Heideman v. American Family Ins. Group

• Citation: 473 N.W.2d 14,163 Wis.2d 847
• Decision Date: 19 June 1991
• Docket Number: No. 90-1912,90-1912
• Parties: James C. HEIDEMAN and Margaret Heideman, Plaintiffs-Appellants-Cross-Respondents, v. AMERICAN FAMILY INSURANCE GROUP, Defendant-Respondent-Cross-Appellant. d ]
• Court: Wisconsin Court of Appeals

Page 14

473 N.W.2d 14

163 Wis.2d 847

James C. HEIDEMAN and Margaret Heideman, Plaintiffs-Appellants-Cross-Respondents, v. AMERICAN FAMILY INSURANCE GROUP,

Defendant-Respondent-Cross-Appellant.

^d]

No. 90-1912.

Court of Appeals of Wisconsin.

Submitted on Briefs March 26, 1991.

Opinion Released June 19, 1991.

Opinion Filed June 19, 1991.

James W. Hammes of Cramer, Multhauf & Hammes, Waukesha, for plaintiffs-appellants-cross-respondents.

M. Christine Cowles and Barbara A. O'Brien of Borgelt, Powell, Peterson & Frauen, S.C., Milwaukee, for defendant-respondent-cross-appellant.

Before NETTESHEIM, P.J., and SCOTT and ANDERSON, JJ.

SCOTT, Judge.

A jury found that by extreme and outrageous conduct, American Family Insurance Group intentionally caused James Heideman, a former American Family agent, extreme and disabling emotional distress. It awarded Heideman $150,000 in compensatory damages and $500,000 in punitive damages. On motions after verdict, the trial court changed two of the special verdict answers and dismissed the complaint. The trial court also commented that if the jury's answers were sustained on appeal, a new trial should be held because the answers were against the great weight of the evidence. The trial court then gave an "advisory opinion" relating to the damages. Heideman appeals.

American Family cross-appeals, primarily asserting that the trial court lacked subject matter jurisdiction to decide the case because worker's compensation provides the exclusive remedy. In the alternative, American Family contends that Heideman did not suffer a disabling emotional response; that the trial court employed the wrong standard of review in adjusting the damages; and that punitive damages are unconstitutional.

We conclude first that the trial court had jurisdiction to hear the case. We also conclude that the trial court erred in changing the jury's answers. In addition, we are not persuaded by any of the arguments raised by American Family's cross-appeal. We therefore reverse the judgment and remand for a reinstatement of the jury verdict.

Heideman began working as an insurance agent for American Family in 1969. By 1982, Heideman was earning approximately $50,000 a year and had won numerous achievement awards and sales competitions. In June of 1986, American Family revoked his agency. The facts leading up to his dismissal are lengthy but necessary to relate.

In October 1982, Heideman suffered a heart attack. He was off work until January 1983, at which time he returned to work on a part-time basis. A month later, Michael Shannon, Heideman's district manager, issued Heideman a written request seeking medical documentation of any limitations on Heideman's work activities. Heideman complied. The letter from his physician, Dr. Howard Evert, recommended that Heideman restrict his work to forty hours per week, to be "divided up in any way that you [Heideman] see fit," but with the added caution that "the added stress of night time and weekend work should be avoided if possible." Dr. Evert's letter also stated:

As you well know chronic stress is as great a contributor to myocardial [heart muscle] disease as any of the other factors that I listed above [cigarette smoking and high blood pressure]. You certainly were a victim of chronic stress and could very well become a victim of this problem again if you allow your work habits to return to the previous state.

As requested, Heideman gave a copy of this letter to Shannon.

About that time, Shannon instituted a system of minimum production standards. The new standards required all agents under Shannon's supervision to produce twenty-seven applications and $600 worth of new life insurance premiums each month. Any agent consistently failing to meet these standards was subject to termination.

American Family releases a quarterly report called a "monthly life production standing" which ranks the production of all district agents. The first report released after Heideman's return to work following his heart attack was dated April 30, 1983. Heideman was ranked last. On Heideman's copy of the report, Shannon circled Heideman's production and penned the notation, "Jim, this just has to improve."

