McCullough v. Golden Rule Insurance Co.

789 P.2d 855, 1990 Wyo. LEXIS 38, 1990 WL 37813

• Court: Wyoming Supreme Court
• Decided: April 5, 1990
• Docket: 88-193
• Status: Published

Opinions

URBIGKIT, Justice.

We consider two questions certified from the United States Court of Appeals for the Tenth Circuit:

Does an insurance company owe a duty of good faith to its policyholders not to unreasonably deny a claim for benefits under the policy, the breach of which duty gives rise to an independent tort action?

If such a tort action is permitted, in addition to showing that the claim was denied unreasonably and without proper cause, must the policyholder demonstrate that the insurance company intentionally, knowingly, or recklessly denied the claim for benefits?

The first certified question is answered “yes,” but the second certified question is answered by enunciating another standard for proof of the tort of violation of the duty of good faith and fair dealing. In response, we adopt the independent tort thesis of Gruenberg v. Aetna Ins. Co., 9 Cal.3d 566, 108 Cal.Rptr. 480, 510 P.2d 1032 (1973) and establish the “fairly debatable” objective standard care analysis of Anderson v. Continental Ins. Co., 85 Wis.2d 675, 271 N.W.2d 368 (1978) for any award of extra-contractual damages. The criteria for award of any punitive damages is provided by present Wyoming case law which will maintain a consistent rule in all cases and avoid differentiation between first-person or third-person insurance cases or with other punitive damage claims.

The facts, as discerned from the certification order, disclose that this case was initiated by the medical insurance policyholder in Wyoming state district court and then removed on diversity grounds to the federal district court. The focus of the suit is a major medical health insurance policy purchased by Curtis and Judith McCullough from Golden Rule Insurance Company (Golden Rule). The policy was applied •for and became effective June 1, 1983. The policy mandated a fifteen day waiting period before coverage could begin and defined a “preexisting condition” to deny coverage for any preexisting illness.

Subsequent surgical bills were incurred by Mrs. McCullough for which claims were denied by Golden Rule as preexisting. In the litigation in federal court, Golden Rule received an unfavorable jury verdict on a contract claim and a directed verdict on the companion tort bad faith claim. The basis of the directed verdict was the anticipation of the federal court that Wyoming, where this court had not previously spoken, would not adopt the first-person independent tort cause of action. McCullough appealed to the Tenth Circuit Court of Appeals from the directed verdict of the bad faith tort claim and the Tenth Circuit, noting our decision of Western Casualty and Surety Co. v. Fowler, 390 P.2d 602 (Wyo.1964), certified the legal issue pursuant to W.S. 1-13-104 through 1-13-107 for our finite resolution since clear precedent in state law did not exist on implementation of first-person independent tort complaint.

ANALYSIS

1. First Question — Recognition of Bad Faith as a Tort

The McCulloughs, supported by amicus curiae brief,¹ advance the premise that the legal duty of good faith and fair dealing arises from the contractual relationship but does not stem solely from the contract itself. Consequently, it is imposed by law and an independent tort action should be possible so the unequal bargaining power of the parties to an insurance contract is recognized in a way that would arguably deter bad faith claim practicés by insurers.

Golden Rule, also buttressed by amicus curiae brief,² strenuously argues that the implied duty of good faith and fair dealing is a simple contractual duty which prevents an independent tort action. On the first question, Golden Rule's gravamina, in addition to public policy concerns, are that legislative preemption has occurred and the theoretical bases of first-party bad faith actions are not sound. The preemption argument is that the Wyoming legislature has preempted the field by enacting the Unfair Trade Practices Act, W.S. 26-13-101 through 26-13-124 and an attorney’s fees and interest recovery statute, W.S. 26-15-124(c)³. The attack on the utilization of first-party bad faith cuts to the fundamental difference between third-party and first-party situations focusing on the adversarial nature of first-party relationships where it is argued no fiduciary relationship develops, no relationship of trust or reliance on the contract appears, and no indicia of agency becomes present. Unlike the third-party situation, both the insured and the insurer in the first-party context are parties to the contract and their rights should be controlled solely by the insurance policy.

