                                                                           FILED
                                                               United States Court of Appeals
                                                                       Tenth Circuit

                                                                       July 22, 2008
                      UNITED STATES COURT OF APPEALS Elisabeth A. Shumaker
                                                                       Clerk of Court
                                   TENTH CIRCUIT


 JOHN COOK,

          Plaintiff - Appellee,
                                                         No. 06-6233
 v.
                                                   (D.C. No. CV-05-289-C)
                                                         (W.D. Okla.)
 MEDICAL SAVINGS INSURANCE
 COMPANY, an Indiana Corporation,

          Defendant - Appellant.


                              ORDER AND JUDGMENT *


Before HARTZ, GORSUCH, Circuit Judges, and BRIMMER, District Judge. **


      After a five day trial in this diversity action, a jury found that Medical

Savings Insurance Company (“MSIC”) misrepresented the scope and nature of its

insurance coverage, committing fraud against its insured, John Cook. In doing so,

the jury awarded Mr. Cook $550,000 in compensatory damages and $550,000 in

punitive damages. After trial, MSIC moved for judgment as a matter of law and a




      *
         This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
      **
          The Honorable Clarence A. Brimmer, United States District Judge for
the District of Wyoming, sitting by designation.
new trial or remittitur. The district court denied each of these motions and MSIC

appealed. We now affirm.

                                          I

      Viewing the facts in the light most favorable to the jury’s verdict, as we

must, they indicate that, based on a referral from his accountant, Mr. Cook spoke

with Troy Russell, an authorized insurance agent for MSIC, in the fall of 2003

about purchasing an MSIC health insurance policy. According to Mr. Cook, Mr.

Russell represented that an MSIC policy would have a $5,000 deductible, which

could be funded using a tax-advantaged health savings account, and that MSIC

would pay 100 percent of medical expenses above the deductible amount, up to

$1,000,000. Mr. Russell echoed and clarified this point, testifying at trial that he

represented the policy would cover 100 percent of “reasonable and customary

charges” above the deductible amount, up to $1,000,000. The insurance policy

itself (which Mr. Cook received but apparently did not read) confirmed this

coverage and defined “reasonable and customary charge” as the most common

charge for particular services or supplies – defined as an amount equal or in

excess of that charged by two-thirds of the providers in the area – so long as those

charges could be considered reasonable. The policy then listed seven factors

MSIC was permitted to consider in determining the reasonableness of a charge,

including the skill and time required to perform the procedure, the severity of the

condition being treated, the amount charged for similar services or supplies in the

                                         -2-
locality and in other parts of the country, and the cost to the provider, among

other things.

      Unknown to Mr. Cook and undisclosed in the MSIC policy, MSIC actually

enforced a different rule. Starting in 2001, MSIC decided that, for hospital bills

over $3,000, it would pay only the reimbursement rate paid by Medicare for the

procedure in question plus 26 percent – and would do so even though MSIC

usually had no guarantee hospitals would accept that amount as payment in full.

As a result, MSIC paid an average of only 30 to 40 percent of billed charges.

MSIC did not publicly disclose its internal Medicare plus 26 percent

reimbursement rule until December 2003, about two months after Mr. Cook

purchased the policy, and then did so only in response to prodding from the

Oklahoma Department of Insurance, which had received complaints about MSIC

and forced MSIC to remove the “reasonable and customary charge” language

from its policy. Even then, however, in its disclosure letter to its policyholders,

MSIC indicated that it would pay Medicare plus 26 percent only for claims

incurred before January 1, 2004, and that claims incurred after that date would be

paid in accordance with a new set of procedures outlined in an enclosed

endorsement. The endorsement replaced the “reasonable and customary charge”

language of the MSIC policy sold to Mr. Cook with a new term – “reimbursable

charge” – but then proceeded to define that term in much the same way as

“reasonable and customary charge,” albeit with some modifications. The new

                                         -3-
definition explained that reimbursable charges could be less than the fees actually

charged and that any excess would be the policyholder’s responsibility. It also

added two new factors to the list that MSIC could consider when determining

whether a charge was reimbursable: billed charges and “Medicare diagnostic or

procedure codes, and reimbursement rates, with appropriate markups to reflect

national average payment or reimbursement rates.” Aplt. App. at 83. Mr. Cook

testified he never saw the December 2003 letter and endorsement.

