Jury Awards $12 Million to Ailing Worker
By Dan Daly
Rapid City Journal
In 1999, Alice Torres, a cook at Meadowbrook Manor nursing home in Rapid City, filed a workers' compensation claim for carpal tunnel syndrome. She sought about $8,000 for medical bills, lost time and physical impairment.
Insurance adjusters denied the claim.
Now after nearly five years of litigation, a four-day trial in federal court and four hours of jury deliberation, Alice Torres has won a whopping $12.06 million judgment against three insurance companies. It could be the largest punitive damages award in a contested case in state history.
The Rapid City jury returned its verdict - $60,000 in compensatory damages and $12 million in punitive damages- early Friday evening. The trial before U.S. District Court Judge Karen E. Schreier had begun Tuesday.
The defendants were Travelers Insurance Co., Insurance Company of the State of Pennsylvania, and Constitution State Services, a subsidiary of Travelers. All were involved as claims administrators or insurers for Beverly Enterprises, parent company of Meadowbrook Manor.
Initially, Beverly Enterprises was also a defendant, but the company reached an out-of-court settlement and was dismissed from the suit on Jan. 8.
The suit was originally filled in U.S. District Court in Rapid City in July 2001. Torres' attorneys, Michael Abourezk and Glen Johnson of Rapid City, accused the companies of bad-faith dealing with Torres, barratry, abuse of process, and interference with business and contract relations.
At the heart of the case, according to Abourezk, was a Travelers incentive program that offered bonuses to claims workers for lowering payouts on claims. Called the Claim Professional Incentive Program, it offered workers end-of-year bonuses of as much as 20 percent of their pay if they reduced overall payouts from one year to the next.
Many companies offer pay incentives, and the Travelers plan included rewards to workers for such things as customer service excellence, retention of existing accounts and keeping office costs down.
But Abourezk argued that the program created an improper conflict of interest for claims adjusters, who are supposed to be motivated by fairness to claimants, not cost control for insurance companies.
"An insurance adjuster is supposed to be like a judge, fair and impartial. …If you bribe a judge, you get thrown in jail. But they bribe these claims adjusters with bounties that are tied directly to their performance in paying claims."
Attorney Patricia Meyers, who represented the insurance companies in the Rapid City trial, was not available for comment Tuesday. But in court papers, the insurance companies said Torres' workers' compensation claim was properly denied because there was a lack of proof that her hand problems were caused by her work.
According to court papers, Torres reported to Meadowbrook Manor administrators in March 1998 that she was having pain, numbness and other symptoms in her hand. She underwent a series of medical treatments. At one point, she took three weeks off work.
On April 19, 1999, Torres underwent surgery for carpal tunnel syndrome. Her doctor sent a workers' compensation report to Meadowbrook Manor, asserting that her work "aggravates and makes her carpal tunnel syndrome clinically significant so that it interferes with her activity and function."
Defense attorneys also noted that there were of inconsistencies in Torres' accounts of what caused her pain, how long it had been bothering her or whether it was caused by repetitive stress or a specific injury from lifting a pot of soup.
The insurance companies also said her hand problems were likely the result of a 1998 home injury from a lawnmower or wheelbarrow, not her work in the kitchen of Meadowbrook Manor. Torres sought medical treatment for that injury but, at that time, didn't mention numbness or tingling in her fingers, the attorneys noted. And tests in December of that year, the defense contended, did not show carpal tunnel syndrome.
In October 1999, Torres filed a workers' compensation action before the South Dakota Department of Labor. Rapid City attorney Jim Leach represented her and won the claim. Afterward, he turned the federal civil suit over to Abourezk and Johnson - partly because he would be a witness in the federal lawsuit.
Torres, 57, now lives in Colorado. In a telephone interview Tuesday afternoon, she said she's grateful that Leach took the case even though it was a relatively small claim at that point.
"I feel great. There is such thing as justice after all," she said. "I work very hard, and I don't think nobody should go through what I went through. I was within my right to get my treatment and they just denied me."
After her claim was denied, she quit her job and left South Dakota. "I knew I wasn't going back to that job again, even though I loved the place and I loved the people," Torres said.
She now works in a private home caring for a 97-year-old woman. "I told her family that no matter what happened, I will stay with her until she don't need me no more. I love this old lady," Torres said.
However, her lawsuit is far from over. Federal courts must review jury verdicts involving punitive damages, and judges may reduce or eliminate the awards. The legal wrangling likely will continue.
And no matter what happens, Torres won't walk away with the entire $12.06 million. Attorney fees in this case equal 45 percent of the award, Abourezk said.
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