The Kyllonen Gap: Why Wisconsin’s Expert Witness Disqualification Statute Should Reach Contingency-Fee Public Adjusters and Contractors

By: Jacob A. Sosnay, Meissner Tierney Fisher & Nichols S.C.

I. Introduction

Picture the following. A public adjuster takes the stand in a first-party property insurance dispute. He testifies that the insured’s roof was destroyed by hail and that the carrier owes the cost of a complete replacement. He is, he explains, testifying for free, not being compensated a dime for his time in court.

At his deposition, however, the public adjuster confirmed that his firm has a contract with the insured entitling it to 20 percent of whatever the insured recovers on the claim. But, the public adjuster explained, the contract with the insured is silent regarding the substance of the testimony he will provide during the trial. If the matter goes to trial and the jury returns a verdict in the insured’s favor, the public adjuster pockets a substantial sum. If the carrier prevails, the public adjuster gets nothing.

This witness has a financial stake in the outcome, yet he stands before the jury as an objective expert. Isn’t that exactly the problem Wis. Stat. § 907.02(2) was enacted to solve, since it bars expert testimony where the witness’s compensation is contingent on a specific outcome of the case? Or does his contract’s silence about trial testimony insulate him from the statute’s reach? 

After the Wisconsin Court of Appeals’ decision of first impression in Kyllonen v. Artisan & Truckers Casualty Co.,[1] circuit courts are reaching inconsistent answers to that question. This article argues that the correct answer is straightforward: The plain text of Wis. Stat. § 907.02(2) and Kyllonen both compel the exclusion of contingency-fee public adjusters and contractors who testify as expert witnesses in insurance coverage litigation. This is because the structural reality of their arrangements is the opposite of what the Kyllonen court found tolerable. Any other reading renders the statute a nullity.

II. The Statute

Wisconsin Stat. § 907.02(2), enacted in 2011 as part of Wisconsin’s tort reform legislation,[2] provides:

Notwithstanding sub. (1), the testimony of an expert witness may not be admitted if the expert witness is entitled to receive any compensation contingent on the outcome of any claim or case with respect to which the testimony is being offered. 

As the text of the statute indicates by the words “may not be admitted,” the statute is mandatory, not discretionary.[3] When its conditions are satisfied, exclusion is required as a matter of law. And the legislature’s use of the word “any” before “compensation” signals a broad reach.[4] The disqualification is not limited to formal expert retention agreements or to compensation explicitly labeled as payment for trial testimony. 

The purpose of the statute is equally clear. Expert witnesses who carry a financial stake in the outcome of a case present a category of bias so fundamental that cross-examination—the normal tool for addressing witness partiality—is insufficient to cure it. The legislature understandably determined that the jury should not be exposed to such testimony at all.

For nearly 15 years after enactment, no Wisconsin appellate court interpreted the statute. Courts and practitioners were largely left to work out its application on their own, and, as one might expect, the results were uneven. That should have changed in December 2025, when the court of appeals issued its decision in Kyllonen,[5] addressing the meaning and application of the statute. Unfortunately, as will be discussed below, Kyllonen has not prevented uneven application in the circuit courts.

III. Kyllonen: What It Held, and Why

Andrew Kyllonen was injured in an automobile-pedestrian accident.[6] His counsel referred him to Aspen Orthopedics for treatment.[7] Prior to his first appointment, Kyllonen’s counsel sent Aspen a “letter of protection,” which stated:

We represent Andrew Kyllonen in regards to injuries he sustained in an accident of October 10, 2017. It is our understanding he is receiving treatment from your office relating to that accident. We agree to protect any outstanding liens you may have for medical bills relating to this motor vehicle accident from any recovery obtained on Mr. Kyllonen’s behalf. Your cooperation is greatly appreciated.[8]

Kyllonen had no health insurance at the time.[9] As such, the letter functioned as a payment guarantee pending the outcome of his lawsuit. 

When Kyllonen sought to call his treating physicians as expert witnesses at trial, the defense moved to exclude them under Wis. Stat. § 907.02(2).[10] The circuit court granted the motion, reasoning that the statute’s reference to “any compensation” was broad enough to encompass the outstanding medical bills whose collection was secured by the letter of protection.[11] Because the treating physicians would practically benefit from a favorable verdict—that is, the verdict would improve Kyllonen’s ability to satisfy the lien—the court concluded their compensation was “contingent on the outcome.”[12]

The court of appeals reversed. Writing for a unanimous panel, Judge Grogan adopted what the court described as the “only reasonable interpretation of the statute.”[13] According to the court, Wis. Stat. § 907.02(2) precludes an expert witness from testifying where the witness’s compensation is: “(1) specifically tied to providing testimony; and (2) dependent on the party proponent’s ultimate success in the matter.”[14] More precisely, the statute bars testimony if the witness “will only be paid for his testimony if the party proponent obtains a positive (or otherwise favorable) outcome in the lawsuit.”[15]

