The Second District Court of Appeal affirmed jury’s $1 million punitive damages award against Geico General Insurance Co. for its unreasonable delay in paying an injured policyholder the full limits of his policy following a head-on collision.
AlderLaw is pleased to report that a California Appellate Court has affirmed a jury’s punitive damages award in one of its cases against Geico.
The case involved a head-on collision in which AlderLaw’s client Michael Mazik suffered a severe and inoperable fracture to his heel bone. Mazik received $50,000 from the at-fault driver’s insurer, Mercury Insurance Co., and then requested the $50,000 underinsured motorist limit under his own policy with Geico. Unfortunately, Geico refused to pay out the underinsured motorist coverage and, between January 2010 and February 2012, Geico offered between $1,000 and $18,887 to settle his claim. Mazik rejected the offers and the dispute went to arbitration where our client was ultimately awarded the full $50,000 policy limit.
In May 2014, represented by Mike Alder, Lauri Brenner and Allison Stone of AlderLaw, Mazik sued Geico for bad faith. The case proceeded to trial, and in July 2016, a jury found that Geico had unreasonably delayed paying out the client’s policy limit.
The jury awarded Mazik $4,313,508* in compensatory and punitive damages. Geico appealed the punitive damages award saying there was insufficient evidence that any “officer, director or managing agent” of the insurer acted in bad faith and that even the reduced award was too much.
The 2nd District Court of Appeal found there was extensive evidence indicating Geico deliberately ignored medical records establishing the severity of the foot injury suffered by Mazik during the 2008 auto accident.
“In concluding that Mazik’s claim was worth far less than the policy limits, Geico disregarded information provided by Mazik showing that he had a permanent, painful injury, and instead selectively relied on portions of medical records that supported Geico’s position that Mazik had fully recovered”Administrative Presiding Judge Justice Elwood Lui
The Court found that the record in the case was replete with evidence that Geico “cherry-picked” medical information pertaining to Mazik’s condition and “disregarded unfavorable findings” that supported his claim for the full policy limit. They also found that Geico’s regional administrator who oversaw Mazik’s claim clearly qualified as the insurer’s managing agent, and he “either authorized unreasonably low settlement offers or approved decisions not to increase those offers” on multiple occasions.
“There was sufficient evidence for the jury to conclude that [Geico through its regional administrator] engaged in oppressive conduct by ignoring information concerning the serious and permanent nature of Mazik’s injuries for the purpose of saving the company money.”Justice Lui
In addition, the appellate panel said the reduced $1 million punitive damages award was not unconstitutionally excessive, given the “degree of reprehensibility of Geico’s conduct.” Among other things, the panel noted that, while the insurer was withholding full payment on Mazik’s claim, he went into debt to pay bills and suffered through other personal difficulties due to the severity of his injury.
“In light of the factors indicating significant reprehensible conduct and the three-to-one ratio of punitive to compensatory damages, we cannot say that the trial court’s decision approving punitive damages of $1 million exceeds constitutional restraints.”Justice Lui
Appellate attorney Norman Pine of Pine Tillett Pine LLP was quoted by Law360: “We are quite pleased with Presiding Justice Lui’s thorough opinion, which covers a vast array of punitive damages issues concerning, inter alia, managing agent requirements, application of the five ‘reprehensibility factors,’ the proper ratio between the punitive award and the compensatory damages award, and other excessiveness issues. Advocates of punitive damages will find much to be pleased with,” Pine said. “One major contribution the opinion makes is its focus on common sense realities concerning what jurors may reasonably deduce from disputed evidence.”
- 2nd District Court of Appeal Justices: Presiding Justice Elwood Lui and Associate Justices Victoria M. Chavez and Brian M. Hoffstadt
- Geico was represented by John T. Brooks and Karin Dougan Vogel of Sheppard Mullin Richter & Hampton LLP.
- Mazik was represented at trial by Mike Alder, Lauri Brenner and Allison Stone of AlderLaw and Michael H. Silvers of Michael H. Silvers Law Corp. Norman Pine, Scott Tillett and Chaya M. Citrin of Pine Tillett Pine LLP handled the appeal.
- The case is Mazik v. Geico General Insurance Co., case number B281372, in the Court of Appeal of the State of California, Second Appellate District, Division Two.
- This case and appellate decision were featured on Law 360. Read the article here.
*After trial, the lower court found that the $4 million punitive damages sum awarded by the jury was excessive based on the circumstances and reduced it to $1 million.