Allstate Ins. Co. v. Dodson
Annotate this Case
Download PDF
Cite as 2011 Ark. 19
SUPREME COURT OF ARKANSAS
No.
10-257
Opinion Delivered 1-27-11
ALLSTATE INSURANCE COMPANY,
APPELLANT,
VS.
JON H. DODSON, M.D.,
APPELLEE,
APPEAL FROM THE CIRCUIT
COURT OF PULASKI COUNTY, NO.
CV 97-9562, HONORABLE ELLEN B.
BRANTLEY, JUDGE,
AFFIRMED ON DIRECT APPEAL;
REVERSED ON CROSS APPEAL.
ROBERT L. BROWN, Associate Justice
Appellee and cross-appellant, Dr. Jon H. Dodson (Dodson), is a radiologist who built
his medical practice in Little Rock and in Pine Bluff in the early 1980s. Dodson’s clinics
provided, among other services, physical therapy. Around 1993, Dodson began receiving
complaints from Allstate Insurance Company (Allstate) that he did not employ licensed
physical therapists in his physical-therapy department. Allstate began refusing to pay for
claims based on physical therapy performed at Dodson’s clinics by unlicensed personnel and,
allegedly, made statements about Dodson’s “illegal” use of these physical therapists. These
statements, as well as others, became the basis for the ultimate litigation filed by Dodson
against Allstate.
On September 3, 1997, Dodson filed a complaint against Allstate and two of its agents
in Arkansas, Bobbie Waddell and John Runkle, alleging that these employees, at Allstate’s
Cite as 2011 Ark. 19
behest, defamed Dodson by representing to insureds and claimants that Dodson provided
unqualified physical-therapy treatment at his office and that this amounted to fraud. Dodson
also complained that Allstate represented that he overcharged for this therapy treatment, and
that his medical practice was illegal. Dodson further alleged that these defamatory statements
were made with an intent to damage his professional reputation. Dodson also included a
cause of action for tortious interference with a business expectancy.
Allstate, Waddell, and Runkle answered and denied Dodson’s allegations. They also
filed a counterclaim in which they alleged that Dodson had engaged in numerous deceitful,
fraudulent, and illegal acts, which included Dodson’s failure to employ state-licensed physical
therapy assistants and misrepresentations to Allstate regarding the treatment he provided to
patients.
Before this case first went to trial in September 1999, Allstate dismissed its
counterclaim. At the close of the first trial, prior to instructing the jury, Dodson dismissed
his claims against Runkle and Waddell and proceeded only against Allstate. A Pulaski County
jury found in favor of Allstate on Dodson’s claims of defamation and tortious interference
with a business expectancy. Dodson filed his first appeal, raising seven points for reversal.1
In that first appeal, this court rejected most of Dodson’s arguments but reversed and
remanded on Dodson’s argument that the trial court had erred in ruling that Allstate’s
withdrawn counterclaim could not be used at trial as evidence that Allstate defamed or
1
This case is before this court for the third time. See Dodson v. Allstate Ins. Co., 345
Ark. 430, 47 S.W.3d 866 (2001) (Dodson I); Dodson v. Allstate Ins. Co., 365 Ark. 458, 231
S.W.3d 711 (2006) (Dodson II).
-2-
Cite as 2011 Ark. 19
interfered with Dodson’s contractual relationships with his patients. See Dodson v. Allstate Ins.
Co., 345 Ark. 430, 47 S.W.3d 866 (2001) (Dodson I). This court held that the withdrawn
counterclaim constituted proper impeachment evidence because Dodson was attempting to
rebut Allstate’s claims that it had never defamed Dodson. This court concluded that the trial
court “abused its discretion and committed error in not allowing the defendants’ withdrawn
counterclaim to be used as impeachment evidence.” Id. at 451, 47 S.W.3d at 880.
After remand, the case was scheduled for trial on January 12, 2004. The retrial began,
but after two days of trial, the trial court granted a mistrial for the reason that, during the
course of the trial, one of the jurors communicated her opinion of the case to other jurors.
About seven months later, Allstate moved for summary judgment on the basis that a jury
could not reasonably find that Dodson’s alleged damages were caused by Allstate. The trial
court initially denied Allstate’s motion, but on March 16, 2005, the court vacated its earlier
order and entered its order granting Allstate’s motion. Dodson filed his second timely notice
of appeal and raised four points for reversal.
In the second appeal, Dodson v. Allstate Ins. Co., 365 Ark. 458, 231 S.W.3d 711 (2006)
(Dodson II), this court concluded that genuine issues of material fact remained regarding
Allstate’s intent with respect to its allegedly defamatory statements about how Dodson ran his
medical practice. Accordingly, we held that summary judgment was not appropriate, and we
reversed and remanded for further proceedings.
-3-
Cite as 2011 Ark. 19
The trial that is the subject of this third appeal commenced on May 26, 2009, in
Pulaski County Circuit Court. The trial continued for six days, and the jury returned a
verdict in favor of Dodson in the amount of $6 million in compensatory damages and $15
million in punitive damages. Allstate moved for a judgment notwithstanding the verdict, a
new trial, and requested a remittitur. The trial court remitted punitive damages to the sum
of $6 million, to match those awarded as compensatory damages. Allstate filed a notice of
appeal, and Dodson filed a notice of cross-appeal on the remittitur issue.
I. Binding Instructions
For its first point on appeal, Allstate claims that the trial court gave two binding
instructions to the jury that in effect directed the jury to rule in Dodson’s favor. The two
instructions at issue were not Arkansas Model Instructions but were proffered by Dodson.
The first special instruction 2 given by the court read:
You are instructed and under the law of the state of Arkansas, and throughout the
entire time period involved in this case, plaintiff Jon H. Dodson, MD, and his medical
practice have been subject to the provision requirements of the Arkansas Medical
Practices Act, and not the Arkansas Physical Therapy Act. In other words, the
Arkansas Medical Board and not the Arkansas Physical Therapy Board, had regulatory
2
The court permitted the first special instruction to be read to the jury apparently based
on her interpretation of the Arkansas Medical Practices Act. The judge made the following
statement in reference to these special instructions: “I don’t think there’s any doubt that he
is a doctor and not a physical therapist. And, therefore, that he may perform physical therapy,
and that people in his office may perform physical therapy operations under his supervision
who are not licensed.” She also stated that she was going to instruct the jury on the law of
Arkansas as set out in the statutes but was not going to give instructions on anything that came
up in the opinion letter written by the counsel for Arkansas Medical Board.
-4-
Cite as 2011 Ark. 19
authority over Jon H. Dodson, MD, and his medical practice, throughout the entire
time period involved in this case.
