.” Graef, 397 Wis. 2d 75, ¶¶15, 19,
21.

c. Public Policy

¶41 Graef’s next argument is that public policy factors do not require
dismissal of this suit and that this suit actually promotes sound public policy.12

12
In Wisconsin, even if a claim meets all the requisite elements of a cause of action, a
court may conclude, “as a matter of law, that considerations of public policy require dismissal of
the claim,” Bowen v. Lumbermens Mut. Cas. Co., 183 Wis. 2d 627, 654, 517 N.W.2d 432
(1994), because “negligence and liability are distinct concepts,” Hoida, Inc. v. M&I Midstate
Bank, 2006 WI 69, ¶25, 291 Wis. 2d 283, 717 N.W.2d 17 (citation omitted). “The legislature
also establishes public policy for the state through the statutes it enacts, and we are limited ‘to
applying the policy the legislature has chosen to enact, and may not impose [our] own policy
choices.’” Hoida, 291 Wis. 2d 283, ¶24 (alteration in original; citation omitted). According to
our supreme court, “[t]he public policy reasons that may preclude liability include:”

(continued)

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No. 2023AP420

The circuit court did not address the six public policy factors in its order granting
Applied Underwriters’ motion to dismiss because its decision relied on WIS. STAT.
§ 102.03(2) and case law to determine that the Act provided Graef’s exclusive
remedy against Applied Underwriters. It appears, based on Graef’s arguments on
appeal, that he is arguing public policy factors in the alternative and in response to
Applied Underwriters’ alternative arguments before the circuit court—that the
first, third, and sixth public policy factors warrant dismissal of Graef’s claims.
Given our conclusion above and our supreme court’s decision in Graef, we deem
it unnecessary to address the parties’ public policy arguments. See State v.
Castillo, 213 Wis. 2d 488, 492, 570 N.W.2d 44 (1997) (“An appellate court should
decide cases on the narrowest possible grounds.”).

d. Unlicensed Status

¶42 Graef’s final argument is that Applied Underwriters’ alleged
“unlicensed status deprives it of immunity.” According to Graef, the specific role
Applied Underwriters played in this case is “opaque” as to whether it “served as a
claims adjusting firm, a genuine insurer, or in some other capacity.” Nevertheless,
Graef claims that Applied Underwriters was required to obtain a certificate of
authority in Wisconsin to “do an insurance business,” which Applied Underwriters

(1) the injury is too remote from the negligence, (2) the injury is
too wholly out of proportion to the tortfeasor’s culpability, (3) in
retrospect it appears too highly extraordinary that the negligence
should have resulted in the harm, (4) allowing recovery would
place too unreasonable a burden on the tortfeasor, (5) allowing
recovery would be too likely to open the way for fraudulent
claims, and (6) allowing recovery would enter a field that has no
sensible or just stopping point.

Gritzner v. Michael R., 2000 WI 68, ¶27, 235 Wis. 2d 781, 611 N.W.2d 906.

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No. 2023AP420

did not do. See WIS. STAT. §§ 600.03(27) (defining “[i]nsurer” as “any person or
association of persons doing an insurance business as a principal” or “any person
purporting or intending to do an insurance business as a principal on his or her
own account”); 610.1113; 618.02(2) (defining “[d]oing an insurance business” as,
for example, “[i]nvestigating, settling, adjusting or litigating claims”); see also
supra note 10. Graef appears to suggest that we should apply the clean-hands
doctrine.14 Essentially, Graef urges us to punish Applied Underwriters for
allegedly not having the proper insurance licensing with the State of Wisconsin by
withholding WIS. STAT. § 102.03(2) immunity in the context of this lawsuit.

¶43 In response, Applied Underwriters argues that Graef’s argument fails
because Applied Underwriters “was not required to obtain a certificate of

13
WISCONSIN STAT. § 610.11 provides:

No person may do an insurance business as defined in [WIS.
STAT. §] 618.02(2) on the person’s own account in this state,
either in person, or through agents or brokers, or through the
mail or any other method of communication, except:

(1) An insurer authorized to do business in this state, within
the limits of its certificate of authority; or

(2) An insurer doing business under [WIS. STAT. §] 618.41.

