Opinion ID: 1846468
Heading Depth: 4
Heading Rank: 4

Heading: Summary of the BMW guideposts.

Text: The reprehensibility of National's actions favor a significant punitive-damages award; the ratio of the punitive-damages award to the compensatory-damages award in this case is 3:1, a ratio that has garnered substantial support by this Court; and no criminal or comparable civil sanctions are available to punish National for its misconduct. Our analysis of the BMW guideposts indicates that the $600,000 punitive-damages award is reasonable. However, we must also consider the factors established by this Court in Hammond and Green Oil. B. The Hammond/Green Oil Factors. 1. The punitive-damages award and the actual or likely harm caused. `Punitive damages should bear a reasonable relationship to the harm that is likely to occur from the defendant's conduct as well as to the harm that actually has occurred. If the actual or likely harm is slight, the damages should be relatively small. If grievous, the damages should be much greater.' Green Oil, 539 So.2d at 223, quoting Aetna Life Ins. Co. v. Lavoie, 505 So.2d 1050, 1062 (Ala.1987) (Houston, J., concurring specially). Is the harm caused by National's misconduct, considering the actual harm as well as the harm likely to result from that misconduct, slight or grievous? We find it to be grievous. We recognize that the amount of the insurance benefits in dispute was $40,000neither the largest nor the smallest amount this Court has addressed in a Hammond/Green Oil analysis. However, the actual harm caused by National's wrongful evaluation and its denial of Sockwell's claim was twofold. First, Sockwell was prevented for some 17 months from obtaining the $40,000 insurance benefits to which she was entitled and which National knew she was entitled to and needed. Second, Sockwell suffered physically and emotionally as a result of the wrongful evaluation and denial of her claim. Thus, the actual harm caused by National's misconduct was significant. However, another harm of an entirely different nature is also likely to result from National's misconduct, if that conduct is not deterred in the future. How many other National insureds with valid claims for insurance benefits will be denied the right to those benefits if National continues to retain invalid provisions in its insurance policies? How many insureds will fail to pursue their claims, believing that National has validly denied those claims? How many other insureds will lose the benefit of their insurance contracts if National's claims representatives continue to act with such intentional or reckless disregard for an insured's right to a proper evaluation of his or her claim? Pursuing a bad-faith claim is a risky and expensive venture. It is possible that some of even the more determined plaintiffs may not be able to retain legal counsel because of the degree of risk involved. Considering the actual harm as well as the harm likely to result from National's misconduct, we find such misconduct to justify a significant punitive-damages award.