The Kyllonen court grounded this narrowing construction in the statute’s own qualifying language – namely, that the “compensation” must be “contingent on the outcome of any claim or case with respect to which the testimony is being offered.”[16] Reading “any compensation” in isolation, the court explained, would sweep in the compensation of any service provider with outstanding bills.[17] Every treating physician, every contractor, every engineer who has done pre-litigation work and has not yet been fully paid would be covered. According to the court, the legislature could not have intended a result that would exclude the testimony of virtually every service provider who has dealt with a party before a suit was filed.[18]

Critically, the Kyllonen court identified the specific feature that distinguished the treating physicians from the problem the statute targets. The obligation to pay the doctors’ bills existed independent of the litigation. The physicians provided treatment; their bills accrued; Kyllonen was obligated to pay those bills regardless of what the jury decided.[19] A verdict in the insurer’s favor would not have erased the physicians’ right to collect.[20] The letter of protection did not extinguish Kyllonen’s liability if the case was unsuccessful.[21] It merely promised to protect the lien from any recovery that materialized. Moreover, the letter of protection did not state that Aspen and/or the physicians would be paid only if Kyllonen succeeded at trial, but rather that counsel would “protect any outstanding liens . . . for medical bills relating to this motor vehicle accident from any recovery obtained on Mr. Kyllonen’s behalf.”[22] As the court put it, “the fact that Kyllonen’s success at trial may ultimately have impacted his ability to pay his outstanding medical bills did not transform his financial obligations into contingency payments or contingent compensation within the meaning of Wis. Stat. § 907.02(2).”[23]

In short, the treating physicians could truthfully say, “We would be owed these amounts even if the plaintiff lost.” And it is that sentence, and its structural implications, that is everything. 

IV. The Public Adjuster and Contractor Problem 

The contingency-fee public adjuster occupies a fundamentally different structural position from a treating physician with outstanding medical bills. So does the contingency-fee roofing contractor who signs an insured before inspecting the roof. 

Consider the typical public adjuster arrangement. The public adjuster signs a contract entitling its firm to a percentage, commonly 10 to 20 percent, of whatever the insured recovers on the insurance claim. The contract specifies that the fee is due and payable upon the insurance company making any full or partial resolution or payment. If the carrier pays nothing, the firm receives nothing. Not a discounted fee. Not deferred compensation for services already rendered. Nothing.

The typical contractor contingency agreement is structured the same way. The insured authorizes the contractor to contact the insurance company on the insured’s behalf. The contractor’s payment is defined as the insurance proceeds: When the price from the insurance company is determined, that becomes the final contract price. No insurance proceeds, no payment.

Unlike the physiciansin Kyllonen, neither the public adjuster nor the contractor can earnestly say, “We would be owed these amounts even if the plaintiff lost.” The opposite is true. If the carrier prevails, they are owed precisely zero. The payment obligation does not pre-exist the litigation outcome. It is created by the litigation outcome. The entire economic relationship is structured as a bet on the verdict being in favor of the plaintiff.

An illustration drawn from cases now appearing in Wisconsin’s circuit courts is instructive. In a recent first-party property insurance dispute, the plaintiff named two expert witnesses to support a hail damage claim. The first was a public adjuster whose contract entitled his firm to 20 percent of the total amount of any claim recovery. The second was a roofing contractor whose contract provided that the insurance proceeds would become the final contract price, with no payment obligation from the insured absent carrier approval and funding. Both witnesses confirmed in their depositions that their compensation was entirely contingent on a favorable outcome for the plaintiff. The defense moved to exclude both witnesses under Wis. Stat. § 907.02(2). 

The contrast with Kyllonen could not be sharper. The Kyllonen physicians were paid for medical treatment already provided. The public adjuster and contractor in the scenario just described were not to be paid for any pre-existing obligations. They were to be paid, if at all, from the proceeds of the lawsuit itself.

V. Applying the Kyllonen Test Correctly

a. Part One: Specifically Tied to Providing Testimony 

The Kyllonen court required that the contingency compensation be “specifically tied to providing testimony.”[24] Courts that have declined to exclude public adjusters and contractors under this prong have typically reasoned that the public adjuster’s contract covers pre-litigation claim preparation, not trial testimony, and that the contract may even disclaim any obligation to participate in legal proceedings.

