The question of who should have the final say in approving medical care – the physician or the insurance company – was key in a case involving a former U.S. Marine and paraplegic.

Thomas Nickerson broke his leg in two places and was admitted to the Veterans Administration Hospital in Long Beach, remaining there for 109 days on doctor’s orders.

After his release, he submitted a claim to his insurance company, Stonebridge Life Insurance, seeking coverage for his hospital stay under his accident indemnity policy, which paid $350 a day for every day confined to a hospital.  But Stonebridge paid for only 19 days, claiming that the remaining days weren’t medically necessary. Nickerson filed suit. Nickerson v. Stonebridge Life Insurance Co., BC 405280, (Los Angeles Super. Ct., filed June 13, 2011).

“We felt that the jury would be quite upset with the widespread practice of an insurance company that wouldn’t pay for a medically necessary treatment,” said Nickerson’s lead attorney. The whole area of insurance companies overruling treating doctors on what is medically necessary is a very huge issue in the medical community.   Mr. Nickerson’s attorney wanted this to be an important test case.

Nickerson did win, with a jury awarding him $31,000 in insurance policy benefits, $35,500 in emotional distress damages, and a whopping $19 million in punitive damages.

This was a case where being able to get punitive damages to stop the bad claim practices of the insurance company mattered and was reasonable.  Obtaining punitive damages is always a challenge it becomes easier when conduct like this can be demonstrated.

As it happened, keeping the punitive damages provided to be an even bigger challenge when the judge whittled that grand sum down to $350,000.

At issue was the standard establishing a ratio of punitive to compensatory damages of 10 to one for isolated incidents of wrongful conduct.  Nickerson’s attorney has appealed the reduction.

While the trial judge may have believed her hands were tied in this regard, Nickerson’s attorney was quoted, “We believe an appeals court will agree with us. It should be a different ratio when you have widespread institutional misconduct, coupled with low compensatory damages.”

If you believe that you have been a victim of Bad Faith on the part of your insurance company feel free to call our office for a free consultation with one of our attorneys.  We can be reached at 916-714-7672 or visit our web site at