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Halloween Safety Tips

A few weeks ago I was instructed to be the Cowardly Lion for Halloween, as everyone else at the law firm had already been assigned a character from the Wizard of Oz. I was lucky enough to find an adult onesie to fit the job. We all prepared separately, and this is how it turned out:


We hope you enjoy Halloween as much as we do. Here are some Halloween safety tips to keep in mind while trick-or-treating tonight from Safe Kids Worldwide:

  • Put electronic devices down when crossing the street;

  • Teach children to make eye contact with drivers before crossing in front of vehicles;

  • If children are mature enough to trick-or-treat without supervision, teach them to stick to familiar, well-lit areas, and trick-or-treat in groups;

  • Costumes and bags should have reflective tape or stickers so motorists can easily see trick-or-treaters;

  • If reflective tape is not an option, glow sticks will also allow motorists to easily see trick-or-treaters;

  • Face paint is preferable to masks so vision is not obstructed;

  • Ensure costumes properly fit so falls are prevented;

  • Eliminate distractions, and pay extra attention tonight while driving as there is more risk of children darting in front of your vehicle tonight than perhaps any other day of the year; and

  • Advise children to use crosswalks where available, rather than darting across intersections, as seen below:


Other safety tips from the National Safety Counsel advise to agree on a specific time to return home, tell children not to eat any treats until returning home, and be extra mindful of dark costumes at twilight and later in the evening.

The Wizard of Oz would not be complete of course without the Dark Side of the Rainbow, which I could not let go unrepresented:

If you’ve never experienced this, wait for the black and white MGM lion to roar while watching the Wizard of Oz, and on the third roar, hit “play” on Pink Floyd’s Dark Side of the Moon album. Repeat the album each time it ends until the movie is over.

Oz, the Scarecrow, the Tin Man, Glenda the Good Witch, Dorothy, the Cowardly Lion, the Wicked Witch of the West, and the Munchkin Mayor didn’t realize they’d have their own soundtrack in 1939. Back then the yellow brick road didn’t have a lot of traffic, and there weren’t cell phones to distract motorists and pedestrians. So watch out for each other tonight and have a happy Halloween!

Doing your part: small efforts make big differences

With the recent water issues experienced in Arkadelphia during the week of July 15-19, I was reminded of a service project last summer where the Brighter Tomorrow Foundation helped provide water to residents in Flint, Michigan.

On April 25, 2014, the Flint’s municipal government decided to change its water service to the local Flint River to save money, but did not treat the water; this resulted in dangerous levels of lead leaching into the water from old pipes, and putting the public at risk. Flint’s local government eventually declared a state of emergency.

A Flint native, Asia Hill, lives in Arkadelphia, and wanted to help. Several Arkadelphia law firms provided the funding, and on September 9, 2018, the Brighter Tomorrow Foundation transported 500 cases of water to up to Michigan. The Daily Siftings Herald reported on the project, as follows:

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The contributing law firms received the following certificates for their efforts:

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Levar Certificate.png

While Arkadelphia’s water issues only lasted 4 days, the water system in Flint is still contaminated over 5 years later. State and Federal assistance totals are over $450 million. Here is what the EPA has done about it. Here is a way to help through the United Way.

I’m thankful to our local leaders and city employees who got Arkadelphia’s water issues resolved in only four days, which puts Flint’s water crises into perspective. I’m proud to have been a part of a project that contributed to the disaster in Flint, even if it was only a small part. Here is how you can make a difference.

Like last year, several members of the Arkansas Trial Lawyer’s Association helped with Arms Around Arkadelphia (“AAA”) in 2019. This year’s project for the ATLA crew involved stripping a wheelchair accessible ramp and repainting it:

Pictured above are Jay Neal (left) and Austin King (right) finishing up the paint job.

Pictured above are Jay Neal (left) and Austin King (right) finishing up the paint job.

Most of the work involved with the ramp above was getting the old paint stripped off, which required the efforts of those pictured below:

Pictured above from left to right: Ed Zellmer, Peter Miller, P.A.; Brian Trubitt, Taylor King & Associates; Jay Neal, Taylor King & Associates; Amanda Boulden, Arkansas Trial Lawyer’s Association; Taylor Chaney, Chaney Law Firm, P.A.; Jessica Mallett, Peter Miller, P.A.; Paige Edgin, Peter miller, p.a.; and austin king, taylor king & associates.

Pictured above from left to right: Ed Zellmer, Peter Miller, P.A.; Brian Trubitt, Taylor King & Associates; Jay Neal, Taylor King & Associates; Amanda Boulden, Arkansas Trial Lawyer’s Association; Taylor Chaney, Chaney Law Firm, P.A.; Jessica Mallett, Peter Miller, P.A.; Paige Edgin, Peter miller, p.a.; and austin king, taylor king & associates.

AAA completed several other projects across the community. The AAA program is an outstanding annual event taking place in late May and early June each year. If you're interested in participating in the AAA projects in 2020, contact David McAllister at I’m already looking forward to it.

At the annual meeting of the Arkansas Bar Association in June, the Young Lawyer’s Section organized a service project bringing bar members together in partnership with The Pack Shack, who’s mission is to supply provisions and opportunities for our neighbors in need, as follows:

There were several tables with four people assigned to a funnel, with each person performing an assembly line task to make individually packaged meals, as follows:

for every 1,000 meals made, someone banged the gong.

for every 1,000 meals made, someone banged the gong.

The entire legal community was represented as Circuit Judges, Court of Appeals Judges, Supreme Court Judges, and attorneys practicing in every area of law participated together. In just a few hours, we packaged over 10,000 meals for hungry Arkansas residents.

I hope the Bar continues performing service projects at the annual meeting, and starts doing them at the mid-year meeting in February each year.

Whether it was funding for water to help our brothers and sisters in need in Flint, Michigan, or repainting a wheelchair ramp for our brothers and sisters at home in Arkadelphia, or packaging meals for hungry Arkansas residents, being able to contribute in some small part has been fulfilling for all attorneys involved, and especially me. If you have a project in need of funding or in need of manpower to get the job done, please contact us.

Dishonest Claim Handling Methods by State Farm, Allstate, Farmers, USAA and Other Insurers Harm Policy Holders with Solutions to Stop the Insurance Abuse

         The “redesign” of insurance claim departments by State Farm, Allstate, Farmers, USAA and other insurance companies harms policyholders and consumers. The courts have held these insurance companies responsible for wrongful conduct in redesigning claims departments to stop fairly paying claims in order to maximize corporate profits.  These changes in insurance industry practices have been publicized as shown by the recommended reading and viewing list in the appendix below.

            State Farm led the auto insurance industry with its claim department redesign in 1979 for the purpose of increasing revenues by reducing or denying benefits.  This was accomplished by abandoning insurance industry standards for good faith claim handling, and “redesigning” its claims procedures to require its adjusters to “delay, deny and defend” injury claims regardless of merit.  This dishonest conduct has cheated consumers, including its own policyholders with first party underinsured motorist and uninsured motorist coverage, out of billions of dollars in policy benefits.  These benefits were purchased by policyholders in good faith for protection and peace of mind should a claim arise (but unfortunately for those having a claim, their claim was predetermined to be adjusted for low value).