      In August 2004, Mr. Cook was diagnosed with prostate cancer, for which

he underwent surgery in September. He incurred a bill of $19,531.45 for the

surgery, but MSIC agreed to pay only $6,970.50. That number represented the

applicable Medicare charge plus 26 percent, with a 25 percent penalty deduction

because Mr. Cook did not “pre-certify” the surgery with MSIC. According to

evidence at trial, even though services were incurred in 2004 and thus purportedly

subject to MSIC’s new “reimbursable charge” endorsement formula, MSIC did

not consider the most common charge for the services billed to Mr. Cook or any

other factors listed in its reimbursable charge endorsement; instead, it simply

applied its longstanding Medicare plus 26 percent rule. When MSIC sent the

hospital a check for $6,970.50 as payment in full, the hospital rejected the

payment and billed Mr. Cook for the full amount.

      MSIC informed Mr. Cook that, if he chose to dispute his bill with the

hospital, MSIC would pay his attorneys fees. Instead, Mr. Cook brought this suit

                                         -4-
against MSIC. He alleged that MSIC committed fraud when it sold him the

insurance policy and breached its duty of good faith and fair dealing by refusing

to pay his hospital bill; he sought both compensatory and punitive damages. The

district court denied summary judgment for MSIC and partial summary judgment

for Mr. Cook and the case proceeded to trial, where a jury found in favor of MSIC

on the good faith claim and in favor of Mr. Cook on the fraud claim, ultimately

awarding Mr. Cook $550,000 in compensatory damages and $550,000 in punitive

damages. The district court denied MSIC’s various post-trial motions and MSIC

timely appealed. We address first MSIC’s arguments with respect to liability and

then its contentions on damages.

                                          II

      MSIC argues that, notwithstanding the jury’s verdict, the evidence

presented by Mr. Cook was insufficient to prove it committed fraud as a matter of

law. We review a district court’s denial of a motion for judgment as a matter of

law de novo. See Williams v. W.D. Sports, N.M., Inc., 497 F.3d 1079, 1086 (10th

Cir. 2007). In doing so we will “not weigh the evidence, pass on the credibility

of the witnesses, or substitute our conclusions for those of the jury,” but will

instead “view the evidence and any inferences to be drawn therefrom most

favorably to the non-moving party.” Id. (internal quotation omitted). We may

enter judgment as a matter of law “only if the evidence points but one way and is

susceptible to no reasonable inference supporting the party opposing the motion,”

                                         -5-
such that “there is no legally sufficient evidentiary basis with respect to a claim

or defense under the controlling law.” Id. (internal quotation omitted).

      Before us, MSIC does not object to the district court’s legal instructions to

the jury, but instead confines itself to arguing that Mr. Cook’s proof failed as a

matter of law to establish intentional or reckless conduct by MSIC, justifiable

reliance by Mr. Cook, or any injury to him. We consider each of MSIC’s liability

arguments in turn.

      1. MSIC argues that Mr. Cook failed to prove the requisite mens rea for

fraud as a matter of law because he did not present evidence that Mr. Russell,

MSIC’s insurance agent, intentionally or recklessly misrepresented the policy to

Mr. Cook. This contention, however, simply misconceives the nature of Mr.

Cook’s suit. Mr. Cook did not sue Mr. Russell or allege that Mr. Russell

intentionally misled him. Rather, his theory at trial was that, while Mr. Russell

may have been “honorable,” as Mr. Cook himself testified, MSIC withheld full

information about the company’s policies from its own sales agents. Aplt. App.

at 406. That is, in Mr. Cook’s theory of the case, MSIC misled even Mr. Russell,

by failing to disclose to him its true Medicare plus 26 rule for reimbursements.

      MSIC offers no reason why the jury could not have found that this is

exactly what occurred. Indeed, Mr. Russell and another MSIC agent testified that

they had believed the “100 percent of reasonable and customary” provision in

MSIC’s policies meant that MSIC would generally base its reimbursement

                                         -6-
decision on what health care providers in the area were charging. See Aplt. App.

at 440-441; Aple. App. at 362. A reasonable jury could conclude that neither

knew MSIC was, instead, simply enforcing a Medicare plus 26 percent rule. See

Aple. App. at 361; Aplt. App. at 439-42. In fact, when the other agent discovered

the Medicare plus 26 percent formula after MSIC reduced payment on a client’s

bill, he was so surprised and troubled that he took the “unusual” step of notifying

his other clients and advising them to change insurers. Aple. App. at 368, 361-

68.

      2. Next, MSIC argues that Mr. Cook did not demonstrate that he

reasonably relied on MSIC’s misrepresentation. This argument has two prongs:

Did Mr. Cook present evidence of actual reliance? And was his reliance

reasonable?

      On the first of these questions, MSIC argues that Mr. Cook did not actually

rely on Mr. Russell’s representations about its reimbursement policy by pointing

to testimony indicating that Mr. Cook sought insurance advice from his

accountant and that he did not find Mr. Russell to be a very strong salesman. But

the record is replete with evidence from Mr. Cook that, although he consulted his

accountant, he did in fact rely on Mr. Russell’s representations about the policy’s

terms in deciding to purchase it and would not have purchased the MSIC policy

had he known the truth. See Aplt. App. at 372-77, 363-64. The jury was free to

credit this testimony and find it sufficient to establish actual reliance. See Tice v.