The trial court next instructed the jury:
You are also instructed that there is a physical therapy act which exists in the state
which provides in relevant part, nothing in this chapter shall be deemed to prohibit
any person licensed under any other act in this state from engaging in the practice for
which he is licensed. Therefore, you are instructed as a matter of law, that Jon H.
Dodson, MD, and all other physicians are specifically excepted from the Arkansas
Physical Therapy Act to the extent stated.
Specifically, Allstate claims that these instructions, which it identifies as Special
Instruction No. 1 and Special Instruction No. 2, respectively, were given in error because in
giving these instructions, the trial court commented on the evidence and impermissibly
adopted Dodson’s theory of the case. Furthermore, Allstate asserts that the given instructions
were incorrect statements of the law.
Dodson counters that Allstate failed to object
specifically to these instructions and therefore waived the right to mount its objections to
these instructions on appeal.
A party is entitled to a jury instruction when it is a correct statement of the law and
there is some basis in the evidence to support giving the instruction. See Dodson I, 345 Ark.
at 459, 47 S.W.3d at 885; see also Coca-Cola Bottling Co. v. Priddy, 328 Ark. 666, 945 S.W.2d
355 (1997). This court will not reverse a trial court’s refusal to give a proffered instruction
unless there was an abuse of discretion. Barnes v. Everett, 351 Ark. 479, 492, 95 S.W.3d 740,
748 (2003). When instructions are requested that do not conform to AMI instructions, they
should be given only when the trial judge finds that the AMI instructions do not contain an
-5-
Cite as 2011 Ark. 19
essential instruction or do not accurately state the law applicable to the case. Id. (citing Tyson
Foods, Inc. v. Davis, 347 Ark. 566, 66 S.W.3d 568 (2002)).
We have said that AMI instructions are to be used as a rule, and non-AMI instructions
should only be used when an AMI instruction does not exist or cannot be modified. Id. It
is error for the trial court to fail to instruct the jury on a statute applicable to the case;
however, it is also error for the trial court to instruct the jury on an inapplicable statute.
Hunter v. McDaniel Construction Co., Inc., 274 Ark. 178, 181, 623 S.W.2d 196, 200 (1981).
Portions of a statute not applicable to the facts of the case must be deleted. Id.
Specific objections to instructions are necessary to preserve the issue for appeal. Ark.
R. Civ. P. 51. Arkansas Rule of Civil Procedure Rule 51 states in part:
No party may assign as error the giving or the failure to give an instruction unless he
objects thereto before or at the time the instruction is given, stating distinctly the
matter to which he objects and the grounds of his objection, and no party may assign
as error the failure to instruct on any issue unless a party has submitted a proposed
instruction on that issue.
Rule 51 further reads that a “general objection shall not be sufficient to obtain appellate
review of the court’s action relating to instructions to the jury except as to an instruction
directing a verdict or the court’s action in declining to do so.” Ark. R. Civ. P. 51. This
court has interpreted this rule to require specific objections in order to alert the trial court as
to why the instruction is wrong. See Precision Steel Warehouse, Inc. v. Anderson-Martin Mach.
Co., 313 Ark. 258, 270, 854 S.W.2d 321, 327 (1993) (citing Chandler & Ramsey v. Kirkpatrick,
270 Ark. 74, 603 S.W.2d 406 (1980)).
-6-
Cite as 2011 Ark. 19
A general objection to a jury instruction is permissible only if the instruction is
inherently erroneous, meaning the instruction could not be correct under any circumstance,
and is binding in nature. See Koch v. Missouri Pac. R. Co., 248 Ark. 1251, 1252, 455 S.W.2d
858, 859 (1970); see also Advocat, Inc. v. Sauer, 353 Ark. 29, 65, 111 S.W.3d 346, 367 (2003).
This court has held that an erroneous instruction, which is likely to mislead the jury, is
prejudicial. Advocat, Inc., 353 Ark. at 65, 111 S.W.3d at 367.
At trial, the court read Special Instruction No. 1 as quoted above, and then asked the
parties if there were any objections to this instruction. The following colloquy occurred
between the court and Allstate’s counsel:
T HE C OURT:
D EFENSE C OUNSEL:
T HE C OURT:
D EFENSE C OUNSEL:
T HE C OURT:
Any objection to that?
Yes.
Okay. Go ahead.
Well, Your Honor, number one, I know it’s their theory
of the case, but also is that while Dr. Dodson, his staff in
there, people that I’ve talked to in his office when he’s
not there . . .
I think I’m going to give that instruction. I will consider
it, but I think I will. I mean, I don’t plan to give all the
instructions he wants but I just think that’s fair.
Instruction regarding licensing and massage therapy . . .
It is clear that Allstate’s counsel made an objection to Special Instruction No. 1 and
began to explain the reasoning behind this objection. At that point, the court interrupted
Allstate’s counsel during her explanation, and counsel did not make her specific objection to
this instruction part of the record. It is the duty of the appealing party to present a record
-7-
Cite as 2011 Ark. 19
from which this court can determine that an error occurred. See Gilliam v. Thompson, 313
Ark. 698, 701, 856 S.W.2d 877, 879 (1993). This was not done.
Allstate also maintains that it was not required to make a specific objection, and that
a general objection was sufficient because Special Instruction No. 1 was inherently erroneous.
An inherently erroneous instruction is one that could not be correct under any circumstance.
See Koch, 248 Ark. at 1252, 455 S.W.2d at 859. Allstate argues that Special Instruction No.
1 misstated the law and eliminated Allstate’s defense—that Dodson’s unlicensed employees
were subject to the dictates of the Physical Therapy Act and were not merely part of Dodson’s
medical practice. And yet Special Instruction No. 1 appears to accurately reflect the law and
present the issue that the jury had to decide; that is, were the unlicensed physical therapists
involved part of Dodson’s medical practice and thus regulated by the Arkansas Medical Board
or were they regulated, as not part of Dodson’s practice, under the Physical Therapy Act? We
conclude that this instruction is not inherently erroneous and a general objection to it by
counsel was not sufficient.
As to Special Instruction No. 2, which is quoted above, Allstate objected to this
instruction on two separate occasions at trial. Allstate’s counsel argued that instead of just
instructing the jury as to subsection (c) of Arkansas Code Annotated § 17-93-301, which
Special Instruction No. 2 does, the jury should be instructed on the entire statute.3
3
At the time of this lawsuit, Ark. Code Ann. § 17-93-301 read as follows:
(a) It shall be unlawful for any person to practice physical therapy or to profess to be
a physical therapist, physiotherapist, physical therapy technician, or to use the initials “PT,”
-8-
Cite as 2011 Ark. 19
Specifically, Allstate’s counsel contended that the entire statute should be included in the
instruction arguing that “[s]ubsection (o) [sic] says if you’re going to be talking to another
physical therapist and you’re not a physical therapist then it’s unlawful unless you have . . . .”