            State Farm’s cheating created a competitive advantage over other automobile insurance companies, motivating some to follow State Farm’s lead in redesigning their own claim departments.  These insurance companies spent hundreds of millions of dollars to rewrite their claims manuals to require their adjusters to disregard the industry standard good faith handling rules and to use dishonest claim handling tactics.  Allstate alone spent $250 million on its claim department redesign, the results of which are discussed below. The financial bottom line was and is the generation of additional billions of dollars of annual revenue per year for these insurance corporations by not fairly paying claims.  Since state insurance departments have not regulated this institutional bad faith misconduct, it is up to the cheated policyholders and their lawyers to right this wrong through the civil justice system.  Solutions to this reprehensible misconduct are provided below.

State Farm’s Dishonest Misconduct

            Despite attempts at secrecy and destroying incriminating evidence, State Farm’s dishonest misconduct eventually was discovered. Through litigation spanning 24 years, the details about State Farm’s wrongdoing came to light, culminating in the United States Supreme Court opinion of State Farm Mutual Automobile Insurance Company v. Campbell,[1] where the court noted that State Farm created “a national scheme to meet corporate fiscal goals by capping payouts on claims company wide,” which was referred to as “Performance, Planning and Review, or PP&R policy.”[2]

            In a close 5 to 4 vote, the court reversed the Utah Supreme Court’s affirmance of a jury verdict against State Farm in the amount of $145 million in punitive damages for bad faith in handling the defense of an auto collision case, and remanded with instructions that the U.S. Supreme Court favored single digit multipliers for compensatory to punitive damages to comport with due process. Justice Ginsberg wrote in her dissent that she would have affirmed the jury verdict for $145 million in punitive damages on the key criterion that the “reprehensibility” of State Farm’s conduct was supported by ample evidence. 

            State Farm implemented PP&R in 1979 with “the explicit objective of using the claims-adjustment process as a profit center,” which “continues to function as an unlawful scheme to deny benefits owed to consumers by paying out less than fair value in order to meet preset, arbitrary payout targets designed to enhance corporate profits.” The scope “applied equally to the handling of both third-party and first-party claims.”[3]

            Common tactics used by State Farm included “falsifying or withholding of evidence in claim files” and “to unjustly attack the character, reputation and credibility of a claimant and make notations to that effect in the claim file to create prejudice in the event the claim ever came before a jury.”[4]

            Former State Farm employees testified they were subjected to “intolerable and recurrent pressure to reduce payouts below fair value” and at times “forced to commit dishonest acts and to knowingly underpay claims.”[5]  Ample evidence was presented that State Farm’s policy was “deliberately crafted to prey on consumers who would be unlikely to defend themselves.”  Several former employees testified “they were trained to target the ‘weakest of the herd’ --  the elderly, the poor, and other consumers who are least knowledgeable about their rights and thus most vulnerable to trickery or deceit, or who have little money and hence have no real alternative but to accept an inadequate offer to settle a claim at much less than fair value.” [6]

            To insulate itself from liability, “State Farm made ‘systematic’ efforts to destroy internal company documents that might reveal its scheme,” despite having a “special historical department that contained a copy of all past manuals on claim-handling practices and the dates on which each section of each manual was changed. Yet in discovery proceedings, State Farm failed to produce any claim-handling practice manuals for the years relevant to the Campbells’ bad-faith case.”  Evidence showed claims management was ordered to destroy a “wide range of material of the sort that had proved damaging in bad-faith litigation in the past.” “In recent years State Farm has gone to extraordinary lengths to stop damaging documents from being created in the first place.”[7]

            “State Farm’s ‘policies and practices,’ the trial evidence thus bore out, were ‘responsible for the injuries suffered by the Campbells,’ and the means used to implement those policies could be found ‘callous, clandestine, fraudulent, and dishonest. …The Utah Supreme Court, relying on the trial court’s record-based recitations, understandably characterized State Farm’s behavior as ‘egregious and malicious.’”[8]

            The underlying Supreme Court of Utah’s opinion provided more details about State Farm’s dishonest and fraudulent wrongdoing. In Campbell v. State Farm Mutual Automobile Insurance Company,[9] rical baseline from 1922 to 1977ned to recuse, and  the initialnion.s s ground to es given to the same interrogatory filed in ththe court reviewed considerable evidence to support the finding that “State Farm repeatedly and deliberately deceived and cheated its customers via the PP&R scheme…State Farm’s fraudulent practices were consistently directed to persons - poor racial or ethnic minorities, women, and elderly individuals - who State Farm believed would be less likely to object or take legal action.”[10]

            The court recounted evidence that showed “State Farm engaged in a widespread pattern of fraud…that demonstrates that State Farm specifically calculated and planned to avoid full payment of claims, regardless of their validity. Thus the nature of State Farm’s conduct supports the imposition of a higher than normal punitive damage award.”[11]

            “A high probability of recidivism justifies a higher than normal punitive damage award…In light of State Farm’s decades-long policy of fraudulent and dishonest practices in its handling of claims, it is difficult to imagine how such ingrained policies of corporate culture can be easily or quickly changed.”[12]  “The harm propagated by State Farm is extreme when compared to the statistical probability that State Farm is likely to be required to pay damages only once in 50,000 cases.”[13]  Other wrongful acts of bad faith included “evidence that State Farm employed predictable experts…engaged in hardball litigation tactics, and discriminated on the basis of sex and race.”[14]  The court noted the $145 million punitive damages verdict was not unreasonable, given the need to sufficiently deter and punish State Farm. 

            The employment of defense lawyers willing to violate the ethical rules of professional conduct was a key component in State Farm’s enforcement of its mandated hardball claims methods of “Delay – Deny – Defend.”  This “fraudulent scheme” increased revenues by billions of dollars per year, so it easily justified State Farm paying millions of dollars per year to defense lawyers hired to defend insured defendants in injury lawsuits. State Farm’s instructions to defense lawyers were outrageous, and were quoted by the Supreme Court of Utah, as follows:

There was also evidence that State Farm actually instructs its attorneys and claim superintendents to employ ‘mad dog defense tactics’ — using the company’s large resources to ‘wear out’ opposing attorneys by prolonging litigation, making meritless objections, claiming false privileges, destroying

documents, and abusing the law and motion process.[15]

             Following remand by the U.S. Supreme Court, the Utah Supreme Court reduced the punitive damages amount from $145 million to $9 million to comport with the single digit multiplier of compensatory to punitive damages, as required by the U.S. Supreme Court’s opinion.  Campbell v. State Farm Mutual Automobile Insurance Company.[16]

            Unfortunately, it appears the Utah Supreme Court and the dissenting justices of the United States Supreme Court were correct when they noted that future wrongdoing by giant corporations would not be deterred unless large punitive damages awards could be enforced.  After the punitive damages verdict was reduced from $145 million to $9 million, State Farm’s and other insurance companies’ insurance abuse has continued to the detriment of policyholders in first party UIM and UM cases, and to injured plaintiffs and defendants in third party cases. 

