The Supreme Court, wrestling with the constitutionality of skyrocketing punitive damage awards in lawsuits, heard sharply conflicting views Wednesday in a case of potentially enormous importance to American consumers and businesses.
Bruce J. Ennis Jr., urging the justices to uphold a $1 million jury award in an Alabama insurance fraud case, said 200 years of legal history are on his side.But his opponent, Bruce A. Beckman, argued for placing stricter limits on the discretion of jurors.
Ennis is representing a woman who won the $1 million award; Beckman is the lawyer for the insurance company.
The court is being asked to decide whether awards aimed at punishing wrongdoers and deterring future misconduct may be so large in some cases that they are fundamentally unfair. A ruling is expected in 1991.
In the Alabama case, the Pacific Mutual Life Insurance Co. was ordered to pay $1,040,000 to Cleopatra Haslip.
An employee of Roosevelt City, Ala., she discovered her insurance coverage had lapsed after incurring $3,500 in hospital and medical bills in 1982 for treatment of a kidney infection.
The hospital demanded $600 before it would discharge her; her doctor turned her case over to a collection agency, and her credit suffered from her inability to pay bills that amounted to about half her annual pay.
Lemmie Ruffin, the insurance agent who arranged health coverage for Roosevelt City workers, had pocketed the premiums.
Pacific Mutual said it had not sanctioned or was even aware of the agent's misdeeds.
In its appeal to the high court, the company said the jury based the damage award on "moral discretion without adequate standards as to the amount necessary to punish and deter." The company said its rights were violated because it was held vicariously liable for Ruffin's wrongdoing.
The justices last year ruled that huge awards in civil lawsuits do not violate the Constitution's ban on excessive fines. But they left open the possibility that awards may be so disproportionate to actual harm suffered that they violate due process rights.
The justices also heard arguments over whether Louisiana officials should be barred from giving a mass murderer mind-altering drugs to restore his sanity so he can be executed.