The insurance industry is looking at this bill through legal lenses positing the possibility “the bill would encourage exorbitant punitive damage awards.” According to Sam Sorich, president of the Association of California Insurance Companies (ACIC), “Although the bill prohibits a jury from being informed that any portion of a punitive damage award will be paid to the state, this information would be widely known by the public. Jurors in California are well versed as to what is going on around them.”
The bill “mandates that awards of punitive damages be directed to the State of California in a so-called ‘split recovery’ scheme.” In a letter sent to the California Assembly by Jeffrey Fuller executive vice president and general counsel to ACIC wrote, “The concept makes no public policy sense from either a fiscal or legal perspective. As fiscal policy, the bill would burden certain defendants in civil actions with a new obligation to fund the operations of state government. As a revenue source, punitive damage awards would be both unpredictable and unreliable, thereby rendering rational fiscal planning illusory.”
The letter went on to further illustrate a real world example, “in a typical lawsuit, a punitive damage award of $100,000 would be divided up so that the state received $56,250, the plaintiff’s lawyer $27,000 and the injured party $16,750.” If I were the injured party I would be none too happy about receiving a paltry sum and the state taking the lions share.
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