            Policyholders and injury claimants are forced to file a lawsuit as the only option to a low valued settlement offer.  A key component of the claim department “redesign” is using the civil justice system as the “Kill Box” for injury claimants unwilling to accept a low settlement offer.  Sadly, the character assassination tactics and other violation of ethical rules by unscrupulous defense lawyers often defeat even the most meritorious of injury claims.

The Fruits of State Farm’s Ill-gotten Gains

            The Utah Supreme Court noted State Farm’s surplus increased from $2.65 billion to $25 billion, and its assets increased from $6.3 billion to $54.75 billion, in the period from just before PP&R was implemented in 1977 to 1995. This shows the great profitability of State Farm’s fraudulent scheme.[17]  State Farm’s web page has a company history stating it was founded in 1922. From inception in 1922 to 1977, in 55 years, State Farm’s assets grew to $6.3 billion per the court’s opinion, which averages $0.12 billion per year as a baseline. The court noted from 1978 to 1995, in 17 years during which PP&R was adopted, State Farm’s assets grew to $54.75 billion, an increase of $48.45 billion, which averages $2.85 billion per year over 17 years.  This is an average increase of 2,400 percent per year over the baseline, once State Farm stopped following insurance industry good faith claim handling rules in 1978. From 1995 to 2013 according to State Farm’s online annual reports, State Farm’s assets increased to $129.34 billion, an increase of $74.59 billion since 1995, which averages $4.14 billion per year over 18 years.  This is an average of 3,400 percent increase per year over the historical baseline, and an increase of 1,200 percent per year over the 2,400 percent per year increase for the initial PP&R period up to 1995 that was mentioned in the court opinion. Dishonesty pays and pays well!

State Farm Caught Lying About Buying a Judicial Election

            State Farm made the news for getting caught buying justice in Illinois. The insurer paid millions to a judge’s campaign in order to get a billion-dollar verdict against it reversed. In 1999, State Farm lost a $1,056,180,000 verdict for repairing insured vehicles with cheaper, aftermarket parts instead of OEM parts. State Farm appealed to the Supreme Court of Illinois. While this appeal was pending, the insurer campaigned for and donated money to a candidate in a race for the Supreme Court of Illinois, the very court that would decide State Farm’s appeal. The candidate backed by State Farm ultimately won the election, which was the most expensive state supreme court race in U.S. history, with $9.3 million raised.

            When the policyholders who won the verdict objected to this judge deciding the appeal, State Farm told the court it had only donated $350,000 to the judge’s campaign. The judge declined to recuse, and cast the deciding vote to overturn the verdict against State Farm, which occurred in 2005.

            Years later, a former FBI agent discovered that State Farm lied when it said it only donated $350,000 to the judge’s campaign. State Farm actually donated between $2.5 and $4 million to the campaign. Based on this evidence, attorney and former Republican senator from Tennessee, Fred Thompson (among others), filed a class action lawsuit to reinstate the $1+ billion verdict against State Farm, which is pending.[18]

Allstate’s Dishonest Misconduct

            In litigation spanning 15 years, the Arkansas Supreme Court found in Allstate Insurance Company v. Dodson,[19] that Allstate adopted dishonest auto claims handling practices, similar to State Farm’s practices quoted above, by adopting a “nationwide practice of deliberately low-balling small insurance claims for bodily injury and taking advantage of financially-vulnerable personal-injury victims.”[20] The court characterized this scheme as Allstate declaring “economic warfare” against injury victims, and noted as follows:

Fye’s testimony included reference to a study of Allstate’s core practices that showed that claimants not represented by attorneys received less in settlements than claimants who were represented by attorneys. Fye also testified that it was Allstate’s goal to control loss payout, especially on bodily injury claims of small to medium size. He added that it was Allstate’s national practice to utilize a computer program (Colossus) to calculate a range of settlement values for claims involving minor impact, soft-tissue injuries and make settlement offers in the lowest ten percent of that range. If the claimants did not want to settle, then they would be forced into a lawsuit. Claim adjusters, he said, are being trained in ‘trial economics,’ which concerns whether it is economically feasible for an attorney to take on the costs of prosecuting a soft-tissue injury case. He testified that Allstate’s claims program sends a message to claimants and lawyers who consider taking claims to court that the majority of claims for small to medium soft-tissue injuries settle for less than ten thousand dollars. Based on his observation of industry standards over the past fifty years, Fye opined that Allstate violated those industry standards by identifying a successful medical practice that was providing assistance to persons with soft-tissue injuries and intervening to curb that practice in order to reduce claims.[21]

             In affirming a jury verdict in the amount of $6 million compensatory damages and $15 million punitive damages for Dr. Jon Dodson, who Allstate targeted to run out of the physical therapy business pursuant to its dishonest claim handling methods, the court stated:

Viewing this evidence in the light most favorable to Dodson, there is sufficient evidence to support a finding by the jury that Allstate, in its continued statements made by its representatives to Dodson’s patients and attorneys that worked with Dodson, acted with malice. There was ample evidence presented that Allstate went beyond merely refusing to pay for physical therapy performed at Dodson’s clinic by unlicensed employees. As recited above, several patients and attorneys testified that Allstate agents not only refused to pay physical therapy claims but also repeatedly told them that Dodson was running an illegal and fraudulent practice.

The enormity of the wrong is great enough to support punitive damages, considering that Allstate continued this conduct over a period of several years resulting in severe damages to Dodson’s reputation and medical practice. Also supportive of the assessment of punitive damages is the fact that this course of conduct was taken by a nationally recognized insurance agency and, apparently, in accordance with their national claims practices and procedures to curb small, soft-tissue claims. The evidence presented in this case was such that a jury could have concluded that the acts committed by Allstate were pursued with a conscious indifference for Dodson and with deliberate intent to injure him. After considering all of the circumstances, we conclude that awarding punitive damages does not shock the conscience of this court. The question is the appropriate amount of those damages, and we will discuss this as a part of the cross appeal.[22]  

Farmers’ Dishonest Misconduct

            In a bad faith failure to settle within policy limits case against Farmers Insurance Company, the trial judge reduced the jury’s verdict for $863,274 compensatory damages and $20,718,576 million bad faith punitive damages, which was further reduced by the Oregon Court of Appeals.  On review by the Oregon Supreme Court,[23] the amount of the insured’s compensatory damages was determined to be $690,619.20, and the case was remanded to the trial court to determine the exact amount of prejudgment interest  (estimated to be $589,000), with instructions for the total compensatory damages to multiplied times four to calculate the maximum amount of punitive damages to be awarded.  The Oregon Supreme Court analyzed controlling federal law, and concluded the maximum punitive damages multiplier would be four times, based upon the specific facts of the case. The calculation was $1.28 million compensatory x 4 = $5.12 million punitive damages + $690,619.20 compensatory + $589,000 prejudgment interest, for total bad faith damages of $6,399,619.20.