At that point, the trial court interrupted Allstate’s counsel and stated that she would look at
a revision, but that the instruction would be given because it was a fair statement of the law.
At the next discussion concerning jury instructions, Allstate’s counsel again related that it
would proffer the entire statute as opposed to just subsection (c). However, at no point did
Allstate’s counsel expand on her reasoning as to why the entire statute should have been given
as opposed to just subsection (c).
When the point on appeal concerns the trial court’s failure to give an instruction, the
party appealing must submit a proposed instruction on the issue. See Gilliam, 313 Ark. at 701,
856 S.W.2d at 879. This was done by Allstate’s counsel. In addition, the appealing party
must present an argument to the trial court as to why the proffered instruction should be
“PHT,” “RPT,” or any other letters, words, abbreviations, or insignia indicating that he is
a physical therapist or to practice or to assume the duties incident to physical therapy without
first obtaining from the board a license authorizing the person to practice physical therapy
in this state.
(b) It shall be unlawful for any person to practice as a physical therapist assistant
without first obtaining from the board a license or temporary permit authorizing the person
to practice as a physical therapist assistant in the state.
(c) Nothing in this chapter shall be deemed to limit the authority of or prohibit any
person licensed under any other act in this state from engaging in the practice for which he
or she is licensed nor prevent students who are enrolled in accredited physical therapy or
physical therapist assistant education programs from performing acts of physical therapy
incidental to their courses of study.
-9-
Cite as 2011 Ark. 19
given. Id. In the instant case, Allstate objected to Special Instruction No. 2 by arguing that
the entire section should be given to the jury and not just subsection (c) and proffered the
entire statute. Yet, Allstate never presented arguments as to why Special Instruction No. 2 was
a binding instruction and why the entire statute should have been given to the jury. Hence,
there was no argument to the trial court that by failing to give the jury subsections (a) and (b)
of section 17-93-301, the court eliminated Allstate’s defense that Dodson’s use of unlicensed
employees violated that statute. This court has frequently held that it will not consider
arguments on appeal that were not presented before the trial court. Gilliam, 313 Ark. at 701,
856 S.W.2d at 879 (citing Viking Ins. Co. v. Jester, 310 Ark. 317, 836 S.W.2d 371 (1992)).
Accordingly, we will not consider the arguments advanced by Allstate on this point.
Furthermore, we do not consider Special Instruction No. 2 to be an inherently erroneous
instruction due to “incompleteness” because instructions on subsections (a) and (b) were not
given. The instruction accurately reflects section 17-93-301(c) and for that reason is not
inherently erroneous.
II. Causation and Damages
Allstate next claims that Dodson failed to meet his burden of proof on both the
causation and damages elements of his defamation and tortious interference claims.
Specifically, it contends that Dodson failed to provide any evidence that he lost existing or
prospective patients as a result of Allstate’s conduct. Allstate further argues that the only
evidence Dodson offered as to damages was the decline in his practice and his annual income
-10-
Cite as 2011 Ark. 19
for many years after the slanderous statements were made. Allstate points out, in addition,
that there were other potential causes for this decline and that Dodson had the burden of
eliminating those other causes.4 Allstate contends that because Dodson failed to prove
causation and damages, there was insufficient evidence to support the jury’s compensatorydamages award, and that award should be vacated or reduced.
More precisely, Allstate maintains that Dodson did not put on proof of a specific
existing patient who was lost, or identify a prospective patient that he lost, due to Allstate’s
conduct.
Dodson counters that several patients did testify that Allstate’s agents made
statements to them concerning Dodson’s illegal and fraudulent practice. Regina Coates, a
former patient of Dodson, testified that while at a party, she engaged in a conversation with
an Allstate adjuster who told her that Dodson’s claims and practices were unfair, that his bills
were inflated, and that he treated people who were not hurt. Paulette Bassett, a former
patient of Dodson, testified that Bobbie Waddell, a former claims adjuster with Allstate, got
4
These seven other factors cited by Allstate are: (1) attorneys stopped taking soft tissue
injury cases because they were losing these cases at trial; (2) personal injury attorneys were not
referring clients to Dodson because they were receiving adverse jury verdicts in cases
involving Dodson and his clinic; (3) patients were enrolling in HMOs during the 1990s and
being directed to physical therapists within the HMO network; (4) Dodson’s physical therapy
clinic was losing money because he failed to account for, and collect, his accounts receivable
during the relevant time period; (5) physicians in general experienced a five percent decrease
in income from 1995–1999; (6) in some years Dodson’s revenue actually increased, but that
his expenses increased even more; and (7) the worker’s compensation claimants, who
constituted a significant percentage of Dodson’s physical therapy patients, were having their
claims impacted by the significant tightening of Arkansas’s Workers’ Compensation laws in
1993.
-11-
Cite as 2011 Ark. 19
involved on her claim and began to badger her by asking questions about Dodson’s care and
therapy. Bassett also testified that Waddell asked her about the nature of Dodson’s practice
and suggested that she see another doctor. Mikal Rasul, a former patient of Dodson, testified
that he had a claim with Allstate and that John Runkle, a former claims adjuster with Allstate,
contacted him about his claim. Rasul testified that Runkle asked him numerous questions
about Dodson’s business, about whether he could have chosen to see another doctor, and
informed Rasul that Dodson was running an illegal business. Rasul further testified that
Runkle told him that Dodson was not using licensed physical therapists and that the people
in his office could just be “off the street.” He also testified that Runkle told him that Dodson
usually prescribed medications in order to make the claims higher. Rasul added that Runkle
told him that Allstate was going to do whatever they could “to shut his business down.”
Dodson’s patient, Harry Bassett, was an additional witness. He testified that adjuster
Waddell handled his claim and she told him that Allstate was not going to pay Dodson
because his people did not have licenses and because he was overcharging. Bassett testified
that Waddell made it seem like Dodson was doing something fraudulent.
The video
deposition of Dodson’s patient, Melvin Baines, was also introduced. Baines testified that he
spoke with Waddell and Runkle about his claim. He testified that both told him that Dodson
had illegal personnel that were not qualified to give therapy. He was told that Dodson was
conducting an illegal operation and that they had him under investigation.
Dodson also introduced the testimony of several attorneys who testified about why
they stopped referring their clients to Dodson for medical care and treatment. Peter Miller,
-12-
Cite as 2011 Ark. 19
a personal injury attorney in Little Rock, testified that he stopped referring his clients to
Dodson because he knew that if he referred his clients to Dodson, they would get less money
in settlement from Allstate. He testified that his clients would end up owing Dodson because
Allstate would refuse to pay the physical-therapy bills, and this was not the best outcome for
his clients. He also testified that the origin of this problem began with Allstate’s recalcitrance
in refusing to pay for physical-therapy services performed by Dodson’s employees.