Heideman testified he was told on several occasions that he was subject to the new requirements despite the medical limitations recommended because of his health. He stated he repeatedly was told to either increase sales or to consider selling off part of his agency if he intended to work fewer hours. Heideman testified that American Family's main focus was life insurance. Because that product was sold most often to married couples, sales required speaking to both spouses, and thus usually necessitated evening house calls. He further testified that American Family rebuffed his request to allow him to simply service his existing agency and was told he must continue to bring in more contracts. Heideman also stated that if he sold off part of his agency, American Family would select which of his customers it would take back. He stated he understood that if he failed to meet these conditions, American Family would terminate his agency.

Heideman testified that, as a result of these work pressures, he became physically run-down and increasingly anxious and stressed. He experienced anxiety attacks manifested by hyperventilation and chest pain, and at least once was hospitalized as a result. Heideman's wife testified that her husband exhibited severe mood swings and withdrew from the family, retiring to his bedroom when he came home from work and remaining there until morning. By the end of 1983 he was addicted to Valium.

At the beginning of every year, each agent was required to fill out a statement listing his or her goals for the year. On the goal statement dated January 11, 1984, Heideman wrote: "Agency growth will depend on my health, which comes first with me. My '84 goals will also depend upon my health throughout the year." Heideman testified that he was told on January 20, 1984 that he must convert his existing life insurance policies "before someone else did." "Converting" means to change existing policies to new, generally more expensive, products. Heideman testified he understood this to mean that if he did not convert his policies, they would be taken from him and reassigned to other agents.

Heideman testified that although his physical health rapidly deteriorated toward the end of 1984, from a business standpoint 1984 was a very successful year because he "sold an awful lot of life insurance." Because of his declining health, however, he then began heeding Dr. Evert's advice to cut back on the number of evening hours worked, even though night calls are imperative to sell life insurance.

At the January 1985 meeting to plan that year's goals, Heideman was informed he would be expected to produce at the same levels as in 1984. The next month, Heideman complained to Dr. Evert that he was fatigued, sleeping poorly and under pressure at work. Notes in Heideman's appointment book, admitted into evidence, reflect that in May Shannon told him "it would be my job on the line" if he did not increase his sales. Heideman stated he reminded Shannon of his medical restrictions and was told, "Hey, that's fine, Jim. If you have to work less hours, you can. But you've got to produce. You have to meet our goals." In March 1985, Heideman received a letter from the chairman and chief executive officer of American Family. The letter, congratulating Heideman on fifteen years of service to the company, commended Heideman for his loyalty and stated that "[t]hrough your hard work and dedication, [American Family's increasing] challenges are continuously met."

On August 12, 1985 at a quarterly review meeting, Heideman questioned Shannon about Harvey Schultz, another agent in Heideman's office. Schultz had had a heart attack and open-heart surgery about the time of Heideman's heart attack. Although Schultz had a manager other than Shannon, Heideman testified that he asked Shannon why "you're pushing me for life insurance when [you] aren't doing that to Mr. Schultz." Heideman was told not to "worry about another agent. That's none of your business." Heideman then offered to submit to an independent physical examination "because I could sense that [Shannon] had the feeling that I wasn't telling him the truth." Instead, Shannon requested another letter from Dr. Evert.

Dr. Evert submitted a letter dated October 7, 1985. In it, he recommended that Heideman restrict his work schedule to "approximately 6 hours per day in the office." Heideman forwarded a copy to Shannon. Shannon, in turn, forwarded the letter to Jerry Cutsforth, the state director, along with a handwritten message stating:

Jerry, I've got a "gut" feeling that Jim initiated this letter from the Dr. so I would get off his back for production! In a discussion with Jim a week ago, he stated, "I've started something to enable me to slow down." I truly believe this is his doing NOT the Dr. (ANY SUGGESTIONS?!) [Emphasis in original.]

Shannon then notified Heideman that Cutsforth wished to meet to discuss the most recent communication from Dr. Evert.

At that meeting, held October 25, 1985, Cutsforth told Heideman that they could accommodate his medical limitations for "a short period of time ... but a month or so down the road" he would be expected to produce at the level required of all other agents because "[t]his business that we're in requires new business be written." Heideman testified that he understood the substance of the meeting to be that "either your production has to come up, or your agency will be taken away from you." A memo Cutsforth prepared after the meeting indicated that at one point during the discussion Heideman became irrational and began to cry.

In January 1986, the production standing report ranked Heideman ninth out of the seventeen agents. In early February, Shannon warned Heideman that his...