14
We previously explained that

[u]nder the clean-hands doctrine, a party who “has been guilty of
substantial misconduct” of the matters in litigation such that the
party “has in some measure affected the equitable relations
subsisting between the two parties and arising out of the
transaction shall not be afforded relief when he [or she] comes
into court.”

State v. Kaczmarski, 2009 WI App 117, ¶15, 320 Wis. 2d 811, 772 N.W.2d 702 (alteration in
original; citation omitted).

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No. 2023AP420

authority, the argument regarding unrelated issues is a red herring, and Graef fails
to present any coherent legal argument why any of it should affect the application
of immunity under [WIS. STAT. §] 102.03(2).” According to Applied
Underwriters, “Graef’s argument rests on a misreading of the statute” because
“Applied Underwriters was clearly not doing insurance business on its own
account but was assisting Continental, which issued the insurance policy and had
the statutory obligation to pay benefits under the Act.” See WIS. STAT. § 610.11.

¶44 We conclude that whether Applied Underwriters was properly
licensed or not is completely irrelevant to the issue on appeal. Graef does not
allege that Continental is not a licensed worker’s compensation insurance carrier,
and he does not dispute Applied Underwriters’ assertion that “Continental
indisputably has a certificate of insurance and disclosed to the Office of the
Commissioner of Insurance (OCI) Applied[ Underwriters]’s role as providing
certain management, claims processing, premium processing, and data processing
services at actual cost in Continental’s Annual Statement filed with the OCI.” The
key question, then, for the purpose of the motion to dismiss is whether Applied
Underwriters was acting as Continental’s agent or representative when it was
allegedly negligent in failing to approve payment for a refill of Graef’s
antidepressant medication.

¶45 Here, it is clear that Applied Underwriters had a contract with
Continental to provide certain services, including adjusting claims; thus, Applied
Underwriters was acting as an agent of Continental when it allegedly denied
Graef’s antidepressant refill. Graef has not presented any legal authority
withholding WIS. STAT. § 102.03(2) immunity based on an agent’s alleged
violation of WIS. STAT. § 610.11. Further, we are not persuaded that whether a
federal court determined that a “Reinsurance Participation Agreement” executed

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No. 2023AP420

in a separate case, with separate parties, and based on a different state’s legal code
was an insurance contract, see Minnieland Priv. Day Sch., Inc. v. Applied
Underwriters Captive Risk Assurance Co., 913 F.3d 409, 411, 422 (4th Cir.
2019), or whether Applied Underwriters has an alleged “pattern nationwide” of
“flout[ing] insurance regulations,” have any influence over, let alone control of,
our decision here.

¶46 To the extent that Graef attempts to make an argument under the
clean-hands doctrine, we conclude that this argument is entirely undeveloped.
See State v. Pettit, 171 Wis. 2d 627, 646-47, 492 N.W.2d 633 (Ct. App. 1992) (we
need not address undeveloped arguments). Graef merely argues that “[h]e who
seeks equity must do equity” and summarizes Applied Underwriters’ alleged
wrongdoing. However, as Applied Underwriters noted, it is not seeking equitable
relief. Graef’s claim that Applied Underwriters is seeking equitable relief by
asking the court to “immunize it from all liability despite the fact that no statute
does so” is not persuasive given our conclusions above.

¶47 Further, Graef does not argue how the clean-hands doctrine would
otherwise apply here. It appears, instead, that the conduct that Graef asserts
supports the application of the clean-hands doctrine—namely, Applied
Underwriter’s failure to obtain a certificate of authority to do an insurance
business in Wisconsin—is not actually related to the harm from which Graef seeks
relief. Further, although Graef cites City of Oak Creek v. DNR, 185 Wis. 2d 424,
451, 518 N.W.2d 276 (Ct. App. 1994), for the proposition that “Wisconsin courts
refuse to reward litigants who have engaged in wrongdoing without appropriate
licensure or permitting,” that case is materially factually and legally
distinguishable, and Graef does not explain how the court’s holding there would
apply in this case.

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No. 2023AP420

¶48 In summary, we conclude that the Act’s exclusive remedy provision
prohibits Graef from maintaining this tort action against Applied Underwriters.
Therefore, Graef cannot recover under any circumstances, and the circuit court
properly dismissed the complaint in this case.

By the Court.—Order affirmed.

Not recommended for publication in the official reports.

27