Word: california
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Dates: during 1970-1979
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Insurers have taken some comfort from the latest turn in the Egan case: the California Supreme Court has ordered the punitive award to be cut. Noting that the $5 million sum amounted to nearly 60% of Mutual's 1974 net income, the court said that the award was bloated by the "passion and prejudice" of the jury. A new trial must now be held to set a fairer award, but the decision left no doubt that courts could continue to exact punitive damages from insurance companies...
...When the California court was ruling on the Egan case, Lawyer Shernoff was off in Mississippi instructing another jury in what he calls "the therapeutic concept of punitive damages." His client this tune was Wilfred Fayard, 58, a sheet metal worker, who had suffered a back injury while carrying a bathtub. Fayard lost his disability benefits because his injury was considered by his insurance company to be "nonconfining." That was because Fayard, on doctor's orders, managed to walk a few hundred yards every day for exercise. At the trial, a former claims adjuster for Fayard's insurers...
Shernoff says that the nonconfinement clause is only one lever that unscrupulous adjusters may use to squeeze customers out of their benefits. Another device is the common requirement that insured people fully disclose their medical histories. In one California case, a Shernoff client with a back injury had been denied coverage because she failed to report that she had rhinitis and amenorrhea. Rhinitis is the medical term for a runny nose; amenorrhea means that she had an erratic menstrual cycle. Shernoff settled that case...
...prosecutor going around the country imposing fines and penalties on insurance companies for illegal conduct." He argues that punitive damages offer the only effective way to protect consumers from wrongdoing by insurers, since claims practices are not closely regulated. In all of 1978, Shernoff points out, the California Department of Insurance collected $7 million for 13,000 claimants; but in just two months last spring, Shernoff won awards and settlements totaling $3 million for 26 claimants...
Insurance men grudgingly admire Shernoffs courtroom mastery. Says one: "He can get a jury really worked up." Yet Shernoff, who grew up in Wisconsin farm country, has none of the slickness of the stereotypical, California personal-injury lawyer. Says he: "My English isn't the greatest, but I know what I'm doing: the little guy against the insurance giant...