This week, the Missouri Court of Appeals for the Western District upheld an $8 million punitive damages award against State Farm, calling the insurance company’s conduct “clearly reprehensible.”
The Jan. 8 ruling involves conduct that stretches back ten years. In 1997, Jennie Hampton called State Farm and reported that her car had been stolen. It was later found abandoned and burned in a Kansas field.
State Farm denied Hampton’s insurance claim. The insurer alleged that Hampton had provided false information when she claimed the engine was in “excellent” condition. According to State Farm, the engine had failed. The insurer also alleged that Marvin Vail, a tow truck driver and the brother of Hampton’s boyfriend, towed the car to the field. State Farm claimed that Hampton and Vail then burned the car to collect insurance money.
State Farm’s investigator contacted the National Insurance Crime Bureau about Hampton’s claim. NICB then contacted Kansas prosecutors. Hampton, Vail, and her boyfriend were charged with insurance fraud and conspiracy to commit insurance fraud. The criminal case against Hampton and Vail went to trial. A jury cleared them of any wrongdoing.
Hampton and Vail filed a breach of contract and malicious prosecution case in Jackson County. It went to trial in 2005. A jury awarded Hampton $10,300 on her breach of contract claim. Hampton and Vail were each awarded $400,000 and legal fees on the malicious prosecution claim. In awarding punitive damages of $4 million to each plaintiff, the trial court noted:
• State Farm’s lawyer lied when he claimed a plaster cast of tire tracks from a tow truck existed;
• State Farm’s lawyer told Hampton’s attorney that criminal charges could be brought and she better be careful;
• State Farm withheld evidence from NICB and the prosecutor that would have supported Hampton’s claim;
• State Farm’s lawyer threatened a witness with perjury if he changed his story;
• State Farm’s mechanical expert did not fully examine the car’s engine before rendering an opinion on the engine’s condition;
• State Farm prepared the mechanical expert to testify at the criminal trial without consulting the prosecutor;
• State Farm failed to investigate the tow truck’s log records and did not interview an independent witness who had seen Hampton driving the car before the theft.
State Farm appealed on several grounds. On Tuesday, the appellate court rejected State Farm’s arguments, concluding that the jury instructions were proper, there was substantial evidence that supported the malicious prosecution and punitive damages award, and that the award was not excessive.
In the opinion, Judge Victor C. Howard wrote:
“In this case, it is clear that the Plaintiffs were financially vulnerable, especially considered in relation to State Farm. State Farm’s misconduct, including relying on a questionable expert, excluding exculpatory evidence, and making representations about nonexistent plaster cases, is clearly reprehensible.”
State Farm went to great lengths to avoid paying Hampton’s claim. And when she fought back, the company resorted to bully tactics and criminal prosecution. When making a insurance claim, especially one involving serious injuries, some companies don’t fight fair. A plaintiff’s lawyer is an important ally who will protect your interests.