South Carolina BAR Journal
SC Lawyer, November 2011, #5.
Digging into the 2011 Tort Reform: Who Gets the Gold?
South Carolina LawyerNovember 2011Digging into the 2011 Tort Reform: Who Gets the Gold?By Ginny Williams Much of the debate over the recent tort reform passed by the S.C. General Assembly portrays the legislation as a gold rush for some litigants and a bust for others. But digging into the details, both sides walk away with something to gain, and the courts are left panning for gold. This article will review the common law status of punitive damages in South Carolina and the changes adopted by our legislature this session and briefly discuss the potential effects the legislation will have on plaintiffs, defendants and our courts.
Basics of punitive damages law in South Carolina
Punitive damages are intended to "deter the wrongdoer and others from committing like offenses in the future." Laird v. Nationwide Ins. Co., 243 S.C. 388, 393, 134 S.E.2d 206, 210 (1964) (quoting Bowers v. Charleston W.C. Ry. Co., 210 S.C. 367, 378, 42 S.E.2d 705, 709 (1947)). They are only permissible when a defendant's conduct is so shocking and offensive that punishment is justified. McGee v. Bruce Hosp. Sys., 344 S.C. 466, 545 S.E.2d 286 (2001); Clark v. Cantrell, 339 S.C. 369, 529 S.E.2d 528 (2000); Laird, 243 S.C. at 393. Stated differently, punitive damages are allowed when a defendant has acted in a "reckless, willful, or wanton" manner. SeeClark, 339 S.C.at 379, 529 S.E.2d at 534. A defendant acts willfully or with reckless indifference to the rights of others when the defendant acts in disregard of a high and excessive degree of danger about which he or she knows or which would be apparent to a reasonable person in his or her condition. Camp v. Components, Inc., 285 S.C. 443, 444, 330 S.E.2d 315, 316 (Ct. App. 1985); Carter v. R.L. Jordan Oil Co., 301 S.C. 84, 87, 390 S.E.2d 367, 368 (Ct. App. 1990). There must be a present consciousness of wrongdoing to justify the assessment of punitive damages against the wrongdoer. Martin v. Martin, 262 S.C. 168, 174, 203 S.E.2d 385, 387 (1974). Furthermore, there must be no reasonable ground for the defendant's conduct to sustain a punitive damages award. Crossley v. State Farm Mut. Auto. Ins. Co., 307 S.C. 354, 360, 415 S.E.2d 393, 397 n.2 (1992); see also Poston v. Nat. Fid. Life Ins. Co., 303 S.C. 182, 187, 399 S.E.2d 770, 773 (1990).
Recently, the S.C. Supreme Court issued a significant decision affecting punitive damages law. In Mitchell v. Fortis Insurance Co., the insured was continually denied health insurance coverage by his insurance company after being diagnosed with HIV because of a clerical error by the insurer noting his diagnosis date before his application of insurance. 385 S.C. 570, 686 S.E.2d 176 (2009). The insurer later realized the clerical error, but continued to deny coverage. Id. The jury awarded the insured actual and punitive damages. The Supreme Court, on cert, affirmed the actual damages but reduced the punitive award to a 10:1 ratio, punitive damages to compensatory damages. Id. at 580-82, 686 S.E.2d at 181-82.
In its opinion, the Court made several notable findings. First, it changed the standard of review for the constitutionality of a punitive damages award.Id.at 582-83, 686 S.E.2d at 182-83. South Carolina courts have typically applied an abuse of discretion standard. Id. at 582, 686 S.E.2d at 182 (citing Gamble v. Stevenson, 305 S.C. 104, 112, 406 S.E.2d 350, 355 (1991); Hundley v. Rite Aid of S.C., Inc., 339 S.C. 285, 314, 529 S.E.2d 45, 61 (Ct. App. 2000)). However, recent federal case law has held that a de novo standard of review is appropriate when a district court addresses...