Case Update: May 2003
U.S. Supreme Court Strikes Down Punitive Bad Faith Damage Award Against Insurer
In Campbell v. State Farm the U.S. Supreme Court ruled that an award of punitive damages 145 times greater than the compensatory damages was so excessive that it violated the carrier’s right to due process. The Court overturned a $145 million bad faith award against State Farm for failure to settle a bodily injury claim within policy limits.
State Farm policyholder Curtis Campbell sued State Farm in 1989 for damages arising from the insurance company’s refusal to pay $50,000 to settle a claim from an accident that killed one driver and left another driver disabled. State Farm decided to go to trial over the claim, in which Campbell was the defendant, rather than accept offers to settle for the $50,000 limits of his insurance policy. A jury found Campbell to be at fault and entered judgments against him totaling $186,000. [MORE]