Robert Cortinez, a general practice attorney in Little Rock and Pine Bluff, testified
that in 1992 or 1993, Dodson had a very busy medical practice. He testified that the last time
he went to Dodson’s office, about five years ago, there were significantly fewer patients at his
office. He also testified that the comments being made by Allstate about Dodson’s practice
were prevalent throughout Jefferson County. He said that the word on the street was that
Dodson was running an illegal practice, and that if he continued, he would not be in business
much longer. He testified that part of the reason he does not refer clients to Dodson at this
time is that many people now have their own health insurance and are required to see doctors
and physical therapists within their network.
Dodson, in addition, introduced the testimony of several doctors who testified that
Dodson’s reputation and practice were damaged by Allstate’s defamatory statements. For
example, Dr. William Rutledge testified that Dodson used to have a thriving practice,
especially in the late 1980s and early 1990s. He said, however, that this had changed over
the years, and Dodson started to have less traffic from patients. He testified that in 2005,
Dodson asked him to work with him, hoping that it would rebuild some of his credibility.
-13-
Cite as 2011 Ark. 19
Rutledge testified that Dodson’s reputation had been harmed because of Allstate and that his
practice declined dramatically. He further testified that his work with Dodson was not as
successful as he hoped it would be because it was difficult to overcome the rumors and attacks
that Allstate made against them.
Allstate counters this by arguing that there were seven other possible reasons for
Dodson’s decline in income that were introduced at trial, as described above in footnote 4.
It further contends that it has an obligation to investigate suspected illegal practices and the
question of whether unlicensed physical therapists should be paid under these circumstances
is an open question in Arkansas.
With respect to compensatory damages, the jury was instructed under Arkansas Model
Instructions–Civil 2201 and 2206, as follows:
If you decide for the plaintiff, Jon H. Dodson, MD, and/or Forest Park Medical
Clinic, PA, on the question of liability against Allstate Insurance Company, you must
then fix the amount of money which will reasonably and fairly compensate them or
one of them for any of the following two elements of damage sustained which you
find were proximately caused by the intentional wrongdoing of the defendant. First,
the value of any profits lost and the present value of any profits reasonably certain to
be lost in the future. Second, any mental anguish experienced in the past and
reasonably certain to be experienced in the future.
Our standard of review for an award for compensatory damages on appeal is as follows:
When an award of damages is alleged on appeal to be excessive, we review the proof
and all reasonable inferences most favorable to the appellee and determine whether the
verdict is so great as to shock our conscience or demonstrate passion or prejudice on
the part of the jury.
Bank of Eureka Springs v. Evans, 353 Ark. 438, 455, 109 S.W.3d 672, 682 (2003) (citing Ellis v.
Price, 337 Ark. 542, 551, 990 S.W.2d 543, 548 (1999) (internal citations omitted)). The
-14-
Cite as 2011 Ark. 19
burden to be met under this standard of review in such a case is whether there is substantial
evidence to support the verdict. Advocat, Inc. v. Sauer, 353 Ark. 29, 43, 111 S.W.3d 346, 352
(2003).
In a case for defamation, there must be evidence that establishes a causal connection
between the defamatory statements and the injury suffered by the plaintiff. See Wal-Mart
Stores, Inc. v. Lee, 348 Ark. 707, 738, 74 S.W.3d 634, 655 (2002). The issue of causation is
a question of fact for the jury to decide. Id. at 738, 74 S.W.3d at 656. The evidence
presented by Dodson included attorney Peter Miller’s testimony; attorney Robert Cortinez’s
testimony; Dr. William Rutledge’s testimony; and the testimony of numerous patients of
Dodson. When viewed in a light most favorable to the appellee, we hold that this was
substantial evidence to support a jury’s finding that Allstate’s statements caused Dodson’s
damages and injury and that those damages are measured in terms of lost profits.
Allstate claims, however, that Dodson was required to eliminate the other possible
causes for the decline in his income espoused by Allstate and listed in footnote 4. Allstate
bases this argument on this court’s decision in Wasp Oil, Inc. v. Arkansas Oil and Gas, Inc., 280
Ark. 420, 658 S.W.2d 397 (1983). In that case, this court held that the defendants “are liable
only for the loss of income caused by the defamatory publication,” but are not liable for the
loss of income due to other factors. Id. at 432, 658 SW.2d at 403. We further found in Wasp
Oil that the loss of income was not established with any exactness, but even if it was, the trial
court “could not determine what part of the loss of income was caused solely by the
defamatory letter.” Id.
-15-
Cite as 2011 Ark. 19
In response, Dodson argues that Allstate failed to raise the argument of other causes in
connection with the testimony described before the trial court. In its motion for directed
verdict, and later in its motion for judgment notwithstanding the verdict (JNOV), Allstate did
present the argument that there were other possible causes for Dodson’s loss of income.
However, Allstate never made the argument that Dodson must eliminate all other possible
causes before being able to recover damages. Even in its motion for directed verdict and
motion for JNOV, Allstate only points to Robert Cortinez’s testimony concerning patients
having their own HMOs and being directed to physical therapists within their HMO network
rather than being referred to Dodson and the testimony that the number of personal injury
soft-tissue claims decreased in the 1990s as other possible explanations for Dodson’s decline
in income. Allstate makes no reference to the other five potential causes that are argued on
appeal. This court has frequently held that it will not consider arguments on appeal that were
not presented to the trial court. See Gilliam, 313 Ark. at 701, 856 S.W.2d at 879. And even
with respect to the HMO network and the decline in soft-tissue injury cases, which are
suggested causes, the issue of causation is a fact question for the jury to decide, as already
stated.
Allstate continues that even if Dodson put on substantial evidence of causation, this
evidence did not support the $6 million compensatory damages award. And yet, this court
in Baptist Health v. Murphy, 2010 Ark. 358, ___ S.W.3d ___, permitted recovery on the
theory of tortious interference where the plaintiff put on evidence that in at least one instance,
he was precluded from treating a patient and lost the professional fees associated with that
-16-
Cite as 2011 Ark. 19
treatment and that the plaintiff was harmed because he was less likely to receive referrals. In
the instant case, much more evidence was presented by Dodson of the chilling effect Allstate
representatives had on his practice due to their contact with his patients.
Furthermore, unlike in Wasp Oil where there was no evidence introduced of tax
returns, books of account, or projections of lost income, Dr. Charles Venus testified on behalf
of Dodson as to his loss of income between the years of 1993 and 2007. Dr. Venus calculated
that had Dodson’s income remained constant over this period of fourteen years, his
cumulative loss would have been $8,779,645.00. Dr. Venus also testified that if Dodson’s
income had increased by five percent each year, his cumulative loss of income would have
been $14,633,336.00. He testified that he calculated this cumulative loss in income from
Dodson’s income tax returns.