            The court stated the following evidence justified the imposition of the maximum amount of punitive damages against Farmers:

Given the evidence, a rational juror could find the following facts: (1) Defendant, in calculated fashion, engaged in a protracted course of conduct -- from its initial 'stonewalling' and 'low-balling' tactics through its fraudulent manipulation of the claims evaluation process and its refusal to settle even at trial -- that exposed its insured to the virtual certainty of a devastating excess verdict in a 'no defense' case. (2) Defendant willfully engaged in such conduct, heedless of its insured's interests and in cynical violation of its obligations to its insured, for its own selfish purposes of building and maintaining a reputation for 'toughness' in claims adjustment and settlement. (3) Defendant's conduct towards Munson was intentional, deceitful, and malicious. (4) Defendant's hardball tactics in this case were typical, not merely an isolated instance...Munson was not stonewalled once; he was stonewalled many times, over a period of years. Moreover, Munson's case was not an isolated incident. A rational jury could have inferred from the evidence that, as one lawyer had said, "Voth doesn't pay policy limits" -- i.e., that "low-balling" insureds' claims was a common practice of defendant... the Court of Appeals' assessment sufficiently conveys the deplorable nature of the thought processes of defendant's minions and correctly places them on the scale of reprehensibility.

In summary, we conclude that defendant's actions were directed at a financially vulnerable victim, were not confined to this victim alone, and involved intentional malice and deceit...leads us to conclude that defendant's actions were very reprehensible... Specifically, the jury could infer that the person injured by defendant's conduct (Munson) was financially vulnerable and defendant knew it, that defendant's tortious conduct was not an isolated incident but, instead, was a deliberate pattern and practice, and that defendant acted deceitfully and with malice.

            In another a bad faith case against Farmers Insurance Company arising under a fire insurance policy with $75,000 policy limits, a federal appeals court affirmed a jury verdict for $375,000 compensatory damages and $4,000,000 punitive damages for bad faith.[24]  The court noted the entire course of conduct between the parties could be considered by the jury in determining whether the good faith and fair dealing standard was breached. The evidence supporting the bad faith judgment included the manner in which the claim was handled, where Farmers violated rules contained within its own training manual about wrongfully invoking an appraisal process. At the time the claim was filed, Farmers did not have in its possession any information to deny payment of the claim, so its denial of payment was wrongful. Farmers unreasonably delayed payment on the contents coverage to pressure the insured to settle on the loss of the structure. Farmers cancelled the insured’s coverage even though the insured was not at fault in causing the loss, as an attempt to pressure the insured to settle on the loss of the structure.  There was also evidence that Farmers unreasonably withheld payment by the branch office waiting a year to request authority from the home office to settle for the policy limits, and after that authority was finally granted, the authority for policy limits was never offered to the insured. The court followed the rule that malice may be inferred when a party commits willful acts in reckless disregard of another’s rights, which supported the imposition of punitive damages.

            Farmers financially motivated its employees to increase revenue by lowering claim payouts.  Its Partners in Progress program was adopted in 1992, which compensated employees by how well claim payouts were reduced, and which was aimed at current and future performance.  A “critical” priority included a “Focus Goal” to improve Farmers’ surplus, which is a measure of the insurance company’s net worth, being the amount left over to an insurance company after all of its legal obligations have been paid, and which directly affects the amount of insurance a company can write.

            The individual claims employee’s job performance upon which their compensation was based, and their plan for future performance, was recorded annually in the employees’ Performance Planning and Review (“PP&R”) form.  Goals for future performance were to reduce the average paid claim for bodily injury, collision, property damage and other categories, compared to previous years. One of the principal measures of an insurance company’s profitability is its combined ratio.  This is the ratio of earned premium to claims payments plus operational and claims handling costs. If the ratio is 100 then the insurance company is breaking even; however, if the ratio exceeds one hundred the insurance company incurs an underwriting loss.  The largest portion of the cost side of the combined ratio is claims payments. For a claims department to contribute to company profitability, that must include a reduction of claims payments. Average paid claims were not only tracked in the individual claims employee’s PP&Rs, but also tracked in the Farmers’ claims office’s quarterly management reports.          

            In addition to its compensation and bonus programs, Farmers has made other efforts to turn its claims department into a profit center.  In 1994, following the Northridge earthquake in California, Farmers initiated the “Bring Back a Billion Program,” where employees were asked to do their part “to help restore” the company’s surplus.  The goal was clear: “Immediately strengthen our actions so as to quickly rebuild surplus to a ratio of surplus to premiums of at least 33 percent, to attain a 40 percent ratio by 1997, and to reach a 50 percent ratio by the year 2000.”   Employees, including claims employees, were asked to sign individual commitment forms that they would work to contribute to profitability and restore the company’s surplus.

            Farmers also instituted a series of bonus programs aimed at rewarding claims personnel for contributing to company profits.  Farmers began its Quest for Gold bonus program in 1998 for all Farmers offices and employees. The amount of each employee’s bonus would depend on the individual office’s success in achieving five goals, including a reduction in the combined ratio by reducing claims payments. 

            Beginning in 2000 to 2001 Farmers started to evaluate their claims employees on “claim overpayment.”  This was part of Farmers’ new ACME program, which was the product of Farmers consultation with Accenture Consulting, and is similar to those adopted by State Farm and other carriers.  This is a claims quality evaluation program that requires claims personnel to “calibrate” their handling of claims files so that all claims personnel are handling claims similarly.  The focus of this program was to adopt outcome oriented results for Farmers, and thereby “improve Farmers’ profitability.” In one PP&R, under the category of “Expected Results” for “Financial,” which is a “critical” category, with a weight of 25%, there is space for notations about Farmers’ employees’ overpayments for a variety of claims categories, however, there is no similar evaluation for underpayment of claims.

            Through executive presentations at Farmers’ annual Strategic Management Conferences, Farmers has continued its efforts to exhort its employees to contribute to corporate profits.  This goal was tied to management performance plans, with compensation paid to claims employees who reduced claims payouts.

USAA’s Dishonest Misconduct

            USAA was found liable for low-balling an uninsured motorist (UM) auto claim, and a jury’s second verdict form awarded damages to the policyholder in the amount of $1.5 million for damages caused by the negligence of an uninsured motorist, $7.5 million for actual compensatory damages for the tort of bad faith, and $7.5 million for punitive damages for the tort of bad faith, in the case of Newport v. USAA.[25] On appeal the jury’s bad faith verdict was affirmed because USAA did not handle the claim in good faith and treat its policyholder fairly. From the evidence there was an inference USAA acted with oppression, malice, wanton or reckless disregard of the policyholder’s rights, which justified submission of punitive damages to the jury.

            The policyholder died 39 days after an auto collision caused by the fault of an uninsured motorist on November 23, 1993. The attorney for his estate repeatedly made requests for USAA to pay medical expenses and funeral expenses, yet no payment was made nor did USAA provide an explanation for not making the payments.  USAA evaluated the claim in May of 1994 between $750,000 to $900,000.  A litigation supervisor was authorized to offer up to $900,000 but never made any offer to settle the claim. USAA hired an attorney and authorized him to negotiate, who made three offers below $750,000 and a fourth offer at $750,000. The policyholder’s lowest counteroffer was $1,175,000. The policyholder’s estate filed suit on October 4, 1994 to collect the UM policy limits of $1.5 million.