                                          -7-
Tice, 672 P.2d 1168, 1171 (Okla. 1983) (“The fraudulent representation need not

be the sole inducement which causes a party to take the action from which the

injury ensued. The key is that without the representation the party would not

have acted.”).

      Second, MSIC argues that no reasonable person could rely on a salesman’s

statement that a health insurance policy pays for “everything” above a $5,000

deductible. 1 As it happens, however, although Mr. Cook testified that he was led

to believe MSIC’s policy would cover 100 percent of his medical expenses above

the deductible up to $1,000,000, he never disputed that the MSIC policy

contained certain exclusions and limitations defining what expenses were

covered. Further, Mr. Russell testified that he told Mr. Cook not that the policy

      1
         MSIC raised the legal reasonableness of Mr. Cook’s reliance in its
motion for summary judgment before trial but did not renew the argument in its
post-trial motion for judgment as a matter of law. When “the denial of summary
judgment is based on the interpretation of a purely legal question, such a decision
is appealable after final judgment” at trial, despite a party’s failure to renew its
argument. Wolfgang v. Mid-Am. Motorsports, Inc., 111 F.3d 1515, 1521 (10th
Cir. 1997). The district court denied summary judgment on this issue on a purely
legal basis, so we may review it.

       Although MSIC argues on appeal that Mr. Cook’s reliance must be
“justifiable,” we conclude his reliance passes the arguably higher standard of
“reasonableness,” as required by Oklahoma law. See Felix v. Lucent Techs., Inc.,
387 F.3d 1146, 1164-65 (10th Cir. 2004) (“Oklahoma law requires . . .
‘reasonable reliance’ on misrepresentations, and . . . ‘an action for fraud may not
be predicated on false statements when the allegedly defrauded party could have
ascertained the truth with reasonable diligence.’” (quoting Silver v. Slusher, 770
P.2d 878, 882 n.8 (Okla. 1988)); Eckert v. Flair Agency, Inc., 909 P.2d 1201,
1206 (Okla. Civ. App. 1995); see also Field v. Mans, 516 U.S. 59, 70-72 (1995)
(comparing justifiable and reasonable reliance).

                                        -8-
would pay for “everything,” but that it would cover “reasonable and customary”

charges. Viewing the evidence in the light most favorable to the jury’s verdict, as

we are obliged to do, the jury was free to infer from this evidence that Mr.

Russell sold the policy on the basis that it would cover reasonable and customary

charges up to $1,000,000 – not that it would cover “everything” – and that this

was the representation on which Mr. Cook relied. MSIC does not argue that

reasonable reliance on such a representation is impossible – nor could it, as its

own policy solicited business on the basis of just such a promise.

      Alternatively, MSIC argues that Mr. Cook could not have reasonably relied

solely on Mr. Russell’s oral representations when he was given a written policy to

review. We need not address whether Oklahoma requires an insured to read his

or her policy in order to discover the insurer’s misrepresentations, however,

because Mr. Cook could not have ascertained the truth by doing so. See Silver v.

Slusher, 770 P.2d 878, 882 n.8 (Okla. 1988) (“An action for fraud may not be

predicated on false statements when the allegedly defrauded party could have

ascertained the truth with reasonable diligence.” (emphasis added)). The policy

Mr. Cook received specified that MSIC would pay all “reasonable and customary

charges,” defined as the most common charge for particular services or supplies

as determined by calculating what two-thirds of the providers in the area are

charging for the same service or supplies, limited by reasonableness. The list of

factors MSIC could consider in determining whether a charge was reasonable did

                                         -9-
not include the Medicare plus 26 percent formula or any other indication that

MSIC would only pay according to such a rule.

      Finally, MSIC argues that Mr. Cook’s reliance on its misrepresentation was

no longer reasonable after MSIC sent him the December letter and policy

endorsement. On appeal, MSIC does not contest the district court’s conclusion

that the endorsement failed to constitute a valid amendment of the policy under

Oklahoma insurance law; instead, even assuming the endorsement did not comply

with Oklahoma insurance law requirements, MSIC asserts that it put Mr. Cook on

notice of the true coverage of the policy and the falsity of the previous

misrepresentation, making any further reliance on that misrepresentation

unreasonable for purposes of a common law fraud claim. Even assuming without

deciding that a legally inoperative endorsement can operate as a disclosure

precluding claims of fraud, the December correspondence, as with the original

policy, simply failed to indicate the truth about how MSIC would reimburse Mr.

