Supreme Court Reduces Compensatory and Punitive Damages in Workers' Compensation Bad Faith Claim

The case of Thornton v. Interstate Insurance Company, No. 18-0809 (Iowa Feb. 28, 2020) came before the supreme court for a second time.  In the first proceeding, the court had remanded the action for a new assessment of compensatory and punitive damages. 897 N.W.2d 445 (Iowa 2017). In the second trial, damages were set at $382,000 and punitive damages at $6,750,000.  Reductions to both damage amounts were made by the court in this action.

The reduction in compensatory damages came about primarily because the court concluded that bad faith had not been shown with respect to the carrier's delayed provision of a wheelchair for claimant.  The court observed that although an order for a wheelchair was provided by the doctor, this was not forwarded to the carrier until after a mobility test was conducted (some ten weeks later) and so bad faith did not apply.  Ultimately, the court reduced compensatory damages to $58,452.42 for attorney's fees and mental pain and suffering as a result of a delay in benefits.  This was a reduction from the jury verdict of $382,000.

Punitive damages were also reduced, from $6,750,000 to $500,000.  The court concluded that the conduct of the insurance carrier was deserving of censure, but found that because this was a one-time event and not a part of a pattern and practice of bad faith, the $500,000 amount was as far as the court was willing to go.  The court stated that defendants' conduct in delaying the permanent total award and partial commutation was not sufficient to allow for a double digit award of punitive damages above the compensatory award.

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