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The Ohio Supreme Court’s Dec. 20, 2002, ruling in a bad-faith case against a major health insurer is believed to be the first time a court has ordered the creation of a charity to be funded with punitive damages. The novel order derives from allegations of breach of contract, bad faith and demand for punitive damages brought by Robert Dardinger against Anthem Blue Cross and Blue Shield and its parent company, Anthem Insurance, on behalf of his late wife, Esther Dardinger, who was 49. Esther Dardinger died in November 1997 from a brain tumor while appealing Anthem’s decision to stop paying for an innovative chemotherapy regime. On Sept. 24, 1999, a Newark, Ohio, jury found Anthem liable for breach of contract and bad faith, and awarded $2.5 million in compensatories and $49 million in punitives. The Ohio Supreme Court upheld $30 million of the $49 million in punitive damages against Anthem and directed the creation of a memorial cancer research fund at Ohio State University in Esther Dardinger’s name. The case is both the largest punitive damages award imposed by the Ohio court and the first time anyone involved with the case knows of a court ordering payment into a charitable fund not already established by statute. “The whole issue of what the court called alternative distribution was never briefed, raised, discussed or mentioned, ever, during the proceedings,” said plaintiff’s attorney Robert Palmer of Palmer Volkema Thomas of Columbus, Ohio. “It was the court’s idea.” TREATMENT AND DENIAL According to a factual summary in the court’s opinion, Esther Dardinger’s physician at the James Cancer Hospital and Solove Research Institute at Ohio State University had recommended her for intra-arterial chemotherapy, a technique that injects chemotherapy medications directly into the artery that fed the brain tumor. A hospital review board approved the treatment. A reviewer at the insurance company approved the first of what was planned to be 12 treatments, costing approximately $100,000 total. Lower-level insurance staffers subsequently approved two more treatments before a higher-level reviewer deemed intra-arterial chemotherapy to be “experimental.” The company refused further payments. Esther Dardinger responded well to the treatments but, according to the court opinion, her health deteriorated during a “Byzantine” appeal process that culminated with a final denial letter arriving at the Dardinger home the day after her funeral. “Anthem had worn them [Esther and Robert Dardinger] down as surely as the cancer had,” wrote Justice Paul Pheifer, author of the majority opinion. He was joined by Justices Andrew Douglas, Alice Robie Resnick and Francis Sweeney. The state high court majority reduced the $49 million punitive damage award against Anthem Insurance to $30 million, but said it agreed with the trial court “that the jury could easily find that a pervasive corporate attitude existed with the defendants to place profit over patients.” The majority directed that $10 million of the punitive damages award, plus $2.5 million in compensatory damages and an estimated $9 million in post-trial interest go to Robert Dardinger. All plaintiff’s attorney fees and court costs are to be paid from the remaining $20 million in punitive damages, with the remainder to be donated to the newly created cancer research fund. The majority said funding research at the state university would bridge the “void between the reasons we award punitive damages and how the damages are distributed” by achieving “a societal good that can rationally offset the harm done by the defendants in this case.” DISSENTING VOICES In a dissenting opinion, Chief Justice Thomas Moyer concurred with a finding for the award of punitive damages but said that he could not find another example of a court directing punitive awards to a charity without statutory authorization. The Ohio ruling, Moyer wrote, “sanctions a judge’s unbridled discretion to allocate punitive damages to his or her preferred charity.” Justices Evelyn Lundberg Stratton and Deborah Cook also dissented. Defense counsel Earle Maiman of Cincinnati’s Thompson Hine referred questions to Anthem Insurance, which, in a written statement claimed no wrongdoing, but said it had “streamlined” its appeal process. Palmer, the plaintiff’s counsel, said that while it was novel for the court to order creation of a memorial charity in Esther Dardinger’s name, it was what his client had intended to do with any punitive award he would have received. Dardinger v. Anthem, 97 Ohio St. 3d, No. 2002-Ohio-7113.

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