This reasoning mistakes the label for the substance. The question the statute asks is not what the contract calls the service. It is whether the compensation flows from the testimonial function the witness performs. When a public adjuster takes the stand to offer expert opinion that the carrier underpaid a claim, he is performing exactly the function his contract contemplates: presenting the claim for loss, damage, and recovery in a manner designed to maximize the insured’s payout. His testimony is the instrument of claim presentation in the litigation phase. The contract may disclaim “legal proceedings” while simultaneously defining the adjuster’s job as maximizing claim recovery, but when the claim is in litigation, the two are inseparable.

The Kyllonen court itself clarified in a footnote that the statute cannot be read “so narrowly as to render payment for an expert witness’s testimony sufficient to preclude that witness from testifying at all.”[25] Rather, the statute is concerned with payment for testimony that is tied to obtaining a specific outcome.[26] The concern is not the fact of payment; it is the contingency. For the public adjuster, the contingency is direct and absolute. He is not paid for appearing. He is not paid for the hours of claim preparation he conducted. He is paid, if at all, from the recovery his testimony may help produce.

A contract disclaimer, like the one for “legal proceedings,” is precisely the kind of formalism the statute is designed to reach with its broad language. As one court observed in an analogous context, the legislature did not condition the statute’s reach on contract labels. It conditioned it on economic reality.[27]

b. Part Two: Dependent on the “Party Proponent’s Ultimate Success” 

This prong presents no analytical difficulty with regard to the cases with the public adjuster or contingency-fee contractor discussed previously. Their compensation is not merely correlated with a favorable outcome. It is mathematically defined by that outcome. A 20-percent contingency fee on a zero-dollar recovery is zero. The prong that the Kyllonen court found unsatisfied for treating physicians—compensation dependent on the plaintiff’s ultimate success—is satisfied for both the public adjuster and the contingency-fee contractor.

As the Kyllonen court explained, the treating physicians’ billing obligations pre-existed the litigation and would be owed regardless of the verdict.[28] The public adjuster’s compensation rests on no such pre-existing obligation. It is contingent on the insurer writing a check. The public adjuster cannot say he has already provided the services that generate his payment. The service his contract defines is maximizing the recovery, and that service is incomplete until the check arrives.

VI. Statutory Construction: The Canons Cut Both Ways 

As previously discussed, the Kyllonen court adopted its narrow construction in part to avoid an absurd result. According to the court, reading “any compensation” so broadly that all treating physicians with outstanding bills would be categorically disqualified from testifying about their own patients would be so absurd that it would be unreasonable to believe the legislature wrote such a statute.[29] I agree. That result would be unreasonable, and the court was correct to reject it. 

But the canons do not inexorably lead to a narrower and narrower reading and application of the statute. They cut both ways under different circumstances. Importantly, Wisconsin courts should construe statutes in a manner that gives them operative effect and avoids rendering any portion redundant or meaningless.[30] An interpretation of Kyllonen that would immunize contingency-fee public adjusters from Wis. Stat. § 907.02(2) produces exactly that result, rendering the statute effectively meaningless in the real world.

Just consider what such an interpretation would entail. The only expert witnesses the statute would disqualify are those whose contracts expressly state: “I will testify in exchange for a percentage of the outcome.” That agreement does not exist in the real world. No sophisticated public adjuster, and certainly no plaintiff’s lawyer structuring the engagement, would ever draft it. The statutory disqualification becomes unreachable simply by omitting those words from a contract that already delivers exactly the contingency the words would describe.

If the legislature’s concern was testimonial bias arising from a financial stake in the outcome (and the statute’s text, structure, and evident purpose all confirm that it was), then a construction that allows anyone with a percentage-of-recovery arrangement to testify simply by disclaiming “legal proceedings” in the contract accomplishes nothing. The bias is not diminished by such a disclaimer. The public adjuster’s 20-percent stake in the verdict is equally real and equally corrupting whether his contract explicitly ties his work to testimony or not.

VII. The Broader Policy Problem: A System Designed to Coerce

To take a step back for a moment, the contingency-fee expert problem in first-party insurance litigation does not exist in isolation. It is part of a structural asymmetry that Wisconsin courts have repeatedly recognized and worked to address. 

Take, for example, Anderson v. Continental Insurance Co.[31] In that case, the Wisconsin Supreme Court created the first-party bad faith tort, anchored to a fairly debatable standard that requires both an objective coverage question and a subjective finding of unreasonable denial. The doctrine was calibrated to distinguish legitimate coverage disputes from genuinely unreasonable claim handling, not to expose carriers to tort liability whenever a coverage question was close.