            The court noted an insurer has an "implied-in-law duty to act in good faith and deal fairly with the insured to ensure that the policy benefits are received," and the essence of a bad-faith action "is the insurer's unreasonable, bad-faith conduct, including the unjustified withholding of payment due under a policy." The insurer "must conduct an investigation reasonably appropriate under the circumstances" and "the claim must be paid promptly unless the insurer has a reasonable belief that the claim is legally or factually insufficient…The decisive question is whether the insurer had a ‘good faith belief, at the time its performance was requested, that it had justifiable reason for withholding payment under the policy’…The knowledge and belief of the insurer during the time period the claim is being reviewed is the focus of a bad-faith claim."[26]

            The court defined “low balling” as “an insurer's intentional offer of a sum less than its own valuation of the claim.” While there is little legal authority for imposing bad faith where an insurer offers less than its internal value of a claim, the court noted “a duty to promptly pay a valid claim has been clearly recognized by this Court's jurisprudence since an insurer's duty of good faith and fair dealing was articulated... An insurer may not treat its own insured in the manner in which an insurer may treat third-party claimants to whom no duty of good faith and fair dealing is owed.”[27]

            The Oklahoma Supreme Court specifically held as follows:

         This Court holds that following ‘an

investigation reasonably appropriate under the

circumstances,’ Buzzard II, 824 P.2d at 1109, an insurer

must promptly settle the claim for the value or within the

range of value assigned to the claim as a result of its

investigation. An insurer's failure to do so may subject it

to a claim for bad faith from its insured. This is

not to say an insurer may not negotiate or litigate the

value of the claim. The duty of good faith and fair

dealing merely prevents an insurer from offering less

than what its own investigation reveals to be the claim's


         The Court of Civil Appeals in this matter held that

there was no bad faith because the claim was not

actually denied and negotiations were ongoing.

However, an offer to make an insufficient payment

is equivalent to a denial of that portion of the claim lying

between the insurer's offer and the value or range of

value which the insurer has assigned to the claim.

Offers below the insurer's own calculation of the value

of the claim are not a valid justification for withholding


         The first three of USAA's pre-litigation

offers fell below the value it assigned to the Newport

claim. A jury could reasonably conclude that USAA was

not negotiating in good faith with its insured. The portion

of the opinion of the Court of Civil Appeals opinion which

holds that there was no bad faith is vacated.[28]

            As additional evidence of bad faith, the court noted that waiting until the fourth offer of settlement, well into settlement negotiations and long after it evaluated the value of the claim, to intimate a defense of “unavoidable accident” created “an inference that its mention in the fourth offer was intended to coerce a settlement.”[29]

            One issue on appeal involved two different jury verdict forms being completed by the jury, following confusion caused by the jury instructions not telling the jury that only an amount up to policy limits of $1.5 million would be recoverable from USAA to pay for damages caused by the negligence of the uninsured motorist. Confusion was also created by the instructions not distinguishing between actual damages on the claim for uninsured motorist benefits and actual damages for compensatory damages on the bad faith claim. The first jury verdict form awarded $6 million for negligence damages and $1.5 million as compensatory damages for the tort of bad faith. The court ruled the trial judge erred by directing the jury to re-deliberate and not correcting the jury’s initial verdict as a matter of law. The court reduced the jury’s verdict to $1.5 million for the amount of the uninsured motorist policy limits, reduced the jury’s verdict to $1.5 million for the amount of compensatory damages for the tort claim of bad faith, and reduced the jury’s verdict to $1.5 million for the amount of punitive damages for the tort claim of bad faith after applying Oklahoma’s tort reform caps on punitive damages. [30]

            The court specifically rejected USAA’s assertion that the award of punitive damages was unjustified, and found:

   This Court has long held that ‘an insurer's

violation of the implied duty to deal fairly and act in good

faith' gives rise to an action in tort for which

consequential, and in a proper case, punitive damages

may be sought…

   Under the applicable version of the

punitive damages statute, ‘the availability of a punitive

damages award is not automatic, but rather is governed

by the standard applicable in other tort cases. The

plaintiff must show that the defendant acted with

oppression, malice, fraud or gross negligence or

wantonness.’ …The act which constitutes the cause of action

must be activated by or accompanied with some evil intent,

or must be the result of such gross negligence - such disregard of

another's rights - as is deemed equivalent to such

intent." … 

   The evidence presented at trial demonstrated

USAA's bad faith in its handling of the Newport claim.

Based on this Court's review of the transcripts, exhibits

and record on appeal, the jury was justified in finding

oppression, malice, or wanton or reckless

disregard of Newport's rights. Further, the amount of

punitive damages, which are today limited to the amount

of 1.5 million dollars by the award of 1.5 million dollars in

actual damages for bad faith, is not grossly excessive,

nor does it appear to be the result of passion, prejudice,

or improper sympathy. The award, as corrected is

neither unjustified nor excessive.[31]

Widespread Dishonest Claims Handling Practices

            How do insurance companies get “good people” claims handlers to do bad things to other people (policyholders)?  They pay them!  Many carriers have employee review and incentive plans, with results being measured as outlined above, which are focused on not fairly paying claims to achieve corporate financial goals.

            Many other auto carriers have implemented similar claim department “redesign” programs to stop fairly paying claims to increase revenue, including Geico, Nationwide, Progressive, and others.  Updates to this article are planned to include the specifics about dishonest claims handling practices by other carriers.

Insurance Defense Lawyer Ethical Misconduct

            Billions of dollars of increased revenue per year from denying fair compensation to policyholders and other injuried consumers easily justifies the payment of many millions of dollars per year to insurance defense counsel, as enforcers of the mandated hardball claims methods, which keeps the extra billions of dollars of annual revenue flowing to the insurance companies.

            In addition to the misconduct quoted in the above court opinions, numerous other examples of insurance defense lawyer misconduct are listed in the case of Lioce v. Cohen.[32] The end result is that now auto injury claimants have difficulty finding a doctor to treat their injuries, and difficulty finding an injury lawyer willing to take an injury claim to trial, in part due to losing cases because of defense lawyer misconduct. 

            In third-party cases it is especially troubling that some defense lawyers ignore the ethical duties owed to the insured individual defendants for whom they are hired by the insurance company to defend. Independent defense lawyers’ ethical duties are 100% owed to the individual client. Instead, some defense lawyers follow insurance company marching orders as quoted above, and do the bidding of adjusters to win cases using questionable tactics and engaging in unprofessional misconduct.  They ignore the duties owed to their true clients, whose interest is usually best served by fulfilling the purpose of insurance in the first instance by accepting responsibility for the insured’s fault in causing damages to another, and settling claims out of court on a fair basis using industry standard good faith claim handling rules.  Settling injury claims on a reasonable basis is in the best interest of the insured because it avoids the risk of an excess jury verdict for which the insured is personally liable, and the time, stress and expense otherwise incurred by the insured when the insurance company forces a jury trial by not making a reasonable settlement offer. Some ignore their independent defense lawyer ethical duties to first be a peacemaker and try to settle claims, instead of using litigation as a last resort for dispute resolution. 

