Insurer denies claim for long-term disability benefits: Bad faith: Emotional distress: Verdict: Punitive damages

Law Reporter, May 1999

Fisher v. Aetna Life Ins. Co., Alaska, Anchorage Super. Ct., No. 3AN-97-00291 Civil, Jan. 21,1999.

Fisher, 55, a probation officer, suffered from a variety of health problems, including coronary artery disease. He applied for long-term disability benefits under an insurance policy purchased through his employer, the State of Alaska, from Aetna Life Insurance Company. Aetna denied the claim, finding that Fisher was not disabled.

Fisher sued Aetna, among others, alleging bad faith Plaintiff alleged defendant failed to ( 1 ) investigate plaintiff's claim and (2) disclose the criteria under which claims are evaluated and coverage may be denied.

Defendant contended that (1) plaintiff was not disabled and (2) it had not mishandled the claim. Alternatively, defendant claimed that any mishandling was merely negligent and, thus, not deserving of punitive damages.

The jury awarded about $8.7 million against Aetna, including $8.4 million punitive damages.

Plaintiff's experts were Stephen Prater, insurance claims practices, Santa Clara, Cal.; Bernard Turnoy, disability insurance, Chicago, Ill.; and Kent Schaefer, vocational rehabilitation, Seattle, Wash. Aetna's experts were Tim Terry, insurance claims, Palm Springs, Cal., and William Breall, cardiology, San Francisco, Cal.

Aetna's posttrial motions were denied. Aetna has filed a supersedeas bond of about $12 million to prevent execution while the case is appealed.

Plaintiff's Counsel:

*Richard H. Friedman, Anchorage, Alaska

*Jeffrey KI Rubin, Anchorage, Alaska

[Comment: For other recent cases against insurers for bad faith denial of claims, see Robinson v. State Farm Mut. Auto. Ins. Co., 41 ATLA L. Rep. 259 (Sept. 1998); and Ace v. Aetna Life Ins. Co., 139 F.3d 1241 (9th Cir. 1998), holding that plaintiff need not prove an insured's distress was "severe" to recover emotional distress damages for an insurer's conduct. Plaintiff in the Ace case was represented by *Jeffrey Feldman, Susan Orlansky, *Richard H. Friedman, and *Jeffrey K Rubin, all of Anchorage, Alaska. Plaintiff in Robinson was represented by Messrs. *Friedman and *Rubin; *Jim C. Harris, Boise, Idaho; and *Dale L. McGarvey, Kalispell, Mont.]

[Documents in the Fisher case are available through the Court Documents section in the back section of this issue, courtesy of Mr. Rubin.]