USA – NEVADA Trends and Developments Contributed by: John Desmond, Alexis Taitel and Alice Samberg, Dickinson Wright PLLC
cating that Nevada law supports only a “multiplier of 9 for the punitive damages award”, which the jury far exceeded. The press has since noted that the jury’s steep punitive damages award reflects the public’s negative opinion of insurance companies. This matter is currently pending on appeal with the Nevada Supreme Court. USAA’s appeal, however, does not challenge the jury’s award and, instead, implicates only the trial court’s post-trial orders on Mr Kuhn’s recovery of attorneys’ fees and costs. The jury’s award will therefore stand and serves as a cau- tionary tale of the risks of proceeding to trial, particu- larly in front of a jury. Eskew v Sierra Health and Life Ins. Co. Mr Kuhn’s windfall victory fell short of a USD200 mil- lion verdict awarded by a Las Vegas jury in 2022, in favour of the estate of decedent and policyholder Mr Bill Eskew and against Sierra Health and Life Insurance Company. The claim was based on Sierra Health’s bad-faith denial of Mr Eskew’s claim for proton beam therapy to treat his lung cancer. Mr Eskew and his wife elected to obtain coverage through Sierra Health after ensuring that the policy would, in fact, cover Mr Eskew’s proton beam therapy. The sample policy that Sierra Health provided to the Eskews confirmed that therapeutic radiation therapy, including proton beam therapy, was a covered service under the policy, but only if the therapy was “medically necessary”. After the Eskews purchased their policy with Sierra Health, Mr Eskew’s thoracic radiation oncologist and his medical team determined that proton beam thera- py was the best treatment for him and would give him the greatest chance of recovery with the least risk of serious detrimental side effects. Sierra Health, howev- er, denied the doctors’ request for prior authorisation, instead approving an alternative therapy at half the cost. Mr Eskew underwent the approved alternative treatment, which caused him severe oesophagitis and debilitating physical and emotional side effects of that condition. He ultimately passed away, and his estate brought claims against Sierra Health on his behalf. At trial, Mr Eskew’s estate presented evidence that the Sierra Health doctor who reviewed Mr Eskew’s claim worked for Sierra Health part-time, in addition
to his full-time job as a practising oncologist; did not understand the medical issues involved in Mr Eskew’s claim; did not review the terms of Mr Eskew’s policy with Sierra Health prior to issuing the denial; reviewed 79 claims for Sierra Health in the week that he denied Mr Eskew’s claim; and, that week, spent an average of merely 12 minutes reviewing each claim. The jury awarded USD40 million in compensatory damages for pain and suffering and USD160 million in punitive damages. This, again, indicates the Nevada public’s growing dislike (or even disdain) for insurers in the face of claims handling conduct. Sierra Health appealed, arguing that the trial court erred by denying its motion for judgment as a mat- ter of law and motion for new trial or remitter. There, Sierra Health argued that it had a reasonable basis to determine that proton therapy was not “medically necessary” to treat lung cancer and, even if the deni- al was unreasonable, it further claimed that it could not be subject to bad-faith liability because whether the treatment should have been covered under the contract was subject to reasonable disagreement. In 2024, the Nevada Supreme Court rejected Sierra Health’s arguments, affirming the district court’s post-trial orders in their entirety and confirming that the jury was presented with substantial evidence of Sierra Health’s bad faith, claim mishandling, and Mr Eskew’s pain and suffering. In its decision, the Nevada Supreme Court held that “[w]e conclude that the high compensatory and punitive damages award does not evince a verdict based on passion and prejudice; it merely reflects the jury’s valuation of the extensive pain and suffering experienced by Eskew due to the denial of coverage and the level of blameworthiness of SHL’s conduct”. Two of the Nevada Supreme Court’s justices disa- greed, concurring in part and dissenting in part. They found that the jury’s award of USD40 million for pain and suffering was excessive, particularly because it was USD10 million more than the jury was asked to award. These two justices likewise found that the punitive damages award – constituting more than four times the amount of the special damages – was excessive to the point of justifying a new trial.
333 I NSURANCE L I T IGATI O N 2026
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