In Dahmen v. American Family Mutual Insurance Co.[32] and Brethorst v. Allstate Property & Casualty Insurance Co.,[33] the courts recognized that allowing bad faith discovery and litigation to proceed simultaneously with the contract claim created a structural problem. The threat of extra-contractual exposure and wide-ranging institutional discovery functioned as a weapon to coerce settlement of coverage disputes that might otherwise be legitimately defensible. To address this issue, Dahmen established that a bifurcation and stay of bad faith claims is not merely permissible but presumptively appropriate.[34] And Brethorst closed the bad-faith-only pleading gambit by requiring breach of contract as a prerequisite to a bad faith claim, ensuring that plaintiffs could not gain access to bad faith discovery without first establishing the predicate coverage obligation.[35] 

The contingency-fee expert arrangement represents the witness-side version of the same structural problem. The public adjuster on a 20-percent contingency, the contractor whose entire payment comes from insurance proceeds, and the plaintiff’s counsel on a contingency fee are all arrayed on one side of the courtroom. Their collective financial stake in the outcome is massive, and their collective cost to the plaintiff is zero. On the other side, the carrier pays its own counsel, pays its retained engineer, pays the cost of deposing every financially interested witness on the plaintiff’s side, and absorbs the costs of the expert testimony it needs to challenge the plaintiff’s case.

The practical effect is an army of financially invested witnesses at zero marginal cost to the plaintiff presented to the jury as objective experts, while the defense absorbs all of the expense of challenging them. The legislature enacted Wis. Stat. § 907.02(2) precisely to address one piece of that asymmetry—the critical piece of the asymmetry where financially invested witnesses testify as though their stake in the outcome does not exist.

A misapplication of Kyllonen that immunizes the public adjuster and contractor from Wis. Stat. § 907.02(2) undoes what the legislature accomplished. Worse, courts sometimes engage in such misapplications entirely on the basis of drafting choices on the part of the plaintiff, public adjuster, or contractor that are themselves directly motivated by the desire to avoid the statute. 

VIII. The Path Forward 

Kyllonen was a case of first impression from the court of appeals. It has not been reviewed or applied by the Wisconsin Supreme Court. The proper application of its two-part test to public adjusters and contingency-fee contractors, as distinguished from treating physicians with pre-existing billing relationships, remains an unsettled and practically significant question in Wisconsin insurance litigation.

That unsettled state of affairs calls for clarification, and two paths are available.

The first is judicial. A case presenting the public adjuster or contractor contingency arrangement, developed under Kyllonen’s framework with a preserved appellate record, is an appropriate vehicle for the Wisconsin Supreme Court to address whether Kyllonen’s narrow construction reaches the core cases that the statute was designed to address. The structural distinction between a physician with pre-existing billing obligations and a public adjuster whose entire compensation depends on the verdict is clear, and the Wisconsin Supreme Court is well positioned to draw it.

The second is legislative. The legislature could amend Wis. Stat. § 907.02(2) to specify that the statute reaches any arrangement under which an expert witness’s compensation is defined as a percentage of, or is otherwise exclusively derived from, the proceeds of the claim or case about which the witness testifies, without regard to whether the witness’s contract expressly conditions compensation on testimony. Such an amendment would eliminate the labeling game discussed in this article and restore the statute to its evident purpose without requiring courts to navigate the interpretive space Kyllonen created.

Either path is preferable to the status quo. Currently, in some cases, a financially invested witness testifies as an objective expert, disclaims compensation for his appearance, and then confirms on cross-examination that he goes home with nothing if the carrier wins—a fact he has understood from the moment he signed his contract. This state of affairs is out of step with the spirit of Wis. Stat. § 907.02(2) and incompatible with a sensible system of justice.

IX. Conclusion 

Kyllonen drew an important, and correct, line: Treating physicians with pre-existing billing obligations are not disqualified expert witnesses simply because a plaintiff’s litigation outcome might improve their practical ability to collect. That holding protects a legitimate category of witnesses whose financial interest is incidental, pre-existing, and independent of the verdict.

But the public adjuster on a percentage-of-recovery contract and the contractor paid from insurance proceeds sit on the opposite side of that line. Their compensation does not pre-exist the claim. It does not exist absent a favorable outcome. It is defined, to the dollar, by the size of the verdict or settlement. They cannot say what the Kyllonen court said the treating physicians could say: that they would be owed certain sums even if the plaintiff lost. 

Wisconsin Stat. § 907.02(2), properly read, requires their exclusion. The bias the legislature targeted—the financially invested expert testifying about the very claim that will determine whether he gets paid or not—is nowhere more present than in cases where a public adjuster or contractor, who has bet his fee on the outcome of the case he is testifying to win, presents himself to the jury as an unbiased witness.

Author Biography:

Jacob A. Sosnay is a shareholder at Meissner Tierney Fisher & Nichols S.C. in Milwaukee, where he represents property and casualty insurers in first-party coverage disputes and bad faith litigation. He can be reached at [email protected].