Opinion ID: 1708694
Heading Depth: 2
Heading Rank: 1

Heading: did the lower court err in submitting to the jury the issue of punitive damages?

Text: This Court has grappled with the problem of the submission of the issue of punitive damages to the jury ever since Standard Life Insurance Company of Indiana v. Veal, 354 So.2d 239 (Miss. 1977) was handed down. In Veal, this Court stated, in regard to the imposition of punitive damages in a bad faith context that: If an insurance company has a legitimate reason or an arguable reason for failing to pay a claim, punitive damages will not lie. Veal, at 248. But, the question of the proper manner in which to submit to the jury the punitive damages issue went unanswered. Reserve Life Insurance Co. v. McGee, 444 So.2d 803 (Miss. 1983) answered the question, to some extent, by holding that the trial court must first determine as a matter of law whether the issue of punitive damages should be submitted to the jury. In McGee, the Court held, in pertinent part, that: At the conclusion of the evidence, the trial court at the request of the defendant, should determine whether or not, as a question of law, the insurer had a legitimate or arguable reason to deny payment of the claim... . If the trial court finds that such a legitimate or arguable claim existed, as shown by the evidence, then the trial court should refuse to grant a punitive damages instruction even though it submits to the jury the question of whether or not the insurer owed the compensatory claim for which proofs of loss were filed. McGee, at 809. Therefore, the issue of punitive damages should not reach the jury unless reasonable minds could differ as to the insurance company having a legitimate or arguable reason for denying the claim. Blue Cross & Blue Shield of Mississippi, Inc. v. Campbell, 466 So.2d 833 (Miss. 1984). Still, even with the guidance of the above cited authorities, there remains to this day much confusion and misunderstanding in the lower courts as to when the punitive damage issue is to be presented to the jury based upon the legitimate or arguable reason standard. In trying to remedy this situation, we find guidance and authority in State Farm Fire and Casualty Co. v. Simpson, 477 So.2d 242 (Miss. 1985), where we stated, in addressing this standard that: We are of the opinion the term legitimate or arguable reason, although spawning much comment in our cases and in briefs and arguments of counsel, is nothing more than an expression indicating the act or acts of the alleged tortfeasor do not rise to the heightened level of an independent tort. Additionally, the very term expresses the holding of this Court establishing a distinction between ordinary torts, the product of forgetfulness, oversight, or the like; and heightened torts which are the product of gross, callous or wanton conduct, or, if intentional are accompanied by fraud or deceit. (citation omitted) (emphasis added) Simpson at 250. As previously mentioned, Standard Life v. Veal, supra, provides that if an insurance company has a legitimate or arguable reason for denying a claim, then such will utterly preclude the submission of the issue of punitive damages to the jury But, the contrary of this statement is not true. The fact that an insurance company lacks a legitimate or arguable reason for denying a claim does not automatically lead to the conclusion that the issue of punitive damages should be submitted to the jury. Simpson at 250. In the absence of an arguable reason for denying a claim, the trial court still must determine whether there is a jury issue as to the insurer's having committed a willful or malicious wrong, or acted with gross or reckless disregard for the insured's rights. If not, the question of punitive damages should not go to the jury. Returning to the case presently at bar, we observe that Pioneer Life, at the close of all evidence, tendered to the lower court as its first instruction a peremptory instruction that the jury find for Pioneer Life. [1] The trial court refused the instruction, and determined that the issue of punitive damages should be presented to the jury. The facts relevant to this determination have been previously stated, but to recapitulate, the adjuster testified that she failed to realize that the echocardiogram was actually performed at Mobile Infirmary as an out-patient on February 10, 1982 due to the fact that the hospital chart showed that Mrs. Moss was still confined at Singing River Hospital on that date. Additionally, Pioneer Life lists several additional factors which would amount to a legitimate or arguable reason for believing the echocardiogram was performed at Singing River Hospital and only analyzed at Mobile Infirmary: 1) The claim form signed by Mrs. Moss on March 24, 1982 did not list Mobile Infirmary as a place of treatment; 2) The Singing River Hospital bill confirms that Mrs. Moss was hospitalized there on February 10, 1982  the same day the echocardiogram was performed; 3) The Singing River Hospital bill shows an in-patient charge of $269.60, leading Pioneer Life to believe that such charge was for performing the echocardiogram; 4) The Mobile Infirmary bill lists eleven (11) x-ray department radiologists and five (5) clinical pathologists, causing Pioneer Life to believe such was for professional component charges; 5) The discharge summary of Singing River Hospital lists the echocardiogram, states the results, but not the location of its taking, and bases the discharge diagnosis on the test (Pioneer Life claims this factor to be the most conclusive). It is upon a consideration of the above factors that Pioneer Life argues its failure to pay the claim of Mrs. Moss was a mere clerical error and an honest mistake not warranting the imposition of punitive damages. Consolidated American Life Insurance Company v. Touche, 410 So.2d 1303, 1306 (Miss. 1982). As to the denial of Mrs. Moss's claim during January 1983, when counsel for Mrs. Moss wrote three (3) letters to Pioneer Life inquiring as to the nonpayment of the claim, it must be remembered that each of these letters was answered fully by Pioneer Life to the effect that the maximum benefits available had been paid, (for a more complete discussion of the contents of these letters, can be found in the FACTS, supra, portion of this opinion). Pioneer Life continued to deny coverage until it learned, with the initiation of this action, that Mrs. Moss had in fact been an out-patient at Mobile Infirmary in Mobile, Alabama. Under the above facts, there was no evidence of gross, callous, or wanton conduct on the part of Pioneer Life toward its insured that would present a jury question on punitive damages and the lower court erred in submitting that issue to the jury. AWARD OF PUNITIVE DAMAGES IS REVERSED AND RENDERED; AWARD OF ACTUAL DAMAGES IS AFFIRMED. ROY NOBLE LEE and HAWKINS, P.JJ., and PRATHER, ROBERTSON, SULLIVAN, ANDERSON and GRIFFIN, JJ., concur. SULLIVAN, J., specially concurring with written opinion joined by DAN M. LEE, PRATHER and ROBERTSON, JJ. ROBERTSON, J., specially concurring with written opinion joined by PRATHER and ANDERSON, JJ.