            Our law firm is aware of this widespread state and national ethical problem due to our firm’s handling, on a pro bono basis, the case of Brown v. Kelton,[33] where we fought and won the battle to keep insurance company staff attorneys from being assigned to represent insured defendants in Arkansas in third party cases, as it was the right thing to do to help policyholders receive representation by independent defense lawyers rather than insurance company employee lawyers with a built in conflict of interest.

This decision helped injury plaintiffs by establishing that insured defendants have a right to be represented by independent defense lawyers, who hopefully will have the ethical fortitude to tell the insurance company to pay the claim based upon a fair evaluation, and refuse to do the bidding of some adjusters to character assassinate the claimant and otherwise do what it takes to win at all costs in violation of the ethical rules. A third benefit from Brown v. Kelton is that it preserved the way of life and law practice for independent defense lawyers in Arkansas, and avoided the trend in other states where defense lawyers are relegated to working as staff attorney employees controlled by insurance company employers.

Solutions for Stopping the Insurance Abuse

            Just as it is not easy to turn an aircraft carrier, it is not easy for greed-driven insurance companies to turn away from using dishonest claim handling methods against policyholders and consumers, due to the additional billions of dollars per year in revenue generated from cheating. After spending hundreds of millions of dollars to “redesign” insurance claim departments, involving hundreds of thousands of pages of claim handling and procedure manuals, and decades spent training adjusters and managers on how to apply the required hardball methods, the corporate culture has become so ingrained that it is difficult, if not impossible, for these dishonest insurance companies to voluntarily mend their ways. This is especially true after the above State Farm v. Campbell decision eliminated the imposition of full punitive damages, and thereby removed effective deterrent and punishment factors to stop the insurance abuse by State Farm, as well as removing the deterrence factor to prevent other insurance companies from adopting similar dishonest schemes that continue to cheat policyholders and consumers.

           There are some options to consider for stopping the dishonest insurance abuse. Reputable defense lawyers must follow their professional ethical duties to serve as independent and objective lawyers for the individual clients they are hired to represent, and resist the insurance company’s orders to engage in ethical misconduct.  These duties include handling litigation in a civil manner and in strict compliance with the ethical rules, and a refusal to follow the adjusters’ instructions to engage in scorched-earth tactics focused on character assassination and willful violation of the ethical rules.  The defense lawyer’s ethical duties include telling the adjuster that such hardball methods are unacceptable, providing the adjuster with a reasonable and objective claim evaluation based upon the merits of the case, and telling the adjuster to pay the claim based upon such evaluation.

            Plaintiffs’ lawyers must learn to overcome ethical misconduct by some defense lawyers and do what it takes to make them play by the ethical rules. It is necessary to work to master the subject matter of litigated cases, and to learn trial advocacy skills to achieve good jury verdict results for deserving injury victims, when forced to take a case to trial by the opposing insurance carrier’s refusal to make a reasonable settlement offer.

            Policyholders and consumers can help with grassroots efforts to learn about and inform others about the dishonest hardball claims methods that have cheated policyholders and injured consumers for decades.  This includes viewing the award winning documentary film, Hot Coffee, reading books and literature listed in the appendix below, and news articles that expose how insurance companies and other powerful interests have corrupted the legal system by tort “reform,” which is nothing more than taking away the average citizen’s constitutional right to a fair jury trial.  Hot Coffee shows how the powerful interests used propaganda to attempt to poison the minds of potential jurors, which is jury tampering on a national scale.

            Working to save the constitutional right to a fair jury trial is of paramount importance, which includes opposition to and the repeal of tort reform laws that hurt the rights of policyholders and injured consumers to hold dishonest insurance companies accountable in court. Policyholders and injured consumers can develop relationships with their local, state and national lawmakers to express their views about insurance reform laws that are needed to stop the insurance abuse, including removal of the exemption from anti-trust laws for insurance companies.

            Complaints of insurance abuse should be filed with state insurance departments that help document ongoing misconduct by specific insurance companies. Consumers should demand state insurance department regulators enforce existing laws and regulations against abusive insurance companies that violate the legal duty of “good faith and fair dealing” owed to policyholders.[34]

            Regulatory reform is needed for state insurance commissioners to focus on consumer protection rather than complying with the wishes of insurance companies, including ethics laws to stop commissioners from being unduly influenced by money and job offers from regulated insurance companies.[35]

            Shareholders and policyholders of insurance companies can organize and lobby boards of directors to fire senior managers who follow the “greed is good” management philosophy taught by McKinsey & Company to State Farm, Allstate, and others; which received hundreds of millions of dollars in consulting fees to “redesign” insurance company claim departments to maximize corporate profits using dishonest methods.  Those senior managers who continue to require dishonest claim handling methods should be replaced with those having personal integrity and business ethical conduct training. With the huge surpluses and assets amassed by these dishonest insurance carriers, they can well afford to change their ways and follow the insurance industry’s good faith claim handling rules to fairly pay claims for decades to come.

            The good people who are adjusters and managers of dishonest insurance companies can demand a stop to the dishonest claim handling methods that abuse their policyholders. If not successful, they can seek employment by an insurance company that follows good faith claim handling rules, which will improve their sleep at night in the knowledge they are fairly treating other human beings in their daily work, instead of being required to cheat policyholders.


            The policyholders and consumers of America, with the help of their lawyers and lawmakers, can force the changes needed to stop the dishonest insurance abuse.  The key is educating the public about this problem, including judges, plaintiff and defense lawyers, and even insurance adjusters and managers, who are often unaware of these dishonest schemes required by many auto insurance companies.  This dishonest misconduct has been kept secret due to the use of protective orders in court cases. It is within the power of judges to end the practice of using protective orders that have long shielded the dishonest misconduct.

            Education should in turn generate public outrage to demand much needed insurance reform laws. In the meantime, the policyholder victims of insurance abuse have no choice except to keep fighting the good fight, one case at a time, through the civil justice system.  

Recommended Insurance Bad Faith Reading and Viewing List

1. The Claims Environment, published by the Insurance Institute of America, which has long been      used in the insurance industry to train adjusters about good faith claim handling rules.

2. Publications about the Unfair Claims Settlement Practices Act published by the National    Association of Insurance Commissioners.

3. David R. Berardinelli. From Good Hands to Boxing Gloves: The Dark Side of Insurance.    Trial Guides, LLC, 2008.

4. Jay M. Feinman. Delay, Deny, Defend: Why Insurance Companies Don’t Pay Claims and What You Can Do About It. Penguin Group, 2010.

5. Allstate Insurance Company v. Dodson, 2011 Ark. 19, an Arkansas Supreme Court Opinion           describing Allstate’s institutional bad faith misconduct discussed above.