The DLA brief, in relation to the first question, essentially argues in parallel to the contentions of Golden Rule, but broadens the preemption argument to encompass the entire Wyoming Insurance Code in W.S. 26-1-101 through 26-38-106. It stresses that any recognition of first-party bad faith as a tort “can only disturb the balance that has been struck by the Wyoming Legislature.” Also, it broaches the view that Arnold, v. Mountain West Farm Bureau Mut. Ins. Co., Inc., 707 P.2d 161 (Wyo.1985) is controlling and should answer the first question in the negative. Justification in logic is presented by all litigants but, aside from their roots in economic interest, the direct inquiry is should Wyoming have the insurance company duty of good faith and fair dealing first-party tort cause of action and, if so, what should be the standard for application of the cause of action and with what effect on potential award of punitive damages.

While a majority of states have adopted this cause of action,⁴ the label attached to it and the standards to determine bad faith differ among the jurisdictions. The approaches divide into four main categories: (1) recognized as an independent tort;⁵ (2) labeled as contractual but allowing a broader range of damages which may include punitives;⁶ (3) characterized as contractual and confining to strictly benefit of the bargain damages;⁷ or (4) established statutorily.⁸ Despite the diversity among the jurisdictions, we believe the superior view recognizes the existence of the independent tort for violation of a duty of good faith and fair dealing in insurance policy application by the carrier to its insured.

Wyoming law has a consistent thread running from the 1964 case of Western Casualty and Surety Co., 390 P.2d 602 involving the third-party situation of a failure to settle and Arnold, 707 P.2d 161 involving first-party uninsured motorist coverage, so that recognition of the independent action for the tort of first-party bad faith would be structurally consistent and could be expected.⁹ Additionally, this court in Tate v. Mountain States Tel. and Tel. Co., 647 P.2d 58, 63 (Wyo.1982) held:

There are certain classes of contracts which create a relation out of which certain duties arise as implied by law independently of the express term of the contract. If the negligent breach of contract is also a breach of such duty the remedy is ex contractu and ex delicto. * * * Such is the situation in this case. Of course, a double recovery is not allowed.

The insurance contract is one of these special classes of contracts so that this duty of good faith and fair dealing imposed by law arises from the contractual relationship. Anderson, 271 N.W.2d at 374; Hilker v. Western Automobile Ins. Co. of Ft. Scott, Kan., 204 Wis. 1, 231 N.W. 257 (1930). See also Hoiness-LaBar Ins. v. Julien Const. Co., 743 P.2d 1262 (Wyo.1987); Hursh Agency, Inc. v. Wigwam Homes, Inc., 664 P.2d 27, 32 (Wyo.1983), liability could lie either for breach of contract or negligent default of duty imposed by contract; and Hogar v. Mobley, 638 P.2d 127, 137 (Wyo. 1981), where duty arose from statutory standards imposed on real estate brokers.

The fear that recognition of this cause of action will blur the distinction between traditional theories of tort and contract is unsound.

The fear that such a holding would eliminate the “barrier” between tort and contract and lead generally to the awarding of punitive damages in all breach of contract cases is unwarranted. Permitting an insured to maintain a cause of action in tort is justified primarily on the basis of the “public service” nature of the insurance business and the unequal bargaining relationship between insurer and insured. These circumstances do not exist in all, or even in most, contracts.

Roberts v. Western-Southern Life Ins. Co., 568 F.Supp. 536, 555 n. 44 (N.D.Ill.1983). See also Hoskins v. Aetna Life Ins. Co., 6 Ohio St.3d 272, 452 N.E.2d 1315 (1983). Additionally, this court has at least inferentially recognized that insurance contracts involve unequal bargaining power by adoption of the rate of construction favoring the insured. See Aetna Ins. Co. v. Lythgoe, 618 P.2d 1057 (Wyo.1980) and Alm v. Hartford Fire Ins. Co., 369 P.2d 216 (Wyo.1962). See also Comment, Establishing the Tort of Bad Faith in Wyoming, XX Land & Water L.Rev. 625, 628 (1985), which recites the inequality of bargaining power thesis. See Neal v. State Farm Ins. Companies, 188 Cal.App.2d 690, 10 Cal.Rptr. 781 (1961). The foundational case of insurer liability as asserting rights to good faith and rejecting imposition of oppression was Hilker, 231 N.W. at 258, which stated:

In view of the fact that these contracts of insurance are prepared by the company and are not prescribed by law, the tendency of the decisions has been to extend, rather than to circumscribe, the field of liability on the part of the company and to hold that the rights of the insured “go deeper than the mere surface of the contract written for him by the defendant. Its stipulations imposed obligations based upon those principles of fair dealing which enter into every contract.” Brassil v. Maryland Casualty Co., 210 N.Y. 235, 104 N.E. 622, 624, L.R.A. 1915A, 629, 632.

That court further recited “ ‘that it would be a reproach to the law if there were no remedy for so obvious a wrong as was inflicted upon this plaintiff.’ ” Id. 231 N.W. at 261 (quoting Brassil v. Maryland Casualty Co., 210 N.Y. 235, 104 N.E. 622, 624). On rehearing, Hilker v. Western Automobile Insurance Co. of Ft. Scott, Kan., 204 Wis. 1, 235 N.W. 413, 415-16 (1931) stated:

We can see no room to quibble upon the proposition that the insurer made an inadequate, a careless, if not shiftless, investigation of the facts with reference to the accident and injury, that it never at any time was in position to exercise a sound or good-faith judgment, and that in none of these respects did it meet the duty which it owed to the plaintiff.

An earlier authority on the emerging trend was Note, The Availability of Excess Damages for Wrongful Refusal to Honor First Party Insurance Claims — An Emerging Trend, 45 Fordham L.Rev. 164 (1976). The countervailing view was stated in Thornton and Blaut, Bad Faith and Insurers: Compensatory and Punitive Damages, 12 Forum 699 (1977).¹⁰

Wyoming generally recognizes the benefit of the bargain damages in relation to contractual damages. UNC Teton Exploration Drilling, Inc. v. Peyton, 774 P.2d 584 (Wyo.1989); Robert W. Anderson Housewrecking and Excavating, Inc. v. Board of Trustees, School Dist. No. 25, Fremont County, Wyoming, 681 P.2d 1326 (Wyo.1984); Panhandle Eastern Pipe Line Co. v. Smith, 637 P.2d 1020 (Wyo.1981). Compare Atlas Const. Co. v. Slater, 746 P.2d 352 (Wyo.1987), assessing detriment for tort damages which were proximately caused by breach of duty. The additional impetus for good faith is furnished by the contingencies as the price of bad faith which are provided by a tort standard protected duty. Crisci v. Security Ins. Co. of New Haven, Conn., 66 Cal.2d 425, 58 Cal.Rptr. 13, 426 P.2d 173 (1967). See also J. McCarthy, Punitive Damages in Bad Faith Cases, § 1.8 (4th ed. 1987) in analysis of the effect of Crisci.

To deny an action in tort would deny such recovery and consequently encourage insurers to delay settlement. In contrast, an action in tort will provide necessary compensation for insureds and incentive for insurers to settle valid claims. * * * At worst, the availability of an action in tort will add nothing to the liability of insurers.

White v. Unigard Mut. Ins. Co., 112 Idaho 94, 730 P.2d 1014, 1018 (1986). See also Annotation, Insurer’s Liability for Consequential or Punitive Damages for Wrongful Delay or Refusal to Make Payments Due Under Contracts, 47 A.L.R.3d 314 (1973).

