An appellate court in Illinois has reversed a multimillion dollar bad faith verdict against an insurance company that followed trial to a six-person jury as provided by Illinois law, finding that the insurer had been denied its constitutional right to a 12-person jury.
The Case
Alizabeth and Elvin Hana filed a medical malpractice lawsuit against, inter alia, Dr. Albert Chams and Dr. Joyce Chams, as well as their joint-obstetrics practice group, Chams Women's Health Care, S.C., in addition to Rush North Shore Medical Center and two of Rush North Shore's emergency room doctors. The Hanas' suit sought to recover for allegedly deficient prenatal care that resulted in physical injury to Ms. Hana and the death of the Hanas' child, Mary. Ms. Hana was appointed as the special administrator of Mary's estate, and a wrongful death claim was included in the complaint.
Illinois State Medical Inter-Insurance Exchange Mutual Insurance Company ("ISMIE") accepted defense of the underlying suit without reservation and retained an attorney to represent the Chamses.
Prior to trial, a number of the defendants either were dismissed from the case or were awarded summary judgment in their favor, and three of the defendants settled with the Hanas. Specifically, the trial court approved a $1.5 million settlement among the Hanas, Rush North Shore, and two of Rush North Shore's emergency room doctors. These three defendants then were dismissed from the Hanas' suit.
As a part of this settlement, payments were made to the Hanas' health insurers to settle any liens they might have on the Hanas' recovery in their case.
The case proceeded to a jury trial involving the plaintiffs' claims against the Chamses and Chams Women's Health Care, S.C.
The jury returned a general verdict in favor of the Hanas and against the three remaining defendants. The jury awarded a total of $6,171,118.67 in damages, which included (1) $621,118.67 for Ms. Hana's personal injuries; (2) $4.55 million for Mary's survival claim; and (3) $1 million for the wrongful death claim. The trial court reduced this amount by $1.5 million to account for the pretrial settlement.
After ISMIE paid its policy limits on the verdict, the Chamses were personally responsible for the $1.35 million balance. In exchange for a covenant not to enforce that excess judgment against the Chamses, the Hanas were assigned whatever rights the Chamses might have with respect to a bad faith claim for ISMIE's failure to settle their lawsuit within the policy limits.
The Hanas sued ISMIE, seeking both $1.35 million in compensatory damages for ISMIE's bad faith refusal to settle and $10 million in punitive damages for ISMIE's allegedly willful and wanton breach of fiduciary duty.
The Hanas also filed a jury demand. Pursuant to Public Act 98-1132 (eff. June 1, 2015), which amended Section 2-1105(b) of the Illinois Code of Civil Procedure to provide for six-person juries in civil cases, and over the objection of ISMIE, the matter was tried before a six-person jury.
The jury ultimately found in favor of the Hanas on both counts, awarding them $1.35 million in compensatory damages and $13 million in punitive damages. In addition, the trial court awarded the Hanas over $1.5 million in costs, attorney's fees, interest, and penalties.
ISMIE appealed, raising a constitutional issue as to the size of the jury.
The Appellate Court's Decision
The appellate court reversed and remanded for a new trial "due to the denial of ISMIE's constitutional right to a 12-person jury."
In its decision, the appellate court explained that, in Kakos v. Butler, 63 N.E.3d 901 (IL 2016), the Illinois Supreme Court held that the portion of Public Act 98-1132 amending Section 2-1105(b) and reducing the size of a jury in civil trials was facially unconstitutional under the Illinois Constitution and therefore void ab initio.
Thus, the appellate court ruled, because ISMIE was denied its constitutional right to a 12-person jury, it was "apparent that it was denied a fair trial."