Opinion ID: 1868724
Heading Depth: 1
Heading Rank: 5

Heading: whether the lower court erred in admitting the financial statements of the appellant; instructing the jury on punitive damages and permitting the jury to consider punitive damages.

Text: The issue here is whether Southwest, as a community hospital defined in Miss. Code Ann. § 41-13-10(c) (1993), can be liable for punitive damage under the principles of sovereign immunity. A community hospital, in its discretion, may obtain liability insurance coverage out of its operating funds. Miss. Code Ann. § 41-13-11(2) (1993). For actions arising prior to October 1, 1993, if liability insurance is in effect immunity to suit is only waived to the extent of such liability insurance available to satisfy any judgment rendered... . Miss. Code Ann. § 41-13-11(2). From and after October 1, 1993, immunity shall be waived only to the extent of the maximum amount of liability provided for in Section 11-46-15. Miss. Code Ann. § 11-46-5. See also Miss. Code Ann. § 41-13-11(4) and (5) (1993). Although the jury awarded Lawrence much in the way of damages, the court limited recovery of these funds to the amount of the insurance coverage held by Southwest. During the course of this litigation, Virginia Insurance Reciprocal, Southwest's insurance carrier, refused to defend this action and claimed that Southwest was not covered in this action. [5] Apparently, Lawrence sued Virginia Insurance Reciprocal (VIR), and the case was removed to the United States District Court, Southern District of Mississippi. Lawrence brought her action against VIR based on the fact that she had prevailed in this case against Southwest at the trial level. She sought to recover mental anguish and punitive damages. The District Court entered summary judgment in favor of VIR, and Lawrence appealed. The Fifth Circuit found that the appeal, basically, turned on whether an insurer, which did not defend the underlying action against its insured, is barred from asserting sovereign immunity when called to defend itself in a garnishment action by the plaintiff from the prior action. To answer this question, the Fifth Circuit applied and interpreted Mississippi law. Lawrence v. Virginia Ins. Reciprocal, 979 F.2d 1053, 1054 (5th Cir.1992). They found that VIR was not barred from raising sovereign immunity as a defense. Turning next to whether punitive and mental anguish damages are recoverable to the extent of the insurance coverage under Mississippi law, the Lawrence Court found that recent developments in Mississippi law did not apply to the case before them. [6] Lawrence focused on whether Southwest was authorized under the governing statute to purchase coverage for punitive and mental anguish damages. The federal court found that Southwest was not authorized to purchase insurance coverage for punitive damages. The basis for this opinion was that the purpose of punitive damages was to punish; and therefore, punitive damages did not fall into the category of damages insurable under the statute. [7] Id. at 1057. On the other hand, the Court found that mental anguish damages could be awarded upon a finding of simple negligence in breach of contract cases, and therefore reversed and remanded for further proceedings on that issue. Id. In Churchill v. Pearl River Basin Dev. Dist., 619 So.2d 900 (Miss. 1993), this Court overruled a line of cases that stood for the principal that a governmental entity did not waive sovereign immunity simply by purchasing liability insurance without express statutory authority. See Strait v. Pat Harrison Waterway Dist., 523 So.2d 36 (Miss. 1988); Joseph v. Tennessee Partners, Inc., 501 So.2d 371 (Miss. 1987); French v. Pearl River Valley Water Supply Dist., 394 So.2d 1385 (Miss. 1981), overruled by Churchill v. Pearl River Basin Development Dist., 619 So.2d 900 (Miss. 1993). Punitive damages are to punish a wrong-doer. In the case of a community hospital, or any other governmental entity for that matter, the punished is the taxpayer, as it is their funds that pay the damages, or the insurance coverage for such damages. With that in mind, litigants should not be allowed to obtain punitive damages from the public treasury which is filled only by taxpayers. However, by statute, sovereign immunity is waived to the extent of insurance obtained. Miss. Code Ann. § 41-13-11(2). We have held that where insurance has been obtained to cover liability for damages or injury to persons or property that insurance also covers punitive damages as governed by the policy. Old Security Cas. Ins. Co. v. Clemmer, 455 So.2d 781, 783 (Miss. 1984); Anthony v. Frith, 394 So.2d 867, 868 (Miss. 1981). Accordingly, even though tax payers should not have to bear the burden of paying a punitive damages award assessed a governmental entity, neither should an insurance company be allowed to retain premiums and avoid the liability where insurance has been purchased to cover such damages. In the case at bar; however, we do not believe the facts support a punitive damages award against Southwest. For that reason, we reverse the award of punitive damages. Alternatively, were punitive damages affirmed, the award should only be allowed to the extent of the insurance coverage in existence.