Out-of-Sight Settlements

Insurance companies have complained that jury verdicts and damage settlements for injuries are getting out of hand. They may now be getting out of sight; each week seems to bring another stunner. Three recent cases indicate that the trend is still onward and upward; they also provide some new theories on who should be paid as well as how.

-- In July 1972, a camp sergeant in the Mississippi State Penitentiary at Parchman ordered Inmate William Hardin Bogard to take a sewing machine away from James B. ("Slick") Davis, a fellow inmate. Davis, who was allowed to work in the prison slaughterhouse even though he had been diagnosed a paranoid schizophrenic, jammed a butcher knife into Bogard's spinal cord. The incident was Bogard's second bloody encounter with the malign brutality that has established Parchman as one of the most dangerous prisons in the U.S. Less than a year before, he was shot in the foot by another inmate, who had been armed to supervise cons working on the prison's 22,000-acre farm. For Bogard, who was serving a 25-year stretch for armed robbery, the knife injury was a ticket to freedom. But the price--paralysis from the waist down --came high, and Bogard sued three former prison officials, a prison guard and three inmates, charging negligence, cruel and unusual punishment and a violation of due process. In October, a six-woman jury in Greenville, Miss., awarded $500,000 to Bogard, 26, who now lives on welfare with his mother in Illinois. A federal judge in Greenville recently upheld the decision, one of the largest prison-related awards ever. But attorneys for the defendants, fully aware that there are some 30 other similar cases pending, will file a motion for a new trial.

Mutual of Omaha, the nation's largest seller of individual and family health-insurance policies, calls itself in its advertising 'The People You Can Count On." In Pomona, Calif., a jury last month chastized Mutual for not living up to that billing by awarding Policyholder Michael Egan, 59, $5.1 million in compensatory and punitive damages. Egan's policy had promised him $200 a month for life if he should be disabled by an accident but only three months' benefits if he became unable to work because of a "non-confining sickness." Egan, an Irish immigrant roofer, fell from a ladder in May 1970 and ruptured a disc. After receiving two checks from Mutual, he underwent surgery and was judged indefinitely disabled. Now, for the first time, the company called his injury a sickness, thus blocking the prospect of lifetime payments. Though Egan could leave his home--to visit a doctor, for example--he insisted that he was unable to work. When Egan and his lawyer could not get the company to continue to pay accident benefits, they sued, seeking compensatory damages and claiming "malice, fraud or oppression" on the part of the company and two claims adjusters. To the jury, the case was apparently a classic instance of the little guy v. a big corporation. To a lawyer for Mutual, which has filed a motion to throw out the award, it was a "runaway verdict" that would only help to hike premium costs for all health-insurance policyholders.

Awards may look fat now, but how lean will they get after 20 years of inflation? With that sobering prospect in mind, the lawyers and family of Mrs. June Walker, 52, now lying in a coma in a San Gabriel, Calif., nursing home as a result of a series of improper medical procedures that occurred in a U.C.L.A. clinic, have worked out a new inflation-proof twist for damages in a malpractice suit. Faced with charges that ranged from unnecessary surgery, falsification of records and failure to monitor the patient, University of California regents have agreed to pay Mrs. Walker's daily medical expenses--currently about $350 and going up all the time--for as long as she lives. Though Mrs. Walker may never come out of her coma, doctors estimate that she still might live for 23.5 years. If she survives that long and inflation does too, the settlement could cost California taxpayers more than $4.5 million.

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