Nevada Supreme Court Affirms Massive Punitive Damages Award
Post 4853
Read the full article at https://lnkd.in/gxsBQ8QR, see the full video at https://lnkd.in/gnvhhVqG and at https://lnkd.in/gUBQvAJS, and at https://zalma.com/blog plus more than 4850 posts.
Sandra Eskew, as administrator of her deceased husband Bill’s estate, sued Sierra Health and Life Insurance Company, LLC (SHL), for insurance bad faith after SHL determined that Bill’s preferred lung cancer treatment-proton beam radiation therapy- was not covered by his health insurance plan. Because SHL refused to cover proton therapy, Bill received an alternative treatment which damaged his esophagus, causing pain and suffering for the remainder of his life. Following trial, the jury awarded the estate $40 million in compensatory damages. After a second phase of trial on punitive damages, the jury awarded $160 million in punitive damages.
In Sierra Health And Life Insurance Company, Inc. v. Sandra Eskew, As Special Administrator Of The Estate Of William George Eskew, No. 85369, Supreme Court of Nevada (August 5, 2024) the Supreme Court resolved the issues raised by the insurer.
THE APPEAL
SHL appealed, arguing that the district court erred by denying its motion for judgment as a matter of law because Sandra failed to prove the elements of an insurance bad faith claim. SHL also asserted that the district court erred by denying its motion for a new trial or remittitur because attorney misconduct and the erroneous admission of prejudicial evidence caused the jury to return a verdict based on passion and prejudice.
COVENANT OF GOOD FAITH & FAIR DEALING
It is well established within Nevada that every contract imposes upon the contracting parties the duty of good faith and fair dealing. To establish insurance bad faith, a plaintiff must show that the insurer had no reasonable basis for disputing coverage, and that the insurer knew or recklessly disregarded the fact that there was no reasonable basis for disputing coverage. A judgment will not be overturned if the jury’s verdict that an insurer acted in bad faith is supported by substantial evidence.
SHL relied on its parent company, UnitedHealthcare, program which stated that proton therapy was not medically necessary to treat lung cancer. SHL also argued that their policy was reasonable because it was consistent with the policies of other major U.S. insurers, and there is no Nevada case law stating that proton therapy must be covered.
To the contrary, it is the role of the jury to decide whether coverage under Bill’s contract was subject to reasonable disagreement. Substantial evidence was presented to the jury from which it could conclude that SHL engaged in bad faith by denying Bill’s claim as not medically necessary when it was medically necessary and SHL knew or recklessly disregarded this fact.
The jury saw evidence that SHL relied primarily on the medical policy and did not conduct a thorough investigation of Bill’s specific needs, in determining that proton therapy was not medically necessary for Bill. Overall, there was substantial evidence supporting the jury’s verdict that SHL knowingly or recklessly denied coverage without a reasonable basis. The Supreme Court concluded that there was substantial clear and convincing evidence from which the jury could find that SHL acted with oppression.
The insurer not only knew the claimant was in dire need of benefits, but also had reason to know that it was probable that the claimant would suffer unjust hardship if deprived of those benefits. A finding of oppression was amply justified and concluded punitive damages were appropriate.
The Supreme Court also concluded that the high compensatory and punitive damages award does not evince a verdict based on passion and prejudice. The almost $200 million in compensatory and punitive damages merely reflects the jury’s valuation of the extensive pain and suffering experienced by Bill due to the denial of coverage and the level of blameworthiness of SHL’s conduct. Therefore, the Supreme Court concluded the district court did not abuse its discretion by denying the motion for a new trial, nor did it abuse its discretion by declining to remit compensatory and punitive damages. Accordingly, the Supreme Court affirmed the judgment.
Justice PICKERING, J., with whom Justice LEE agreed filed a concurring and dissenting opinion which argued that a total of $200,000,000 represents excessive damages appearing to have been given under the influence of passion or prejudice. Three errors appear especially serious and the punitive damages, which are four times the amount of the special damages, are excessive and should have been substantially remitted by the district court in accordance with the SCOTUS opinion See State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S 408, 416-18 (2003).
