Opinion ID: 2218734
Heading Depth: 1
Heading Rank: 5

Heading: The Punitive Damage Award.

Text: Finally, we consider National States' challenge to the jury's award of punitive damages. It asserts that the district court's instructions on punitive damages were inadequate and that the amount of the award was excessive. National States' objection to the jury instructions involved the refusal of the trial court to give its requested instructions, which would have contrasted malicious acts with acts that are merely negligent. Plaintiff's claims of bad faith and fraud were based on the theory that the company was engaging in a general scheme to induce elderly persons to purchase insurance that was not intended by the company to provide the benefits expected. We do not believe that the jury was likely to confuse malicious conduct, as described in the instructions that were given by the trial court, with mere negligence. Moreover, we are persuaded that, once the jury found that a bad-faith tort had been committed under the instructions that were given concerning that cause of action, the elements required for an award of punitive damages had been confirmed. We find no error in the refusal to give the requested instruction. With respect to National States' challenge to the amount of the punitive damage award, this court has reviewed the criteria for reviewing such awards in Johnston v. Norfolk Southern Corp., 448 N.W.2d 486 (Iowa 1989), and Ryan v. Arneson, 422 N.W.2d 491 (Iowa 1988). We concluded in those decisions that an inflexible mathematical ratio that focuses on the plaintiff's injuries rather than the wrongful acts of the defendant fails to accomplish the policy objectives of punishment and deterrence. Ryan, 422 N.W.2d at 496. Punitive damages exist to punish the particular defendant and to deter the offending party and like-minded individuals from committing similar acts. Id.; Pringle Tax Serv., Inc. v. Knoblauch, 282 N.W.2d 151, 154 (Iowa 1979). In the present case, the jury could have found that the defendant insurance company had been engaging in a calculated scheme to sell insurance to elderly people by means of underwriting practices that would ultimately render the company unable to pay the promised benefits. Although National States urges that the jury award of punitive damages represented forty-five percent of the company's net income for a single year, that suggestion is posited upon the company's unaudited determination of net operating income. The company also enjoyed several million dollars in investment income during the time this scheme was in effect. During this time, more than $5,000,000 in dividend income was being paid to company principals. The jury could have determined that a substantial award of punitive damages was necessary to deter the offending conduct. We will not alter the jury's award.