Preclusion by alternative statutory remedy has been denied acceptance in most jurisdictions unless the remedy would be as broad as the bad faith tort claim. It seldom is and would not be in Wyoming and we join the majority precept in rejection of statutory preemption. Travelers Ins. Co. v. Savio, 706 P.2d 1258 (Colo.1985). Furthermore, it is logically argued that Western Casualty and Surety Co., 390 P.2d is dispositiye since the statutory preemption or preclusion would logically apply to either type of bad faith claim. Clearly, the Wyoming statutes, W.S. 26-15-124(c) and 26-13-124, and the entire insurance code, W.S. 26-1-101 through 26-38-106, do not provide the same scope of remedies as found in the good faith and fair dealing independent tort remedy. See Comment, supra, XX Land & Water L.Rev. at 640 and W. Shernoff, S. Gage & H. Levine, Insurance Bad Faith Litigation, § 7.04[1] (1989).

2. Second Question — The Applicable Standard

We believe the appropriate test to determine bad faith is the objective standard whether the validity of the denied claim was not fairly debatable. As this test was further examined by Justice Hef-fernan in Anderson, 271 N.W.2d at 376-77, he added:

Whether a claim is “fairly debatable” also implicates the question whether the facts necessary to evaluate the claim are properly investigated and developed or recklessly ignored and disregarded.

To show a claim for bad faith, a plaintiff must show the absence of a reasonable basis for denying benefits of the policy and the defendant’s knowledge or reckless disregard of the lack of a reasonable basis for denying the claim. It is apparent, then, that the tort of bad faith is an intentional one. * * *

⅝ Jj! ⅜ ⅜ jfc *

The tort of bad faith can be alleged only if the facts pleaded would, on the basis of an objective standard, show the absence of a reasonable basis for denying the claim, i.e., would a reasonable insurer under the circumstances have denied or delayed payment of the claim under the facts and circumstances. See, Hilker, supra, and Alt v. American Family Mut. Ins. Co., 71 Wis.2d 340, 237 N.W.2d 706 (1976).

Thus, the utilization of this objective standard of whether appropriateness of the denial of the claim is fairly debatable will form the focus of this tort. The Alabama court substitutes the word “arguable” for debatable. King v. National Foundation Life Ins. Co., 541 So.2d 502 (Ala.1989). The logical premise of the debatable (or arguable) standard is that if a realistic question of liability does exist, the insurance carrier is entitled to reasonably pursue that debate without exposure to a claim of violation of its duty of good faith and fair dealing. White, 730 P.2d at 1018; Fehring v. Republic Ins. Co., 118 Wis.2d 299, 347 N.W.2d 595 (1984).

Moreover, this decision today should not be interpreted as opening the floodgates for awarding punitive damages in each case where the claim of the bad faith tort may be submitted for trial determination.¹¹ Although we recognize this tort, we believe that the awarding of punitive damages for the tort of bad faith should remain consistent in Wyoming law and require wanton or willful misconduct. See Mayflower Restaurant Co. v. Griego, 741 P.2d 1106 (Wyo.1987); Weaver v. Mitchell, 715 P.2d 1361 (Wyo.1986); Arnold, 707 P.2d 161; and Waters v. Trenckmann, 503 P.2d 1187 (Wyo.1972). Cf. Oukrop v. Wasserburger, 755 P.2d 233 (Wyo.1988). This posture is also consistent with the Wisconsin application in Anderson and other cases where both bad faith and punitive damage may have been claimed.

We do not conclude, however, that the proof of a bad faith cause of action necessarily makes punitive damages appropriate. * * * For punitive damages to be awarded in addition to compensatory damages for the tort, there must be a showing of an evil intent deserving of punishment or something in the nature of special ill-will or wanton disregard of duty or gross or outrageous conduct. In the specific context of the intentional tort of bad faith, exemplary damages are not necessarily appropriate although the plaintiff be entitled to compensatory damages. For punitive damages to be awarded, a defendant must not only intentionally have breached his duty of good faith, but in addition must have been guilty of oppression, fraud, or malice in the special sense defined by Mid-Continent v. Straka [47 Wis.2d 739, 178 N.W.2d 28 (Wis.1970) ]. See also, Silberg v. California Life Ins. Co., supra, 11 Cal.3d [452] at 462, 113 Cal.Rptr. 711, 521 P.2d 1103 [ (C.A.1974) ].

