ANDERSON, JUSTICE, FOR THE COURT:
This is an appeal from a jury verdict in the Circuit Court of Lee County in which Henry Edward Bristow was awarded $50,000 in compensatory damages and $6,000,000 in punitive damages for his bad faith claim against Life & Casualty.
In April 1969 the Life & Casualty Insurance Company of Tennessee issued a disability policy to Henry Edward Bristow, an electrician. The part of the policy in controversy here contains the following statement:
Total disability means the complete inability of the insured to perform the duties of his regular occupation, except if indemnities have been paid for 24 months of a continuous disability, then . . . "total disability" shall mean the complete inability of the insured to perform the duties of any occupation for which he is reasonably fitted by his education, training and experience. . . .
On February 11, 1980, Bristow was involved in an accident and broke his left arm. His doctors in Tupelo referred him to Dr. Alan Freeland, an orthopedic specialist at the University Medical Center in Jackson. Although he is right handed, Bristow filed a claim under the disability policy. Life & Casualty determined that Bristow was totally disabled for purposes of his regular occupation, and began issuing benefit checks to him from April 18, 1980. For the next year, Bristow continued to visit Dr. Freeland. By July 30, 1981, the doctor was so pleased with Bristow's progress that he released him from treatment for a period of one year with the understanding that if any problems developed, Bristow would contact him. It is undisputed that Bristow did not make any such complaints. At this time Dr. Freeland stated that Bristow should not resume his regular job as a commercial electrician and that he should not do any work involving standing on a ladder or working with objects overhead.
Meanwhile, Life & Casualty continued to receive periodic reports from Dr. Freeland on the status of Bristow's injury. The 24th payment to Bristow was made in January 1982. By the terms of the policy, further payments were permissible only if the insured was completely unable to perform the duties of any occupation for which he was reasonably fitted. Accordingly, Life & Casualty undertook to review Bristow's file as the deadline approached. Life & Casualty wrote a letter to Dr. Freeland on February 16, 1982, requesting a specific statement as to Bristow's status. Dr. Freeland returned the form, indicating thereon that Bristow was still totally disabled as to his regular occupation, but stating that he was not disabled from other occupations, provided they did not involve heavy manual work, working on ladders, or with overhead objects. After reviewing Bristow's entire file, including this most recent statement by Dr. Freeland, Life & Casualty decided to discontinue the disability benefits and so informed Bristow by letter. Bristow, feeling aggrieved by the decision, consulted a lawyer, who challenged the company's decision. Correspondence in this dispute continued for several months.
In January, 1983, Life & Casualty filed for a declaratory judgment in the Circuit Court of Lee County to determine its obligations under the insurance policy and resolve the dispute. Shortly thereafter in March, Life & Casualty paid Bristow the amount of the disputed benefits and filed an amended complaint asking for declaratory judgment and reimbursement of this amount. Bristow answered with general denials and a counter-claim charging Life & Casualty with bad faith refusal to pay benefits under the policy. He sought $50,000 in damages for emotional distress and $10,000,000 in punitive damages. The case went to trial in the Circuit Court of Lee County, with all issues being submitted to the jury, including punitive damages. The jury returned a verdict in the amount of $50,000 actual damages and $6,000,000 punitive damages. Life & Casualty feeling aggrieved by this judgment has appealed to this Court.
ASSIGNMENT OF ERROR NO. I: THE ISSUE OF PUNITIVE DAMAGES SHOULD NOT HAVE BEEN SUBMITTED TO THIS JURY.
Mississippi law does not favor punitive damages; they are considered an extraordinary remedy and are allowed "with caution and within narrow limits." Standard Life Ins. Co. v. Veal, 354 So.2d 239, 247 (Miss. 1978). In the specific context of insurance litigation, this Court has held that
"any plaintiff asking for punitive damages or any special or extraordinary damages based on bad faith of an insurance company has a heavy burden." Blue Cross/Blue Shield of Mississippi v. Campbell, 468 So.2d 833, 842 (Miss. 1984).
Whether or not the question of punitive damages goes to the jury is decided by applying a two-step test: (1) there must be a finding that the insurance company had no "legitimate or arguable reason to deny payment of the claim." Reserve Life Ins. Co. v. McGee, 444 So.2d 803, 809 (Miss. 1983); Campbell, supra, 466 So.2d at 842.
A finding that there was no arguable reason for denying the claim does not automatically produce the conclusion that punitive damages issue should be submitted to the jury. As this Court recently noted,
In the absence of an arguable reason, the trial court still must determine whether there is a jury issue as to the insurer's having committed a wilful or malicious wrong, or acted with gross and reckless disregard for the insured's rights. If not, the question of punitive damages should not go to the ...