Howard v. State Farm Mut. Auto. Ins. Co.
| Decision Date | 20 April 1994 |
| Docket Number | No. 24155,24155 |
| Citation | 316 S.C. 445,450 S.E.2d 582 |
| Parties | Barbara L. HOWARD, Respondent, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant. . Heard |
| Court | South Carolina Supreme Court |
Rebecca Laffitte, C. Mitchell Brown, and William C. Wood, Jr., all of Nelson, Mullins, Riley, & Scarborough, Columbia, for appellant.
William P. Walker, Jr., of Walker, Morgan, and Manning, Lexington, for respondent.
A jury awarded Barbara Howard (Howard) $1,297 actual damages and $30,000 punitive damages in this breach of contract and bad faith action against State Farm Mutual Automobile Insurance Company (State Farm). State Farm appeals. We reverse and remand.
On December 22, 1987, Howard suffered neck and back injuries in an automobile accident. Her family physician diagnosed a mild cervical strain. Because she was still suffering pain in her neck and back in February 1988, she sought additional treatment from a chiropractor, who performed adjustments to her whole body. Howard's ankle became so swollen after one adjustment, she could not walk without crutches. She returned to her family physician for treatment for the ankle injury. He referred her to physical therapy.
Howard submitted claims for medical bills and lost wages to State Farm for payment under her insurance policy's Personal Injury Protection (PIP). State Farm paid all claims until it received a phone call from someone identifying himself as Howard's father. He said Howard's ankle injury was caused by the chiropractor's adjustments. State Farm refused to pay further claims until it received documentation concerning the cause of the ankle injury. State Farm did not get this information. Howard then brought this action against State Farm for breach of contract and bad faith refusal to pay benefits under her insurance contract.
On appeal, State Farm argues the trial judge erred in not granting a new trial because it was prejudiced by the improper cross-examination of its claims adjuster. The company contends the trial judge erred in allowing Howard's lawyer to cross-examine its claims adjuster concerning her handling of the claim after litigation commenced.
Whether an insurance company is liable for bad faith must be judged by the evidence before it at the time it denied the claim or if the insurance company did not specifically deny the claim by the evidence it had before it at the time the suit was filed. See Nationwide Mutual Insurance Co. v. Clay, 525 So.2d 1339, 1342 (Ala.1987). Evidence that arises after the denial of the claim is not relevant to the propriety of the conduct of the insurer at the time of its refusal. See id. Likewise, if the insurance company did not specifically deny the claim evidence that arises after the filing of the bad faith claim is not relevant. Thus, testimony concerning the adjuster's handling of the claim after litigation commenced was irrelevant. See Associate Management, Inc. v. E.D. Sauls Constr. Co., 279 S.C. 219, 305 S.E.2d 236 (1983) ().
Moreover, the testimony was clearly prejudicial. The core of State Farm's defense was Howard's failure to provide adequate documentation concerning her injury. The cross-examination testimony implied to the jury that once the adjuster had the documentation necessary to process the claim, even though the information was received after litigation had begun, she should have paid the claim. Because this testimony clearly prejudiced State Farm, the trial judge abused his discretion in overruling the company's objection to this testimony. Therefore, we reverse and order a new trial. See Watts v. Bell Oil Co., 266 S.C. 61, 221 S.E.2d 529 (1976) ().
State Farm also seeks reversal because of prejudicial remarks Howard's attorney made during trial. During opening arguments, Howard's counsel argued State Farm had spent more money defending this case than the amount of the claim. Also, while cross-examining State Farm's claims representative, Howard's attorney referred to State Farm's lawyers as "one (of) the biggest law firms in South Carolina." Furthermore, during closing argument, Howard's lawyer stated:
State Farm can go out and hire the biggest, baddest law firm in the State, the former Governor's law firm. They gonna have two lawyers over here, a legal assistant; they gonna have books, they gonna have resources and they gonna fight us for every dime. They've done it for the last four years. Deposition, expert witnesses, doctors out of the ying-yang. You name it. They have put us through patience, her through the patience of just trying to get a little justice. 1200. It'll probably cost you a six figure by now but you know that.
While we express reservations about the impact of these remarks on the fairness of the original trial, we need not reverse on this ground, having done so on the previous issue. However, we caution the bar that such arguments to the jury should be avoided and may constitute grounds for a new trial. Bowers v. Watkins Carolina Express, Inc., 259 S.C. 371, 192 S.E.2d 190 (1972).
Although not necessary to our decision, we also address several of State Farm's remaining arguments to guide the trial judge on remand.
State Farm argues the trial judge erred in charging the following language to the jury:
If an injured person uses ordinary care in selecting a health care provider for treatment of an injury, the law regards the aggravation of an injury from inappropriate or negligent treatment of the health provider as part of the immediate and direct damages which naturally flow from the original injury. Graham v. Whitaker, 282 S.C. 393, 321 S.E.2d 40 (1984).
The PIP provision of the State Farm policy provides:
[State Farm] will pay in accordance with the NO FAULT ACT for bodily injury to an injured caused by an accident, resulting from the maintenance and use of a motor vehicle as a vehicle.
The No Fault Act provides:
The minimum medical, hospital, and disability benefits ... shall include ... payment of all reasonable expenses arising from the accident....
S.C.Code Ann. § 38-77-240 (1989) (repe...
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