In West Virginia, a Beacon for Insureds and Insurers
May 16, 2015| Von George Barson
A note in Mayer Brown’s Punitive Damages Blog should be welcome news to insurers that have to defend against punitive damage awards in West Virginia. According to the blog:
"[T]he W.Va. Legislature passed and the Governor signed a punitive damages statute which comprehensibly reforms the manner in which this remedy is administered in W. Va."
Highlights of the statutory reforms, due to take effect on June 8, 2015, include:
- Adoption of the clear-and-convincing-evidence standard of proof
- Limiting punitive damages to cases in which the injury was the result of conduct "carried out by the defendant with actual malice toward the plaintiff or a conscious, reckless and outrageous indifference to the health, safety and welfare of others"
- Requiring bifurcation of the trial - with issues relating to liability for the underlying tort and compensatory damages tried in the first phase, and issues relating to liability and amount of punitive damages tried in the second phase - at the defendant's request
- Capping punitive damages at the greater of $500,000 or four times the amount of compensatory damages
However, ATRA's Judicial Hellhole Report has perennially cited West Virginia, and the Punitive Damages Blog cautions that concern remains whether the courts will support the legislative effort to control punitive damage awards. The Blog notes that court decisions in other states have undercut the clear and convincing standard and that there is potential for courts to water down the "actual malice" standard. Lastly, the Blog notes that courts have been generally less inclined to reduce punitive awards that fall within the BMW standard, and that even with the cap in place, if the compensatory award is sufficiently large, the potential for outsized punitive awards remains.
Another bright spot should be noted: The West Virginia Supreme Court has a history of upholding tort reform laws, such as the medical malpractice caps on noneconomic damages. While we see some damage caps struck down in state courts, the favorable state supreme court history in West Virginia gives some comfort that the new law will hold up.
West Virginia is still a challenging state, but the legislation is a step in the right direction. If we can share insights with you on the West Virginia law, or tort reforms in general, let us know.