6. Allstate Floridian Insurance Company v. Office of Insurance Regulation, 981 So. 2d 617, 2008     Fla. App. LEXIS 6955; 33 Fla. L. Weekly D 1287, May 14, 2008; Allstate was        suspended from doing business in Florida for not complying with a subpoena to produce          the McKinsey & Company and other documents related to the redesign of its claim department, issued in connection with a state investigation of Allstate defrauding its   policyholders.

7. Lioce v. Cohen, 174 P.3d 970 (2008), containing a long list of what constitutes unethical   misconduct by insurance defense lawyers in defending auto collision cases.

8. Study materials for the AIC (Associate in Claims) designation by The Institutes;


9. Articles within the Summer 2010 issue of Exclusive Focus, an official publication of the     National Association of Professional Allstate Agents, Inc.

10. View the award winning documentary movie, Hot Coffee, available on Netflix and elsewhere;         and here is a link to a trailer for the movie:    .

11. CNN Anderson Cooper 360: Auto insurers play hardball in minor-crash claims;

   (view on You Tube).

12. Nathan P. Chaney, A Survey of Bad Faith Insurance Tort Cases in Arkansas, 64 Ark. L. Rev.

            853 (2011).


Don P. Chaney is a trial lawyer from Arkadelphia, Arkansas. The Chaney Law Firm has a statewide practice helping policyholders handle contract and bad faith claims against insurance companies, and people injured by big truck and auto collisions. The firm’s lawyers collectively received the Arkansas Trial Lawyers Association’s Outstanding Lawyer Award in 2013. The firm uses the latest advances in medical technology tools to obtain accurate diagnosis of permanent injuries that help with patient treatment and provide objective medical evidence in court to prove their clients’ permanent injuries. Mr. Chaney was graduated from the University of Arkansas School of Law in Fayetteville in 1977 where he served as an associate editor of the Arkansas Law Review, has served as a special justice on the Arkansas Supreme Court and as a special Clark County District Court Judge, was selected as a “Top 100 Lawyer,” and was elected to serve on the governing boards for the Arkansas Bar Association and the Arkansas Trial Lawyers Association. He also provides leadership for community and civic organizations.  Mr. Chaney carries the highest “AV” rating for legal ability and integrity by the Martindale-Hubbell Legal Directory. 

Revision Date:  June 22, 2017

Copyright 2017 by Don P. Chaney

[1] 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003).
[2] Id. at 408 U.S. at 412. 
[3] Id. 538 U.S. at 431. 
[4] Id. 538 U.S. at 431.
[5] Id. 538 U.S. 431.
[6] Id. 538 U.S. at 433.
[7] Id. 539 U.S. at 436.
[8] Id. 538 U.S. at 436.            
[9] 2001 UT 89, 65 P.3d 1134 (2001).
[10] Id. 2001 UT 89 at page 25.rical baseline from 1922 to 1977ned to recuse, and  the initialnion.s s ground to es given to the same interrogatory filed in th
[11] Id. 2001 UT 89 at page 30.
[12] Id. 2001 UT 89 at page 36
[13] Id. 2001 UT 89 at page 60. 
[14] Id. 2001 UT 89 at page 70.
[15] Id. 2001 UT 89 at page 9.
[16] 2004 UT 34 (2004). 
[17] Id. 2001 UT 89 at page 25. 
[19] 2011 Ark. 19, 376 S.W.3d 414 (2011).
[20] Id. 2011 Ark. 19 at page 12.  
[21] Id. 2011 Ark. 19 at page 13. 
[22] Id. 2011 Ark. 19 at page 15.
[23] Goddard v. Farmers Insurance Company, 344 Ore. 232 (2008).
[24] Massey v. Farmers Insurance Group, 986 F.2d 1428 (10th Circuit, 1993).
[25] 2000 OK 59, 11 P.3d 190 (2000).
[26] Id. 2000 OK 59 at page 5.
[27] Id. 2000 OK 59 at page 6.
[28] Id. 2000 OK 59 at page 6.
[29] Id. 2000 OK 59 at page 9.
[30] Id. 2000 OK 59 at pages 11, 14.
[31] Id. 2000 OK 59 at page 14.
[32] 174 P.3d 970 (2008).
[33] 2011 Ark. 93 (2011).
[34] These include Uniform State Laws adopted in Arkansas: the Uniform Trade Practices Act, Ark. Code. Ann. § 23-66-201 et seq, and the Uniform Unfair Claims Settlement Practices Act, codified as Rule 43 of the Rules and Regulations of the Arkansas Insurance Department; and appellate court opinions that establish binding legal precedents that must be followed by insurance companies. See also AMI Civ. 2426 (2016) and Arkansas Research Medical Testing, LLC v. Osborne, 2011 Ark. 158 (2011)(a breach of the implied covenant of good faith and fair dealing is admissible evidence of a possible breach of a contract between parties).
[35] - the Center for Public Integrity found about half of state insurance commissioners came from the insurance industry, that many have committed ethical and criminal violations, accepted money to attend lavish conferences and being wined and dined, have direct ties to insurance companies, over half leaving their posts to accept a job in the insurance industry, and have raised more doubt with the public about honesty in government.

Repeat Tour Complete

It’s been awhile since we last posted. Lots has happened since then. The Arkansas Supreme Court held the General Assembly unconstitutionally referred Issue 1 to the voters. The Razorback football team had their worst season (by loss count) on record amid the coaching change, but still managed a top-25 recruiting class. We waited and waited and waited for the duck migration, which just arrived in the middle of February several weeks after duck season ended.

One other thing happened. The Arkadelphia Badger football team started off the Repeat Tour by losing its first five games. On December 8, 2018, the team, after starting the season 0-5, reeled off its 10th straight game to win a second consecutive state title. In the playoff run, they beat four #1 seeds away from home. An 0-5 team has never come back to win a state title, nor has a team ever beaten four #1 seeds in the playoffs in Arkansas high school football history.


While last year’s state title was special, this year’s run says so much about the coaches, players, teachers, parents, administrators, and others in our community who never gave up on themselves or the team. Like last year, many people contributed to the video below commemorating the 2018 State Championship:

I always thought adults were supposed to be examples for kids. However, the example these kids have shown us all is an example I hope to follow. So the next time life gets difficult; the next time things don’t go your way; the next time you think you’re down and out; the next time you’re 0-5 in life, believe in yourself. Remember these coaches and kids. Like they did, believe your efforts will get you where you want to go as long as you continue doing things the right way. What a lesson. What a season. #RepeatTourComplete

Let the #3PeatTour commence.

The dignity of life

Seeing Patsy's health decline reminded me of my maternal grandmother, who spent 30+ years in nursing homes after a stroke paralyzed her in 1985. The common denominator between the two was witnessing the most vulnerable among us pass away with dignity.

Fred Kammer.jpg

A quick Google search provided the following definitions of "dignity," as follows:

1. The state or quality of being worthy of honor or respect. That is, ‘a man of dignity and unbending principle.’

2. A composed or serious manner or style. That is, ‘he bowed with great dignity.’

3. A sense of pride in oneself; self-respect. That is, ‘it was beneath his dignity to shout.’

We all deserve the right to go out on our own terms ... with dignity. While witnessing Patsy's declining health, I could not help but think ... what happens when our dignity is taken away from us against our will by those responsible for our care? The only legal recourse we have is to file a lawsuit against the responsible parties, which are most commonly nursing homes where elderly residents are provided with long-term care.