Anderson, 271 N.W.2d at 379. Likewise, see Fehring, 347 N.W.2d 595. Cf. Annotation, Recoverability of Punitive Damages in Action by Insured Against Liability Insurer for Failure to Settle Claim Against Insured, 85 A.L.R.3d 1211 (1978) and J. McCarthy, supra, § 1.57.

CONCLUSION

Therefore, we recognize the tort of first-party bad faith and answer the first question affirmatively. We answer the second question by implementation of an objective standard of fairly debatable as the test of damage award recovery and retain the higher requirement of present Wyoming law for allowance of punitive damages.

1 . Wyoming Trial Lawyers Association (WTLA).

2 . Defense Lawyers Association of Wyoming, Inc. (DLA).

3 . W.S. 26-15-124(c) provides:

In any actions or proceedings commenced against any insurance company on any insurance policy or certificate of any type or kind of insurance, or in any case where an insurer is obligated by a liability insurance policy to defend any suit or claim or pay any judgment on behalf of a named insured, if it is determined that the company refuses to pay the full amount of a loss covered by the policy and that the refusal is unreasonable or without cause, any court in which judgment is rendered for a claimant may also award a reasonable sum as an attorney’s fee and interest at ten percent (10%) per year.

4 . See Comment, Establishing the Tort of Bad Faith in Wyoming, XX Land & Water L.Rev. 625 (1985) and citations therein for an overview of this tort.

5 . See Justin v. Guardian Ins. Co., Inc., 670 F.Supp. 614 (D.V.I.1987); DiSalvatore v. Aetna Cas. & Sur. Co., 624 F.Supp. 541 (D.N.J.1986); Washington v. Group Hospitalization, Inc., 585 F.Supp. 517 (D.D.C.1984); Phillips v. Aetna Life Ins. Co., 473 F.Supp. 984 (D.Vt.1979); Chavers v. National Sec. Fire & Cas. Co., 405 So.2d 1 (Ala. 1981); United Services Auto. Ass’n v. Werley, 526 P.2d 28 (Alaska 1974); Sparks v. Republic Nat. Life Ins. Co., 132 Ariz. 529, 647 P.2d 1127, cert. denied 459 U.S. 1070, 103 S.Ct. 490, 74 L.Ed.2d 632 (1982); Aetna Cas. & Sur. Co. v. Broadway Arms Corp., 281 Ark. 128, 664 S.W.2d 463 (1984); Gruenberg, 510 P.2d 1032; Travelers Ins. Co. v. Savio, 706 P.2d 1258 (Colo.1985); Buckman v. People Exp. Inc., 205 Conn. 166, 530 A.2d 596 (1987); Continental Ins. Co. v. Lynham, 293 A.2d 481 (D.C.App.1972); White v. Unigard Mut. Ins. Co., 112 Idaho 94, 730 P.2d 1014 (1986); Dolan v. Aid Ins. Co., 431 N.W.2d 790 (Iowa 1988); Gibson v. National Ben Franklin Ins. Co., 387 A.2d 220 (Me.1978); Weems v. American Sec. Ins. Co., 486 So.2d 1222 (Miss.1986); Lipinski v. Title Ins. Co., 202 Mont. 1, 655 P.2d 970 (1982); Chavez v. Chenoweth, 89 N.M. 423, 553 P.2d 703 (1976); United States Fidelity & Guaranty Co. v. Peterson, 91 Nev. 617, 540 P.2d 1070 (1975); Dailey v. Integon General Ins. Corp., 75 N.C.App. 387, 331 S.E.2d 148, review denied 314 N.C. 664, 336 S.E.2d 399 (1985); Newton v. Standard Fire Ins. Co., 291 N.C. 105, 229 S.E.2d 297 (1976); Corwin Chrysler-Plymouth, Inc. v. Westchester Fire Ins. Co., 279 N.W.2d 638 (N.D.1979); Hoskins v. Aetna Life Ins. Co., 6 Ohio St.3d 272, 452 N.E.2d 1315 (1983); Christian v. American Home Assur. Co., 577 P.2d 899 (Okl.1977); Bartlett v. John Hancock Mut. Life Ins. Co., 538 A.2d 997 (R.I.1988); Bibeault v. Hanover Ins. Co., 417 A.2d 313 (R.I.1980); Nichols v. State Farm Mut. Auto. Ins. Co., 279 S.C. 336, 306 S.E.2d 616 (1983); Matter of Certification of a Question of Law from the U.S. Dist. Court, Dist. ry South Dakota, Western Div., 399 N.W.2d 320 (S.D.1987); Arnold v. National County Mut. Fire Ins. Co., 725 S.W.2d 165 (Tex.1987); Escalante v. Sentry Ins., 49 Wash.App. 375, 743 P.2d 832 (1987); and Anderson, 271 N.W.2d 368.

