U.S. Supreme Court upholds punitive damage award.The U. S. Supreme Court, in Haslip v. Pacific Mutual Life Insurance Co. (553 S.2d 537), upheld a $840,000 punitive damages Monetary compensation awarded to an injured party that goes beyond that which is necessary to compensate the individual for losses and that is intended to punish the wrongdoer. award against Pacific Mutual. In the case (discussed in the JofA Feb.91 Legal Scene), an agent for Pacific misappropriated mis·ap·pro·pri·ate tr.v. mis·ap·pro·pri·at·ed, mis·ap·pro·pri·at·ing, mis·ap·pro·pri·ates 1. a. To appropriate wrongly: misappropriating the theories of social science. funds that should have been tendered to the insurer, which provided group healthcare to employees of Roosevelt City, Alabama. Because it never received the funds, Pacific sent cancellation notices to the city regarding its healthcare coverage. The notices were intercepted by the embezzler embezzler n. a person who commits the crime of embezzlement by fraudulently taking funds or property of an employer or trust. and never received by the city. After being hospitalized, city employee Cleopatra Haslip was forced to pay her own medical costs when a collection agency obtained a judgment against her on behalf of the attending physician and the hospital. Haslip and other city employees sued Pacific, alleging the insurer was responsible for the wrongful acts of its agent. A jury awarded Haslip $200,000 compensatory damages A sum of money awarded in a civil action by a court to indemnify a person for the particular loss, detriment, or injury suffered as a result of the unlawful conduct of another. and $840,000 punitive damages. The Alabama Supreme Court The Supreme Court of Alabama is the highest court in the state of Alabama. The court consists of a Chief Justice and eight Associate Justices, elected in partisan elections for staggered six year terms. upheld the award. Pacific then appealed the case to the U.S. Supreme Court, arguing that the punitive award was the product of unreasonable jury discretion and violated Pacific's rights to due process under the 14th Amendment of the U.S. Constitution. Justice Harry Blackmun, speaking for the Court, ruled punitive damages schemes are not "so inherently unfair as to deny due process and be per se unconstitutional." The Court also addressed the narrower issue of whether the punitive damage award violated the due process clause. The Court concluded that the discretion allowed the jury, as long as exercised within reasonable constants (that is, similar jury instructions regarding the scope and purpose of punitive damages), satisfied due process requirements. (Pacific Mutual Life Insurance Company v. Cleopatra Haslip, 1991 WL 24587 U. S.) Editor's note: Thanks to Ron Berman of Berman and Clark for the Union Bank case. Edited by Wayne J. Baliga, CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. , JD, CPCU CPCU Chartered Property Casualty Underwriter CPCU Cardiac Progressive Care Unit CPCU Custody Pending Completion of Use , vice-president, AON Corp. |
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