Based on this testimony, we conclude that there was substantial evidence to support
the jury’s verdict for compensatory damages. We further hold that this compensatory-damage
award of $6 million does not shock the conscience of this court or demonstrate passion or
prejudice on the part of the jury, especially in light of Dr. Venus’s testimony estimating
Dodson’s lost profits to be between $8 million and $14 million. We affirm the jury’s verdict
for compensatory damages in the amount of $6 million.
III. Expert Testimony
Allstate next contends that the trial court erred in allowing Dodson’s insurance industry
expert from Nevada, Gary Fye, to testify concerning Allstate’s nationwide practice of
deliberately low-balling small insurance claims for bodily injury and taking advantage of
-17-
Cite as 2011 Ark. 19
financially-vulnerable personal-injury victims.
Allstate argues that this testimony was
irrelevant, inflammatory, and improper and should have been excluded. In response, Dodson
argues that Allstate did not make the proper objections to this testimony at trial. Dodson
further argues that the arguments presented by Allstate on appeal were not presented to the
trial court, and, thus, this court should not consider them.
Initially, we reject Dodson’s claim that Allstate failed to make the proper objections
during Fye’s testimony and failed to present the arguments presented on appeal concerning
the admissibility of Fye’s testimony at the time of trial. As Allstate underscores, it filed a
motion in limine seeking to exclude Fye’s testimony prior to trial. This court has frequently
observed that where a pretrial motion in limine has been denied, the issue is preserved for
appeal, and no further objection at trial is necessary. See, e.g., Morris v. State, 358 Ark. 455,
193 S.W.3d 243 (2004). Furthermore, Allstate objected throughout Fye’s entire testimony,
and at several points objected to Dodson’s failure to lay a proper foundation and failure to
connect the documents to which he was testifying to Arkansas and to Dodson. Allstate
further argued in its motion for new trial that Fye’s testimony should have been excluded
because he impermissibly testified to Allstate’s motive, intent, and thought processes and
because his testimony concerning Allstate’s nationwide practices enticed the jury to punish
Allstate for being a bad company. We hold that Allstate properly preserved this issue for
appeal.
This court reviews the admissibility of expert testimony under an abuse-of-discretion
standard. See Green v. Alpharma, Inc., 373 Ark. 378, 397, 248 S.W.3d 29, 43 (2008). Arkansas
-18-
Cite as 2011 Ark. 19
Rule of Evidence 702 allows an expert who is qualified by knowledge, skill, experience,
training, or education to testify to his or her scientific, technical, or specialized knowledge that
would assist the trier of fact in understanding the evidence or determining a fact in issue.
Fye testified that in his opinion, the national claims practices of Allstate did relate to
Dodson’s case. Three categories of national claims practices, he stated, were involved: (1)
training for identifying and handling suspicious or potentially fraudulent bodily injury claims;
(2) practices referred to by Allstate as indemnity-control initiatives; and (3) the
implementation of Allstate’s training manual that lays out the core principals and practices for
settlements.
Allstate responds to this by contending that Fye did not have knowledge of what
Allstate did in Arkansas with respect to claimants who were patients of Dodson. Allstate
further contends that what it may or may not have been doing in other states was irrelevant
to this case. The trial court ruled that Fye would be permitted to testify and that these issues
raised by Allstate would go to the weight of his testimony rather than to its admissibility.
Fye’s testimony included reference to a study of Allstate’s core practices that showed
that claimants not represented by attorneys received less in settlements than claimants who
were represented by attorneys. Fye also testified that it was Allstate’s goal to control loss
payout, especially on bodily injury claims of small to medium size. He added that it was
Allstate’s national practice to utilize a computer program (Colossus) to calculate a range of
settlement values for claims involving minor impact, soft-tissue injuries and make settlement
offers in the lowest ten percent of that range. If the claimants did not want to settle, then they
-19-
Cite as 2011 Ark. 19
would be forced into a lawsuit.
Claim adjusters, he said, are being trained in “trial
economics,” which concerns whether it is economically feasible for an attorney to take on the
costs of prosecuting a soft-tissue injury case. He testified that Allstate’s claims program sends
a message to claimants and lawyers who consider taking claims to court that the majority of
claims for small to medium soft-tissue injuries settle for less than ten thousand dollars. Based
on his observation of industry standards over the past fifty years, Fye opined that Allstate
violated those industry standards by identifying a successful medical practice that was
providing assistance to persons with soft-tissue injuries and intervening to curb that practice
in order to reduce claims.
Allstate urges once more on appeal that the testimony presented by Fye was irrelevant
and inflammatory. Allstate concludes that Fye impermissibly told the jury which result to
reach and testified about Allstate’s motives, intent, and thought processes. Although Allstate
cites authority for the proposition that an expert may not tell the jury what result to reach or
testify as to the defendant’s motives, intent, or thought process, it fails to identify those
portions of Fye’s actual testimony which support violation of that principle.
Allstate does contend Fye did not relate his testimony concerning Allstate’s documents
and national policies to Dodson, or to physical therapy, or to a physician’s use of unlicensed
employees to perform physical therapy in Arkansas. Allstate emphasizes that the trial court
commented after the jury verdict had been returned that Dodson’s counsel “tried to get
evidence in that [the court] didn’t think was directly related.
That is, [the court]
understand[s] [Dodson’s counsel], and many other attorneys, have all kinds of problems with
-20-
Cite as 2011 Ark. 19
Allstate and the colossus system and all their things, not all of which [the court] felt were . .
. well, very little of which [the court] thought was relevant to this case.”
Despite the trial court’s voiced concern about the extent of Fye’s testimony and
relevancy, we are of a mind that Fye’s testimony sufficiently related to Allstate’s course of
conduct regarding Dodson. While the Colossus computer program and claim practices did
not relate only to physical-therapy claims, it did illustrate a program of economic warfare
regarding small soft-tissue-bodily-injury claims, including physical-therapy claims, and
potential litigation. It further depicted a willingness on the part of Allstate to use low benefit
offers and the threat of protracted litigation as tools to discourage these small claims. Denial
of claims for Dodson’s unlicensed physical therapists’ work could easily be viewed as falling
within the parameters of Allstate’s overall strategy to curtail soft-tissue claims. Legitimate
cost-saving measures are one thing; a protracted campaign to limit and even shut down a
physician’s business is another. We hold that there was a sufficient connection between Fye’s
testimony of national practices and the Dodson scenario for the testimony to have some
relevancy. The trial court did not abuse its discretion on this point.