It shouldn't come as a surprise to learn the nursing home industry, whose trade association is called the Arkansas Health Care Association, is a significant contributor in favor of Issue 1 that will be on the November 2018 ballot in Arkansas. Issue 1 is a proposed constitutional amendment to the Arkansas Constitution, which if passed, will have the following effects:

  1. A cap of $500,000 for non-economic damages in any lawsuit resulting in injury or death. "Non-economic" damages are defined as "damages that cannot be measured in money, including without limitation any loss or damage, however characterized, for pain and suffering, mental and emotional distress, loss of life or companionship, or the visible result of injury;
  2. A cap of $500,000 for punitive damages unless the facts show a wrongdoer intentionally pursued a course of conduct causing injury or damage, and the intentional conduct caused damage to an injury victim;
  3. Give the General Assembly the authority to enact laws amending, repealing, or adopting on its own initiative rules of pleading, practice, or procedure, which supersede such rules adopted by the Arkansas Supreme Court. This section explicitly states these rules include the presentation and admission of evidence; and
  4. A cap of 33 1/3% for contingency fees of an injury victim's attorney of the net amount recovered, regardless of how the recovery is obtained.

How do you measure the loss of someone's dignity? Wouldn't you have to know how someone's dignity was lost? The facts of the individual case matter. A case in point is what is commonly referred to as "the Mena Nursing Home case," or Advocat, Inc. v. Sauer, 353 Ark. 29, 111 S.W.3d 346 (2003) ("Sauer"). The court opinion provided the following facts:

  • The nursing home resident, Margaretha Sauer, died in the care of Rich Mountain Nursing and Rehabilitation Center from severe malnutrition and dehydration;
  • At the time of her death, Ms. Sauer had signs of bedsores on her body, stemming from lying in urine and excrement; she also suffered from contractures from Alzheimer's Disease, which involved contraction of her limbs into her sockets; she also had a urinary infection and had been experiencing foul vaginal discharge;
  • Before her death, Ms. Sauer was found at times with dried feces under her fingernails from scratching herself while lying in her own excrement;
  • Ms. Sauer's food tray was often times found in her room untouched because there was no staff member available to feed her;
  • Ms. Sauer's son complained on one occasion he found his mother in the middle of the afternoon, still in her gown, wet with urine, disturbed, and upset;
  • Ms. Sauer was often times found wet without being changed in four hours;
  • Ms. Sauer had pressure sores on her back, lower buttock, and arms on days she was found sitting in urine and excrement;
  • A former staff member at the nursing remember seeing Ms. Sauer with a pressure sore the size of a softball, which was open;
  • Ms. Sauer's sores and blisters became infected;
  • Ms. Sauer was frequently double or even triple padded, rather than single-padded for her incontinence problems;
  • At times, Ms. Sauer had no water pitcher in her room, and did not receive a bath for a week or longer, due to the facility being understaffed; the owners of the facility knew this from surveys conducted by the Office of Long Term Care, but the understaffing was never fixed;
  • Ms. Sauer was not "let loose" from a geriatric chair every two hours as required by law; and
  • Ms. Sauer was found to suffer from poor oral hygiene with caked food and debris in her mouth.[1]

Ultimately, a Polk County jury allowed a combined compensatory and punitive damage amount of $78,420,000 for Ms. Sauer's estate. In the appeal, the Arkansas Supreme Court found as follows:

There was ample testimony and evidence presented to demonstrate that Ms. Sauer suffered considerably and was not properly cared for, that [the nursing home] was short-staffed, and ... tried to cover this up by ‘false-charting’ and by bringing in additional ‘employees’ on state-inspection days. [A former regional vice-president of one of the corporate owners of the facility] testified that these deficiencies were due to a shift in corporate philosophy that placed profits over proper patient care.

The Court also found the jury's verdict to be excessive, and granted a remittitur in the amount of $52,420,000.[2] A remittitur is "the process by which a court requires either that the case be retried, or that the damages awarded by the jury be reduced." Bryan A. Garner, Blacks Law Dictionary 1073 (8th ed. 2005). Thus, the Court reduced the total verdict to $26,000,000. 

The facts of Ms. Sauer's death demonstrate she was robbed of the right to pass away with dignity as a result of under staffing, which was a symptom of the corporate culture of putting profits over patient care. Under Issue 1, Ms. Sauer's dignity would be capped at $500,000. Consequently, the facts of each individual case will not matter because the facility knows it can under staff and get away with it because of the limited amount of damages available to the family of the deceased resident.

In turn, the owners of the facility are likely to see the cap as "the cost of doing business" because Issue 1 eliminates the deceased's families' meaningful recourse to hold the owners accountable, i.e., by filing a lawsuit and allowing a local jury to determine the appropriate amount of damages owed to the family for the wrongful death of their loved one. Under Issue 1, even if a jury allowed more than the cap, the family of the deceased would only be able to recover $500,000. Without Issue 1, Ms. Sauer's case serves an example of the proper remedy the civil justice system provides when a jury verdict is excessive.

The whole purpose of tort law[3] is to make an injury victim whole, and to deter wrongdoers from similar conduct.[4] Issue 1 will significantly weaken both of these purposes.[5] What will happen to the family of the next Ms. Sauer if Issue 1 passes? What about the family after that one? And the next one? And the next one? Will a nursing home ever be held accountable again for purposefully under staffing its facilities?

Issue 1 disregards the dignity of life. It assumes the only value people have is by the amount of money an individual earns, or is capable of earning. All of us are entitled to our own dignity, and there should be consequences when it is taken away because corporations are more interested in profits than caring for those they are supposed to protect.


[1] Sauer, 353 Ark. at 39-51, 111 S.W.3d at 353-58.

[2] The Court stated "[t]he remedy for an excessive-damages award is for the court to grant a remittitur. This remedy dates back to 1841 in our case law. Remittitur can be applied to compensatory damages as well as to punitive damages." Id. at 47, 111 S.W.3d at 356.

[3] A "tort" is a civil wrong.

[4] See City of Monterey v. Del Monte Dunes, 526 U.S. 687, 727, 119 S. Ct. 1624, 1647, 143 L. Ed. 2d 882, 917 (1999) (Scalia, J., concurring); Minneci v. Pollard, 565 U.S. 118, 127, 132 S. Ct. 617, 624, 181 L. Ed. 2d 606, 614 (2012).

[5] See W. Page Keeton, Prosser & Keeton on the Law of Torts § 4 p.25 (5th ed. 1984) ("The 'prophylactic' factor of preventing future harm has been quite important in the in the field of torts. The courts are concerned not only with [making the injury victim whole], but with admonition of the wrongdoer. When the decisions of the courts become known, and defendants realize that they may be held liable, there is of course a strong incentive to prevent the occurrence of future harm. Not infrequently one reason for imposing liability is the deliberate purpose of providing that incentive.").