Governor Fallin recently signed House Bill 2128 in an act described as a significant step toward tort reform in Oklahoma. House Bill 2128, which becomes effective November 1, 2011, contains both a damage cap and a cap lifting feature. Section 1(B) provides the cap by imposing a $350,000 limit on noneconomic losses (defined to include, among other items, pain and suffering, mental anguish and other intangible loss) in civil actions arising from claimed bodily injury. Section 1(C) provides the mechanism by which the cap can be lifted by providing there is no limit on the amount of noneconomic damages “in a civil action arising from a claimed bodily injury resulting from negligence” if the judge and jury finds by “clear and convincing evidence” reckless disregard, gross negligence, fraud or intentional conduct. Although House Bill 2128 appears designed primarily for conventional negligence suits, e.g., automobile accidents or physician malpractice, its terms suggest potential applicability in actions for breach of the insurer’s duty of good faith and fair dealing, more commonly referred to as “bad faith” actions.
It seems relatively clear that Oklahoma law allows claims for mental pain and suffering in bad faith actions. See generally, Timmons v. Royal Globe Ins. Co., 1985 OK 76, and Badillo v. Mid Century Ins. Co., 2005 OK 48. See also, OUJI 22.4. Moreover, certain types of bad faith actions involve direct claims for bodily injury, e.g., claims arising from an insurer’s failure to authorize certain medical treatments. Thus, it could certainly be argued that the cap provided by House Bill 2128 applies in some bad faith actions. But does the cap lifting provision also apply?
Section 1 (C) on its face only applies to “actions resulting from negligence.” If the phrase “actions resulting from negligence” is meant to refer to actions that are founded on breach of a simple negligence standard, then Section 1(C) could certainly be read as not applicable in actions for bad faith because the Badillo Court was very clear in holding that bad faith actions are not negligence actions.
To the extent American Fidelity & Casualty Co. v. L.C. Jones Trucking Co., 321 P.2d at 687, may have implied that a simple negligence standard was approved or adopted as to the level of culpability necessary to be shown for liability to attach to an insurer for breach of the duty of good faith and fair dealing in relation to the handling of a third party claim made against the insured, i.e., the situation involved here, that case is expressly overruled, but only to such extent.
2005 OK 48 at ¶27. And, it stands to reason the Legislature had something in mind when it constructed a cap that is not written using the same language as the cap lifting feature in the same bill. Thus, a bad faith plaintiff seeking damages for bodily injury seems pretty clearly subject to the $350,000 cap for those damages. More guidance will be necessary to be sure that same plaintiff may also avail herself of the cap lifting provision.