6 . See Vernon Fire & Cas. Ins. Co. v. Sharp, 264 Ind. 599, 349 N.E.2d 173 (1976); Pirkl v. Northwestern Mut. Ins. Ass’n, 348 N.W.2d 633 (Iowa 1984); Lawton v. Great Southwest Fire Ins. Co., 118 N.H. 607, 392 A.2d 576 (1978); Jarvis v. Prudential Ins. Co. of America, 122 N.H. 648, 448 A.2d 407 (1982); Fleming v. Allstate Ins. Co., 106 A.D.2d 426, 482 N.Y.S.2d 519 (1984); Halpin v. Prudential Ins. Co. of America, 48 N.Y.2d 906, 425 N.Y.S.2d 48, 401 N.E.2d 171 (1979), reargument denied 49 N.Y.2d 801, 426 N.Y.S.2d 1029, 403 N.E.2d 466 (1980); Employers’ Fire Ins. Co. v. Love It Ice Cream Co., 64 Or.App. 784, 670 P.2d 160 (1983); Beck v. Farmers Ins. Exchange, 701 P.2d 795 (Utah 1985); and Hayseeds, Inc. v. State Farm Fire & Cas. Co., 352 S.E.2d 73 (W.Va.1986).

7 . See A & E Supply Co., Inc. v. Nationwide Mut. Fire Ins. Co., 798 F.2d 669 (4th Cir.1986), cert. denied 479 U.S. 1091, 107 S.Ct. 1302, 94 L.Ed.2d 158 (1987) (Virginia law does not recognize the tort); Federal Kemper Ins. Co. v. Hornback, 711 S.W.2d 844 (Ky.1986); Johnson v. Federal Kemper Ins. Co., 74 Md.App. 243, 536 A.2d 1211, cert. denied, 313 Md. 8, 542 A.2d 844 (1988); Kewin v. Massachusetts Mut. Life Ins. Co., 409 Mich. 401, 295 N.W.2d 50 (1980); Saltou v. Dependable Ins. Co., Inc., 394 N.W.2d 629 (Minn.App.1986); and Haagenson v. National Farmers Union Property and Cas. Co., 277 N.W.2d 648 (Minn.1979); cf. Short v. Dairyland Ins. Co., 334 N.W.2d 384 (Minn.1983) (duty to settle). See Comment, Federal Kemper Insurance Company v. Hornback and the Demise of First Party Bad Faith in Kentucky, 14 N.Ky.L.Rev. 415 (1988). Cf. Harvey and Wiseman, First Party Bad Faith: Common Law Remedies and a Proposed Legislative Solution, 72 Ky.L.J. 141 (1983) (an early case of a bad prophecy).

8 . See Leonard v. Firemen's Ins. Co. of Newark, N.J., 100 Ga.App. 434, 111 S.E.2d 773 (1959); Mohr v. Dix Mut. County Fire Ins. Co., 143 Ill. App.3d 989, 97 Ill.Dec. 831, 493 N.E.2d 638 (1986); Debolt v. Mut. of Omaha, 56 Ill.App.3d 111, 13 Ill.Dec. 656, 371 N.E.2d 373 (1978); Duncan v. Andrew County Mut. Ins. Co., 665 S.W.2d 13 (Mo.App.1983); Chandler v. Prudential Ins. Co., 715 S.W.2d 615 (Tenn.App.1986); and Fla.Stat.Ann. § 624.155 (West 1984).