IV. Joint and Several Liability
Allstate next claims that it cannot be held jointly and severally liable for the tort of
defamation, because there was evidence presented at trial that other insurance companies were
making the same slanderous statements that Allstate was making. It urges that it was held
jointly and severally liable for all of the damages suffered by Dodson when there was no
distinction made between the damages suffered by Dodson due to Allstate’s statements and
-21-
Cite as 2011 Ark. 19
those made due to the conduct of the other insurance companies. Dodson correctly argues
that Allstate made no objection to the jury instructions offered on damages and made no
proffer of an instruction or interrogatory on this issue it now advances on appeal.
This court has stated that where a general verdict form is used, we will not speculate
on what the jury found. Hyden v. Highcouch, 353 Ark. 609, 614, 110 S.W.3d 760, 764 (2003).
Further, “[w]hen special interrogatories concerning liability or damages are not requested, this
court is left in the position of not knowing the basis for the jury’s verdict, and this court will
not question nor theorize about the jury’s findings.” Id. at 614–15, 110 S.W.3d at 764.
In the instant case, a general-verdict form was used, and there were no special
interrogatories requested by Allstate. It is impossible for this court to determine whether the
jury held Allstate jointly and severally liable for all of Dodson’s damages caused either by
Allstate or the actions of other insurance companies. It was incumbent upon Allstate to
request a specific instruction concerning this issue or request that a special interrogatory be
included on the jury-verdict form. This was not done, and for that reason, we decline to
address this issue.
V. Withdrawn Counterclaim
Allstate contends that Dodson improperly used its withdrawn counterclaim as
substantive evidence after this court in Dodson I held that the counterclaim could be used as
impeachment evidence. Dodson responds by arguing that the counterclaim was used only
as impeachment evidence and, thus, was proper.
-22-
Cite as 2011 Ark. 19
In Dodson I, this court held that Allstate’s withdrawn counterclaim qualified “as
impeachment evidence to show that despite Allstate’s stance at trial that it never asserted that
Dodson had done anything wrong, Allstate’s own pleadings indicated that they believed
Dodson was acting fraudulently.” 345 Ark. at 451, 47 S.W.3d at 881. This court reasoned
that the use of the counterclaim as impeachment evidence was permissible because “Dodson
was not attempting to admit his own pleading to bolster his claims, but instead attempted to
admit a filed and dismissed pleading adopted by all of the defendants.” Id. at 450, 47 S.W.3d
at 881.
In the instant case, Dodson did use the withdrawn counterclaim for impeachment
purposes during the testimony of John Runkle. Nevertheless, when Dodson testified on
direct that there was a counterclaim filed against him that accused him of criminal
wrongdoing and fraud, Allstate objected and Dodson’s counsel, agreed to save this line of
questioning for another time.
Dodson’s counsel then asked Dodson what he believed
constituted the defamation in this case, to which Dodson responded: “the continuing even
current accusations of fraudulent activity, criminal activity, activities subject to prosecution
with fines and imprisonment and the, the continuing presentation of these accusations to the
public of Pulaski and Jefferson county in the courts of law . . . .”
Dodson does not specifically mention the counterclaim in this later testimony, but he
makes it clear that he believes accusations of fraud and criminal activity were presented to the
public by Allstate through the courts. Without a specific reference to the pleading, however,
-23-
Cite as 2011 Ark. 19
we are reluctant to find reversible error on this point or to find a direct contravention of this
court’s holding in Dodson I.
VI. Punitive Damages
Allstate asserts that there was insufficient evidence to support an award for punitive
damages. Alternatively, Allstate argues that even if this court finds there was sufficient
evidence to support a punitive damage award, that award should be reduced.
This court has previously set forth the standards to determine whether there was
sufficient evidence to support a punitive damages award:
When reviewing a punitive damage award under Arkansas common law, “we
consider the extent and enormity of the wrong, the intent of the party committing
the wrong, all the circumstances, and the financial and social condition and standing
of the erring party.” Ellis, 337 Ark. at 551, 990 S.W.2d at 548. Punitive damages are
to be a penalty for conduct that is malicious or done with the deliberate intent to
injure another. Id. We have also held that “where, in light of the evidence, the jury
could have concluded that appellants displayed a conscious indifference for appellee
and that their acts were done with the deliberate intent to injure her, the amount of
punitive damages did not shock our conscience.” Id. When conducting our review
of an award of punitive damages, we view the evidence in the light most favorable to
the appellee. E.g., Houston v. Knoedl, 329 Ark. 91, 947 S.W.2d 745 (1997).
See Bank of Eureka Springs v. Evans, 353 Ark. 438, 456–57, 109 S.W.3d 672, 683 (2003).
This opinion already recounts the testimony of former patients Regina Coates, Paulette
Bassett, Mikal Rasul, Henry Bassett, and Melvin Baines, concerning disparaging comments
made by Allstate adjusters. We reiterate the testimony of Peter Miller, who testified that he
had a conversation with Waddell, Allstate’s adjuster, where he advised her that there was a law
that specifically said a doctor may have non-licensed physical therapists as long as those
therapists were under the direct supervision of the doctor.
-24-
Miller testified that in his
Cite as 2011 Ark. 19
experience, Allstate has always been innovative in finding ways not to pay injured people.
One of these ways was to make it unattractive to deal with certain doctors, which is what
happened to Dodson, and after awhile other insurance companies began doing the same thing.
Robert Cortinez, the general practice attorney in Little Rock and Pine Bluff, testified
that Dodson would treat some of his personal injury clients. He testified that in 1994 or 1995,
Allstate began making allegations that Dodson was using an unlicensed physical therapist, that
this was illegal, and that they were not going to pay for that type of treatment. He testified
that Allstate adjusters said Dodson would not be in business much longer. Michael Crockett,
a personal injury attorney in Little Rock, testified that after 1994 and 1995, it became difficult
to get cases settled with Allstate as long as Dodson was on the other side. He testified that
Allstate was attacking Dodson’s credibility on billing because he did not have licensed physical
therapists, which Allstate said was required. He stopped referring cases to Dodson when
Allstate was on the other side because it was not in the best interest of his clients.
Sheila Campbell, a lawyer, testified that Runkle, Allstate’s adjuster, told her that
Allstate would no longer pay Dodson’s bills because he was fraudulently billing due to the fact
that he did not have a licensed physical therapist in his office. She testified that she concluded
that the Physical Therapy Act had nothing to do with the Medical Practices Act under which
Dodson was licensed and reported her conclusions to Allstate. She testified that Allstate
responded that they were doing what their attorney told them to do. She added that Allstate
still refused to pay Dodson’s bills after the medical board’s attorney issued his opinion in 1997.
