Edstrom Industries, Inc. v. Companion Life Insurance

POSNER, Circuit Judge.

Edstrom, a manufacturing company that is the plaintiff in this diversity suit, which is governed by Wisconsin law, sponsors a group health insurance plan for its employees and their dependents. It pays claims under the plan out of its own pocket — up to $65,000. Above that, an insurance company, the defendant, Companion, which has sold Edstrom what is called a “stop loss” insurance policy, pays. As explained in Jerry S. Rosenbloom, The Handbook of Employee Benefits: Design, Funding and Administration, 98 (2005), “If an organization utilizes a cost-plus or self-insured…