9 . In Arnold, 707 P.2d at 164, a modest award of damages was included in the jury verdict entered against the carrier for violation of a duty created by "the implied covenant of good faith.” The carrier did not appeal and the issues presented on appeal considered claims of error made by the insured on the uninsured motorist provision in the policy.

10 . A most thoughtful review of the bad faith tort is provided by the rehearing analysis of the Alabama court in Chavers, 405 So.2d 1. See, likewise, Aetna Cas. & Sur. Co., 664 S.W.2d 463, where the large verdict was reversed on appeal. See also Langdon and Sytsma, The Duty of Good Faith and Fair Dealing and the Pre-Adjudicatory Role of the Insurance Company Advocate, 45 Ins.Couns.J. 309 (1978) and S. Ashley, Bad Faith Actions — Liability and Damages, ch. 2, § 2:19 and ch. 5 (1984).

To be compared after the demise of Royal Globe Ins. Co. v. Superior Court of Butte County, 23 Cal.3d 880, 153 Cal.Rptr. 842, 592 P.2d 329 (1979) in California by Moradi-Shalal v. Fireman's Fund Ins. Companies, 46 Cal.3d 287, 250 Cal.Rptr. 116, 758 P.2d 58 (1988) is Practicum, The Overruling of Royal Globe: A "Royal Bonanza" For Insurance Companies, But What Happens Now?, 16 Pepperdine L.Rev. 763 (1989).

11 . Apparently, the principal objection of the dissent is to the application of even the very restrictive Wyoming law on punitive damages to adjusting and settlement misconduct of insurance companies who may intentionally or maliciously abuse rights of their policy holders. Outrageous conduct done with malice, bad motives or reckless indifference is neither so hard to define nor impossible to defend in seeking justice for the insured. Economic misconduct of this egregious character is most appropriately corrected by financial responsibility plus, if action was willful and wanton, punitive retribution. Witness recent cases, Eichenseer v. Reserve Life Ins. Co., 881 F.2d 1355 (1989), reh’g denied 894 F.2d 1414 (5th Cir.1990) (medical policy denial caused by abjectively mishandled claim procedure); United Services Auto. Ass'n v. Wade, 544 So.2d 906 (Ala.1989) (unproved arson defense and incompetent adjustment procedure in denial of fire loss settlement); Hawkins v. Allstate Ins. Co., 152 Ariz. 490, 733 P.2d 1073, cert. denied 484 U.S. 874, 108 S.Ct. 212, 98 L.Ed.2d 177, reh’g denied 484 U.S. 972, 108 S.Ct. 477, 98 L.Ed.2d 414 (1987) (use of arbitrary add on fee as a deduction from total loss settlement value as a course of conduct in reducing payments to insureds); and Gourley v. State Farm Mut. Auto. Ins. Co., 217 Cal.App.3d 1111, 265 Cal.Rptr. 634 (1990) (use of seat belt defense against own insured when representative of insurer believed defense had a five to ten percent chance of success and realistic settlement was assiduously stonewalled). See, however, South Carolina Ins. Co. v. McKenzie, 547 So.2d 25 (Miss.1989), where lack of good faith was not proved and the jury verdict of $475,000 was reduced to $1,813 actual damages. Likewise, see State Farm Fire & Cas. Co. v. Nicholson, 777 P.2d 1152, 1158 (Alaska 1989), where that court comprehensively considered and then adopted the tort of bad faith in first-party insurance cases by following Gruenberg, 510 P.2d 1032, and then reversed even a nominal punitive damage award where the insurance company’s conduct ”[t]o support punitive damages, * * * must be ‘outrageous, such as acts done with malice or bad motives or reckless indifference to the interests of another.’ ” (Quoting Sturm, Ruger & Co., Inc. v. Day, 594 P.2d 38, 46 (1979), overruled on other grounds sub nom. Dura Corp. v. Hamed, 703 P.2d 396 (Alaska 1985).) Accord Guy v. Commonwealth Life Ins. Co., 894 F.2d 1407 (5th Cir.1990).