-25-
Cite as 2011 Ark. 19
Allstate counters that this is not a punitive-damages case due to the absense of
malicious intent. It emphasizes: (1) that the question of the legality of Dodson’s use of
unlicensed personnel was an open question in Arkansas and that the only law on point came
from an Attorney General opinion that Allstate maintains supports its position; (2) that other
jurisdictions have adopted a position similar to Allstate’s regarding unlicensed personnel; (3)
that it presented evidence at trial that its position regarding Dodson’s use of unlicensed
personnel was based on a legal opinion rendered by independent counsel; (4) that it received
information from the Arkansas State Board of Physical Therapy that licensure is required for
individuals providing physical therapy services; (5) that there was no evidence of tortious
conduct on the part of Allstate introduced at trial; (6) that several other insurance companies
took the same position and refused to pay for treatment performed by Dodson’s unlicensed
employees; and (7) that the punitive-damages award should be vacated because Fye, Dodson’s
expert, was permitted to testify to Allstate’s nationwide practices, which, Allstate underscores,
did not relate to Dodson, physical therapy, or the use of unlicensed personnel.
Viewing this evidence in the light most favorable to Dodson, there is sufficient
evidence to support a finding by the jury that Allstate, in its continued statements made by
its representatives to Dodson’s patients and attorneys that worked with Dodson, acted with
malice. There was ample evidence presented that Allstate went beyond merely refusing to
pay for physical therapy performed at Dodson’s clinic by unlicensed employees. As recited
above, several patients and attorneys testified that Allstate agents not only refused to pay
-26-
Cite as 2011 Ark. 19
physical therapy claims but also repeatedly told them that Dodson was running an illegal and
fraudulent practice.
The enormity of the wrong is great enough to support punitive damages, considering
that Allstate continued this conduct over a period of several years resulting in severe damages
to Dodson’s reputation and medical practice. Also supportive of the assessment of punitive
damages is the fact that this course of conduct was taken by a nationally recognized insurance
agency and, apparently, in accordance with their national claims practices and procedures to
curb small, soft-tissue claims. The evidence presented in this case was such that a jury could
have concluded that the acts committed by Allstate were pursued with a conscious
indifference for Dodson and with deliberate intent to injure him. After considering all of the
circumstances, we conclude that awarding punitive damages does not shock the conscience
of this court. The question is the appropriate amount of those damages, and we will discuss
this as a part of the cross appeal.
VII. Cross Appeal
Cross-appellant Dodson argues that the original punitive damage award of $15 million
was appropriate and not excessive and that the trial court should be reversed on this point.
He argues that Allstate’s conduct was outrageously reprehensible and that the ratio between
the compensatory and punitive damages was within an acceptable range. Allstate responds
that its conduct was not outrageously reprehensible, especially when viewed in contrast to the
facts of other Arkansas cases where this court upheld similar awards. Allstate additionally
-27-
Cite as 2011 Ark. 19
contends that the punitive-damage award was excessive considering the high amount of
compensatory damages awarded and in light of comparable civil penalties.
An analysis of an award of punitive damages is reviewed in a two-step process: first,
whether the award is consistent with state law, and second, whether it violates the Due
Process Clause, as analyzed by the United States Supreme Court in BMW of North America,
Inc. v. Gore, 517 U.S. 559 (1996). See Routh Wrecker Service v. Washington, 335 Ark. 232, 240,
980 S.W.2d 240, 244 (1998).
This court has previously stated the law in Arkansas relating to remittitur of punitive
damages:
When considering the issue of remittitur of punitive damages, we review the issue de
novo. See Smith v. Hansen, 323 Ark. 188, 914 S.W.2d 285 (1996). We consider the
extent and enormity of the wrong, the intent of the party committing the wrong, all
the circumstances, and the financial and social condition and standing of the erring
party. See United Ins. Co. of America v. Murphy, 331 Ark. 364, 961 S.W.2d 752 (1998);
McLaughlin v. Cox, 324 Ark. 361, 922 S.W.2d 327 (1996). Punitive damages are a
penalty for conduct that is malicious or perpetrated with the deliberate intent to injure
another. See United Ins. Co., supra. When punitive damages are alleged to be excessive,
we review the proof and all reasonable inferences in the light most favorable to the
appellees, and we determine whether the verdict is so great as to shock the conscience
of this court or to demonstrate passion or prejudice on the part of the trier of fact. See
Houston v. Knoedl, 329 Ark. 91, 947 S.W.2d 745 (1997); Collins v. Hinton, 327 Ark.
159, 937 S.W.2d 164 (1997). It is important that the punitive damages be sufficient to
deter others from comparable conduct in the future. See McLaughlin v. Cox, supra.
Advocat, Inc., 353 Ark. at 50, 111 S.W.3d at 357–58 (citing Routh Wrecker Service, 335 Ark.
at 240–241, 980 S.W.2d at 244).
We begin by holding that the punitive-damage award of $15 million awarded by the
jury does not shock the conscience of this court. We review the remittitur issue de novo, and
-28-
Cite as 2011 Ark. 19
as already discussed in this opinion, testimony abounded of Allstate’s efforts to tag Dodson as
one engaged in a fraudulent and illegal practice. The clear goal was to curtail Dodson’s claims
and, according to one witness, to shut his business down. That testimony easily supports the
jury’s verdict on punitive damages.
We turn next to the question of whether Allstate’s Due Process rights were violated.
The U.S. Supreme Court has set out three guideposts to be considered when determining
whether a punitive damages award is excessive: (1) the degree of reprehensibility; (2) the
disparity between the harm or potential harm suffered by the plaintiff and his punitive damage
award; and (3) the difference between this remedy and the civil penalties authorized or
imposed in comparable cases. BMW of North America, Inc. v. Gore, supra. An analysis of the
factors set out in Gore for remittitur purposes is also performed by the appellate court by using
a de novo review. Advocat, Inc., 353 Ark. at 53, 111 S.W.3d at 360.
A. Degree of Reprehensibility
When analyzing the degree of reprehensibility, the Court in Gore said that “exemplary
damages imposed on a defendant should reflect ‘the enormity of his offense.’” Gore, 517 U.S.
at 575. In discussing reprehensibility, this court has said:
(1) where the harm inflicted by the tortfeasor was ‘purely economical in nature[,]’ (2)
there was no evidence that the tortfeasor had acted in bad faith, (3) there was no
evidence that the tortfeasor had ‘persisted in a course of conduct after it had been
adjudged unlawful on even one occasion, let alone repeated occasions[,]’ and (4) the
record failed to disclose any ‘deliberate false statements, acts of affirmative misconduct,
or concealment of evidence of improper motive,’ the tortfeasor’s conduct was not
sufficiently reprehensible to warrant the imposition of a $2 million award.
Advocat, Inc., 353 Ark. at 54, 111 S.W.3d at 360 (citing Gore, 517 U.S. at 576–80).
