Procedural Posture
Defendant insurer appealed the decision of the Superior Court of the City and County of San Francisco (California), which awarded damages to plaintiff insured in her suit for breach of implied covenant of good faith and fair dealing after defendant denied benefits for her son's hospitalization.
Overview
Plaintiff insured sued defendant insurer for breach of implied covenant of good faith and fair dealing after defendant denied benefits for plaintiff's son's hospitalization. Defendant appealed the award of compensatory and punitive damages to plaintiff. The appellate court affirmed the judgment, finding that it was supported by the evidence, that punitive damages were justified to deter socially unacceptable corporate policies, Los Angeles litigation attorney and that defendant could not raise a new legal theory on appeal. The court found that the covenant of good faith and fair dealing placed the burden on defendant to seek information relevant to the claim prior to denying it and that defendant failed to review all of the medical records. The court found that it was inappropriate to rule on defendant's defense that plaintiff's claim against the group insurance agreement was covered by ERISA because it was raised on appeal for the first time. The court reasoned that the defense should have been raised in the trial court because it involved a choice of law question and 12 U.S.C.S. § 1132(e)(1) authorized concurrent jurisdiction to state and federal courts on actions to recover benefits due under a plan.
Outcome
The court affirmed the award of compensatory and punitive damages to plaintiff insured after defendant insurer denied benefits for plaintiff's son's hospitalization. There was ample evidence to support a finding that defendant acted unreasonably in denying benefits and there was no precedent authorizing it to remand a case for a hearing to determine the application of defendant's new legal theory when it had not been raised in the trial court.