A Nevada jury has mandated that the state’s biggest health management organization (HMO) pay $500 million in punitive damages to three plaintiffs in a civil lawsuit, which derived from a Las Vegas hepatitis outbreak. This verdict comes after a $24 million ruling against the companies for compensatory damages.

The matter began when two subsidiaries of UnitedHealth Group executed an agreement with the doctor who managed the clinic where the initial outbreak started. The doctor had a reputation of expediting procedures and cutting costs at his clinics. During six weeks of testimony and complex litigation, defense attorneys told the jury that the doctor, owner of the clinics where the plaintiffs were infected, was responsible for the hepatitis outbreak.

Nevertheless, the jury ruled in favor of the plaintiffs. Also, the doctor, no longer a member of the Nevada state Board of Medical Examiners, was not named in the civil lawsuit involving two of the plaintiffs. He has denied responsibility for the matter, but faces trial in federal and state courts on criminal charges related to the outbreak.

Legal experts have looked to recent U.S. Supreme Court rulings, asserting that generally, punitive damages in HMO cases that are greater than $240 million (or 10 times the compensatory figure) are often cut. The U.S. Supreme Court notes that there are due process problems when punitive damages are so elevated.

Business litigation and subsequent appeals can be very complex. However, the companies promise to appeal in this case. Furthermore, they warn that the litigation could drive up health rates if the verdict is not altered.

Source: The Las Vegas Sun, “Nev jury orders HMO to pay $500M in hepatitis case,” April 17, 2013