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02/24/95 LIBERTY NATIONAL LIFE INSURANCE COMPANY v.

February 24, 1995

LIBERTY NATIONAL LIFE INSURANCE COMPANY
v.
EDITH N. MCALLISTER



Appeal from Mobile Circuit Court. (CV-92-4085).

Rehearing Overruled April 7, 1995, .

Ingram, Maddox and Butts, JJ., concur. Houston, J., concurs specially. Cook, J., concurs in the result.

The opinion of the court was delivered by: Ingram

INGRAM, JUSTICE.

Edith N. McAllister sued Liberty National Life Insurance Company ("Liberty National"), alleging that Liberty National had induced her to switch an older Liberty National cancer insurance policy for a newer, more expensive cancer insurance policy, while fraudulently concealing that the newer policy reduced or eliminated important benefits available under the older policy. The trial court submitted to the jury McAllister's theories of misrepresentation, deceit, and fraudulent suppression. The jury awarded McAllister $1,000 in compensatory damages and $1,000,000 in punitive damages. The trial court entered a judgment on the jury's verdict and denied Liberty National's motions for JNOV, a new trial, or a remittitur. Liberty National appeals.

A jury's verdict is presumed correct and will not be disturbed unless it is plainly erroneous or manifestly unjust. Alpine Bay Resorts, Inc. v. Wyatt, 539 So. 2d 160, 162 (Ala. 1988). In addition, a judgment based upon a jury verdict and sustained by the denial of a motion for a new trial will not be reversed unless it is plainly and palpably wrong. Ashbee v. Brock, 510 So. 2d 214 (Ala. 1987). Because the jury returned a verdict for McAllister, any disputed questions of fact must be resolved in her favor, and we must presume that the jury drew from the facts any reasonable inferences necessary to support its verdict. State Farm Auto. Ins. Co. v. Morris, 612 So. 2d 440, 443 (Ala. 1993). In short, in reviewing a judgment based upon a jury verdict, this Court must review the record in a light most favorable to the appellee. Continental Cas. Ins. Co. v. McDonald, 567 So. 2d 1208, 1211 (Ala. 1990).

Viewed in the light most favorable to McAllister, Continental Cas. Ins. Co., the record suggests the following:

McAllister, a widow, had been a Liberty National policyholder since 1947. In 1982, she purchased a Liberty National cancer insurance policy for herself; she also purchased an identical policy for her daughter. The 1982 policy provided coverage for various costs associated with cancer treatment; these included limited hospital expenses, surgical expenses, and private nursing costs. Of particular importance to this case, however, was the 1982 policy's coverage for expenses stemming from radiation, chemotherapy drugs, and prescription drugs. In the 1982 policy, Liberty National set no maximum limit for coverage of these expenses; therefore, Liberty National agreed to provide total coverage of these expenses.

Evidence at trial indicated that 65% to 80% of cancer patients are treated with radiation, chemotherapy, or a combination of the two. Prescription pain medication, described in trial testimony as the "dominant expense in taking care of long-term cancer patients," is used by 50% of those patients who continue treatment beyond their initial cancer treatment. The price of treatment by radiation, chemotherapy, and related prescription medication is very high. The prescription pain medication can cost up to $2 per dose; with several doses of different types of medication a day, the costs for a patient may easily reach over $1,000 a month. The cost of chemotherapy may range from nearly $700 to over $1,600 per day of treatment. Radiation and medicine relating to its use may cost over $3,600 a day during certain periods of the radiation treatment cycle. Expensive prescription anti-nausea and antibiotic medications are also used in these cancer treatments.

In the 1980s, Liberty National developed a steadily increasing amount of expenses stemming from claims under these full-coverage policies. At the same time, Torchmark Corporation, Liberty National's parent corporation, ordered Liberty National to cut its expenses. Liberty National then embarked on a program to persuade its cancer insurance policyholders to exchange the older policies for new cancer policies. These new policies increased coverage or created additional coverage in certain aspects; for example, the new policies provided a $2,000 cash payment for the first occurrence of cancer and provided coverage for certain "dread diseases," such as polio and tetanus, that was unavailable under the old policy. However, the new policies limited their coverage to $500 per day for radiation and chemotherapy treatments and $8,000 a year for prescription chemotherapy drugs; no coverage was provided for prescription anti-nausea, antibiotic, or pain medicine. One former Liberty National agent who participated in the exchange program stated the following:

"Q. ... What were [you] taught you were supposed to do as a Liberty National agent?

"A. ... We were showed just to highlight the benefits, the first occurrence benefits, the $2,000 up front and we showed them what they were going to get but we never showed them what they were going to lose.

"Q. ... Were you taught to ever show them what they were [to] give up?

"A. No, sir.

"Q. Were you taught not to tell them what they were giving up?

"A. Yes, sir.

"Q. Who taught you ...


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