-29-
Cite as 2011 Ark. 19
The United States Supreme Court in State Farm Mut. Auto Ins. Co. v. Campbell, 538
U.S. 408 (2003), elaborated on the factors to be considered when assessing reprehensibility:
“whether the harm caused was physical as opposed to economic; the tortious conduct evinced
an indifference to or a reckless disregard of the health or safety of others; the target of the
conduct had financial vulnerability; the conduct involved repeated actions or was an isolated
incident; and the harm was the result of intentional malice, trickery, or deceit, or mere
accident.” Campbell, 538 U.S. at 419.
In Gore, the Court said that when considering the degree of reprehensibility in light
of economic harm, “infliction of economic harm, especially when done intentionally through
affirmative acts of misconduct . . . or when the target is financially vulnerable, can warrant a
substantial penalty.” Gore, 517 U.S. at 576. But the Court added that this “does not convert
all acts that cause economic harm into torts that are sufficiently reprehensible to justify a
significant sanction in addition to compensatory damages.” Id.
In the instant case, most of the evidence presented reflected that the harm caused to
Dodson was economic harm through lost profits. Although the harm inflicted on Dodson
was purely economic, the alleged harm to his practice was substantial. To repeat in part, Dr.
Charles Venus testified that he estimated Dodson’s lost profits to be between $8 million and
over $14 million, depending on whether it was calculated to include a five percent increase
in income each year. The evidence presented also showed that Allstate representatives had
made statements concerning Dodson’s “illegal practice” and “fraudulent practice” to several
patients and attorneys and that these statements were repeated over several years, even after
-30-
Cite as 2011 Ark. 19
Allstate received the letter from counsel for the Arkansas Medical Board in 1997. More than
a reasonable effort to control claims costs, Allstate appears to have sought to severely limit a
medical practice that was costing it money. Based on this evidence, we conclude that the
reprehensibility of Allstate’s conduct in this case warranted an award of punitive damages.
B. Ratio
The Court in Gore stated that it was reluctant to identify concrete constitutional limits
on the ratio between harm, or potential harm, to the plaintiff and the punitive damage award.
See Gore, 517 U.S. at 582. In Campbell, the Court again declined to impose a bright-line ratio
which a punitive damage award cannot exceed. Campbell, 538 U.S. at 425. The Court did
indicate in Campbell that its jurisprudence has established that “in practice, few awards
exceeding a single-digit ratio between punitive and compensatory damages, to a significant
degree, will satisfy due process.” Id. The Court went on to say that “[w]hen compensatory
damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can
reach the outermost limit of the due process guarantee.” Id. The Court concluded that the
exact reward in each case still must be determined by the circumstances surrounding the
defendant’s conduct and the harm caused to the plaintiff. Id.
Turning to the facts of the instant case, the jury awarded Dodson $6 million in
compensatory damages and $15 million in punitive damages. The ratio between the punitive
and compensatory damages was 2.5:1. This ratio does not approach the shocking ratio of
145:1, which was the award in Campbell.
-31-
Cite as 2011 Ark. 19
We are reminded again on this issue by Allstate that Dodson’s expert, Gary Fye,
testified to Allstate’s national practices regarding claims settlement and that it is being punished
for those practices and not for conduct perpetrated in Arkansas. Again, we disagree that
Allstate’s conduct testified to by Fye did not have some nexus to the specific harm suffered
by Dodson. That is what the Court required in Campbell—a sufficient nexus. Id. at 422.
Our conclusion is bolstered by the fact that the 145:1 ratio in Campbell manifestly evidenced
punishment for running an “unsavory” business nationally as opposed to the 2.5:1 ratio in the
instant case, which corresponds more directly to its conduct in Arkansas relating to Dodson’s
soft-tissue practice.
The trial court appeared to be influenced in its grant of the remittitur by the case of
Exxon Shipping Co. v. Baker, 554 U.S. 471 (2008), where the ratio of punitive damages to
compensatory damages was one to one. The Exxon case is not apposite in our judgment.
There, the award of compensatory damages was $507.5 million and a punishment in a
comparable amount was significant punishment, as the Court itself acknowledged. In the case
before us, that is not the situation.
C. Comparable Civil Penalties
The third guidepost as set out in Gore is the disparity between the punitive damages
award and the “civil penalties authorized in comparable cases.” Gore, 517 U.S. at 575. The
Arkansas Deceptive Trade Practices Act defines defamation when made in the business of
insurance as an unfair method of competition and an unfair or deceptive act or practice. Ark.
Code Ann. § 23-66-206(3). A penalty of up to $10,000 per act of violation is permitted under
-32-
Cite as 2011 Ark. 19
this act. See Ark. Code Ann. § 23-66-211(1). Clearly, under this standard, the initial jury
award of $15 million would be excessive.
Nevertheless, when balanced against the
reprehensibility of the conduct and the ratio of punitive to compensatory damages of only
2.5:1, we fail to see a Due Process violation under the Gore standards in the jury’s award of
$15 million in punitive damages. We reverse the trial court on cross appeal.
Affirmed on direct appeal. Reversed on cross appeal.
H ANNAH, C.J., and C ORBIN , J., dissent.
JIM H ANNAH, Chief Justice, dissenting.
I respectfully dissent.
The special jury
instructions were improper and deprived Allstate of a fair trial by essentially telling the jury
what decision to reach. Allstate made valid objections to the special jury instructions which
apprised the circuit court of the alleged error and permitted the circuit court to correct that
error.
This case should be reversed based on the jury instructions alone.
The AMI
instructions were sufficient, and this court should stand by its precedent of requiring use of
AMI instructions except when they are wholly inadequate.
Further, while Dodson offered evidence, including the testimony of patients and
lawyers, to show that the earnings from his practice had diminished, this evidence did not
establish that Allstate was the cause. Also, Gary Fye’s testimony was wholly irrelevant because
at issue in this case were statements of local employees, yet Fye testified about alleged national
policies. His opinions of alleged national policy only confused the jury further. He should
not have been permitted to testify as an expert. Because I conclude there was a lack of
-33-
Cite as 2011 Ark. 19
evidence of causation, submission of the case to the jury was error. The jury decision in this
case was based on speculation and conjecture.
I also note that on the former appeal, see Dodson v. Allstate Ins. Co., 345 Ark. 430, 47
S.W.3d 866 (2001), this court held that the withdrawn counterclaim was admissible to
impeach Allstate on the claim that it had never asserted that Dodson had done anything
wrong. It was not held to be admissible as evidence of defamation. The counterclaim was
used as evidence of defamation in the present trial; however, I do not conclude that its
admission constituted reversible error.
Therefore, I dissent. I would reverse and remand this case.
C ORBIN , J., joins.
-34-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.