Bankers Life & Casualty Co. v. Crenshaw

Lloyd Crenshaw (Plaintiff) accidentally dropped a car alternator on his foot while performing work on a workbench. After attempting to treat the wound himself, he visited a local hospital and, after several visits, was diagnosed with a condition requiring amputation below the knee. After his amputation, Plaintiff made a claim with his insurer, Bankers Life & Casualty (Defendant) for $20,000, the amount allowed by the policy. Defendant denied the claim, stating that Plaintiff’s amputation was caused by a pre-existing condition and not the incident with the alternator. Plaintiff contested this claim, corresponding with Defendant extensively. After several months, Plaintiff sued Defendant in Mississippi state court, seeking $20,000 in actual damages and $1,635,000 in punitive damages for the tort of bad-faith refusal to pay an insurance claim. The jury found for Plaintiff and awarded $20,000 in actual damages and $1.6 million in punitive damages. Defendant appealed to the Mississippi Supreme Court, which affirmed the jury verdict in its entirety. Defendant then filed a motion for rehearing, arguing for the first time “[t]he punitive damage verdict . . . constitutes excessive fine [sic], and violates constitutional principles.” The Mississippi Supreme Court denied the petition for rehearing. Defendant appealed to the United States Supreme Court.