ZALMA OPINION
In State Farm v. Campbell SCOTUS concluded that punitive damages should be limited, where there is a great amount of compensatory damages, should be limited to one time the compensatory damages. Since there was $40 million in compensatory the punitive damages should have been no more than $40 million rather than four times punitive damages. The Nevada Supreme Court was right in finding a need for bad faith damages and punitive damages but I agree with the concurrence and dissent that the Nevada Court allowed an excessive punitive damages award. Ms. Eskew will be required to pay income taxes to the US on the $160,000,000 in punitive damages and even after paying the lawyers should have enough money, invested carefully, to keep her well for the rest of her life. The punitive damages awarded was within the minimums stated in State Farm v. Campbell.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to my substack at https://barryzalma.substack.com/subscribe; Subscribe to my substack at https://lnkd.in/gmmzUVBy
Go to X @bzalma; Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01; Go to Barry Zalma videos at Rumble.com at https://rumble.com/account/content?type=all; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg
; Go to the Insurance Claims Library – https://lnkd.in/gwEYk
Jury’s Findings Interpreting Insurance Contract Affirmed
Post 5105
See the full video at https://lnkd.in/gPa6Vpg8 and at https://lnkd.in/ghgiZNBN, and at https://zalma.com/blog plus more than 5100 posts.
Madelaine Chocolate Novelties, Inc. (“Madelaine Chocolate”) appealed the district court’s judgment following a jury verdict in favor of Great Northern Insurance Company (“Great Northern”) concerning storm-surge damage caused by “Superstorm Sandy” to Madelaine Chocolate’s production facilities.
In Madelaine Chocolate Novelties, Inc., d.b.a. The Madelaine Chocolate Company v. Great Northern Insurance Company, No. 23-212, United States Court of Appeals, Second Circuit (June 20, 2025) affirmed the trial court ruling in favor of the insurer.
BACKGROUND
Great Northern refused to pay the full claim amount and paid Madelaine Chocolate only about $4 million. In disclaiming coverage, Great Northern invoked the Policy’s flood-exclusion provision, which excludes, in relevant part, “loss or damage caused by ....
Failure to Name a Party as an Additional Insured Defeats Claim
Post 5104
Read the full article at https://lnkd.in/gbcTYSNa, see the full video at https://lnkd.in/ggmDyTnT and at https://lnkd.in/gZ-uZPh7, and at https://zalma.com/blog plus more than 5100 posts.
Contract Interpretation is Based on the Clear and Unambiguous Language of the Policy
In Associated Industries Insurance Company, Inc. v. Sentinel Insurance Company, Ltd., No. 23-CV-10400 (MMG), United States District Court, S.D. New York (June 16, 2025) an insurance coverage dispute arising from a personal injury action in New York State Supreme Court.
The underlying action, Eduardo Molina v. Venchi 2, LLC, et al., concerned injuries allegedly resulting from a construction accident at premises owned by Central Area Equities Associates LLC (CAEA) and leased by Venchi 2 LLC with the USDC required to determine who was entitled to a defense from which insurer.
KEY POINTS
Parties Involved:
CAEA is insured by Associated Industries Insurance Company, Inc. ...
Exclusion Establishes that There is No Duty to Defend Off Site Injuries
Post 5103
Read the full article at https://lnkd.in/geje73Gh, see the full video at https://lnkd.in/gnQp4X-f and at https://lnkd.in/gPPrB47p, and at https://zalma.com/blog plus more than 5100 posts.
Attack by Vicious Dog Excluded
In Foremost Insurance Company, Grand Rapids, Michigan v. Michael B. Steele and Sarah Brown and Kevin Lee Price, Civil Action No. 3:24-CV-00684, United States District Court, M.D. Pennsylvania (June 16, 2025)
Foremost Insurance Company (“Foremost”) sued Michael B. Steele (“Steele”), Sarah Brown (“Brown”), and Kevin Lee Price (“Price”) (collectively, “Defendants”). Foremost sought declaratory relief in the form of a declaration that
1. it owes no insurance coverage to Steele and has no duty to defend or indemnify Steele in an underlying tort action and
2. defense counsel that Foremost has assigned to Steele in the underlying action may withdraw his appearance.
Presently before the Court are two ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:
Health Care Fraud Trial Results in Murder for Hire of Witness
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
Professional Health Care Services Exclusion Effective
Post 5073
See the full video at https://lnkd.in/g-f6Tjm5 and at https://lnkd.in/gx3agRzi, and at https://zalma.com/blog plus more than 5050 posts.
This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:
Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
A Heads I Win, Tails You Lose Story
Post 5062
Posted on April 30, 2025 by Barry Zalma
"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime."
Immigrant Criminals Attempt to Profit From Insurance Fraud
People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.
The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...
