Punitive damages that were reduced by the trial court to $1 million fro $4 million were affirmed by the appellate court. Mazik v. Geico Gen. Ins. Co., 2019 Cal. App LEXIS 454 (Cal. Ct. App. May 17, 2019). 

    Mazik was injured in a serious auto accident. He was diagnosed with a "grossly comminuted fracture of the left calcaneus," i.e., heel bone. Mazik's expert at trial described the injury to the heel as "devastating." Surgery was not an option because the bone had burst into to many pieces. The expert testified that Mazik would have a lifetime of chronic pain and issues related to his heel injury. 

    Mazik received $50,000 from Mercury Insurance Company, the insurer for the driver of the other car involved in the accident. Mazik submitted a claim to Geico, his insurer for underinsured motorist coverage, in the amount of the policy limits $50,000 after the offset from the $50,000 he had already received. 

    Geico initially offered $1000, then $13,800, then $18,000, then $18,887. An IME requested by Geico found that Mazik's injury did not restrict his occupation as a teacher and that no further medical care was indicated. His prognosis was "good." 

    An arbitration took place, and the arbitrator issued an award of the full policy limits. Geico finally paid Mazik $50,000.

    Mazik filed his bad faith action and the jury returned a verdict in Mazik's favor. Compensatory damages of $313,508 and punitive damages of $4 million were awarded. The trial court reduced the punitive damage award to $1 million.

    California law allowed punitive damages against the insurer when an "officer, director, or managing agent" was involved in any act of bad faith and acted with "oppression, fraud, or malice." A regional liability administrator from Geico, Lon Grothen, had initially rejected Mazik's $50,000 claim and offered $1,000. Grothen testified that his job was to establish settlement standards within his region. The court found there was sufficient evidence for the jury to conclude that Grothen engaged in oppressive conduct by ignoring information concerning the extent of Mazik's injuries for the purpose of saving Geico money. He approved unreasonably low offers to Mazik that ignored medical records showing the serious and permanent nature of the injuries. The jury could have reasonably found that Grothen ratified such egregious conduct in approving settlement offers that ignored Mazik's serious injuries.

    Therefore, the punitive damages award was affirmed.