Higgins v. Blue Cross of Western Iowa & South Dakota

ALLBEE, Justice.

This lawsuit arises from defendants’ rescission of plaintiff’s insurance contract for hospital and medical services. A jury awarded plaintiff actual damages of $27,-143.90 on her contract claim and punitive damages of $200,000 on the theory that defendants committed a tort by denying contract benefits in bad faith. Defendants challenge both awards on this appeal, and we reverse.

The following facts are largely undisputed. In January 1978, plaintiff completed an application form for Blue Cross/Blue Shield coverage. The form contained an inquiry as to whether plaintiff had any…