Bad Faith Denial of Disability
Benefits Award in Excess of $17
Million Against Paul Revere
McKendry v. General Am. Life Ins. Co., CA No. 96-754-PGR (D. Ariz. Mar. 31, 2000).
When General American terminated Mr. McKendry’s long-term disability benefits, he sued claiming that the insurer’s termination was in bad faith. General American had terminated the long-term disability benefits of Mr. McKendry, a real estate professional who was suffering from Chronic Fatigue Syndrome, asserting that he was not disabled from working full-time. A federal jury in Phoenix, Arizona concluded that the benefits termination was in bad faith and awarded McKendry $350,000 in compensatory damages and $10.2 million in punitive damages against General American. The jury also imposed a $6.8 million punitive damages award against Paul Revere Life Insurance Company, which handled the claim for General American and made the decision to terminate his benefits. The punitive damages were awarded against Paul Revere because it encouraged General American to terminate valid disability claims in order to increase profits.