Cook’s medical expenses; accordingly, it did not render his reliance on MSIC’s

previous misrepresentations unreasonable. See Silver, 770 P.2d at 882 n.8 (“An

action for fraud may not be predicated on false statements when the allegedly

defrauded party could have ascertained the truth with reasonable diligence.”

(emphasis added)).

      The December letter stated that MSIC would pay Medicare plus 26 percent

on claims incurred prior to January 1, 2004 and would pay according to the

                                        - 10 -
endorsement for claims, like Mr. Cook’s, arising after that date. The endorsement

purported to change “reasonable and customary charge” to “reimbursable charge,”

but left the definition largely the same, still defining it as the most common

charge for particular services or supplies as determined by calculating what two-

thirds of the providers in the area are charging for the same service or supplies,

limited by reasonableness. To be sure, the endorsement added to the existing list

of reasonableness factors “Medicare diagnostic or procedure codes, and

reimbursement rates, with appropriate markups to reflect national average

payment or reimbursement rates,” and billed charges if “less than a reasonable

charge.” Aplt. App. at 83. But nowhere did the endorsement suggest that MSIC

– contrary to the endorsement – would not even consider what the most common

charge for a particular procedure was but instead would automatically reduce

payment on medical bills accruing even after January 1, 2004 to Medicare plus 26

percent, ultimately paying only 30 to 40 percent of billed charges. Based on this,

a reasonable jury could conclude that Mr. Cook could not reasonably ascertain the

truth about MSIC’s coverage from the December correspondence.

      3. Lastly, MSIC asserts that, because it agreed to pay his hospital bill in

full after he sued, Mr. Cook lacked evidence of economic damages and, thus, any

injury cognizable in an Oklahoma common law fraud claim. This argument has at

least two defects. First, Mr. Cook did testify to economic damages, including the

fact that he personally paid $1,400 for an MRI because the hospital would not

                                        - 11 -
honor his MSIC insurance card and that he was improperly charged over $2,000

for a pre-certification penalty. Second, although MSIC is correct that damages

for non-economic injuries such as mere embarrassment usually are not available

in fraud under Oklahoma law, damages for mental and emotional distress are. See

Okla. Stat. tit. 76 § 2; Mashunkashey v. Mashunkashey, 113 P.2d 190, 191 (Okla.

1941); Coble v. Bowers, 809 P.2d 69, 73 (Okla. Civ. App. 1990). And, in

testimony MSIC does not now challenge as improperly received by the district

court, Mr. Cook spoke at length about the mental and emotional distress he and

his wife suffered as a result of MSIC’s fraud and their discovery that Mr. Cook

did not have adequate health insurance during his struggle with cancer. On this

unchallenged record, the jury was free to find that Mr. Cook’s injury rose above

the level of mere embarrassment and is thus compensable in fraud under

Oklahoma law. 2

      2
         MSIC also argues, for the first time on appeal, that the jury’s verdict in
MSIC’s favor on the bad faith claim contradicts its verdict in Mr. Cook’s favor on
the fraud claim and forecloses the possibility of recovery for fraud. As a general
rule, we will not consider an issue raised for the first time on appeal, and MSIC
offers us no reason to vary from the rule in this instance. See Singleton v. Wulff,
428 U.S. 106, 120 (1976); Hicks v. Gates Rubber Co., 928 F.2d 966, 970 (10th
Cir. 1991).

        Separately, we note that MSIC purports to seek a new trial on the issue of
liability as well but does not actually provide any discussion of this point as such
in its briefs. Under our case law, “[a]rguments inadequately briefed in the
opening brief are waived,” Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 679
(10th Cir. 1998), and, in any event, based on the arguments MSIC adduces for
judgment as a matter of law we see nothing that would merit a new trial on
                                                                        (continued...)

                                        - 12 -
                                         III

      MSIC challenges the jury’s damages award to Mr. Cook on three grounds,

asserting that the punitive damages award is inappropriate as a matter of law, that

the punitive damage jury instruction was unconstitutional, and that the

compensatory and punitive damages are excessive and should be remitted. We

evaluate the first two legal contentions de novo and the final, discretionary,

argument under a more deferential standard of review.

                                          A

      MSIC’s argument that the jury’s punitive damages award fails as a matter

of law itself has two different components. First, MSIC claims that it cannot be

liable in punitive damages for the misrepresentations of its soliciting agent

because the company did not know of or ratify the agent’s actions. But MSIC

admits that Mr. Russell was one of its soliciting agents and does not dispute that

he was acting within the scope of his employment as an insurance salesman when

he made the misrepresentations to Mr. Cook regarding the MSIC policy. Under

settled Oklahoma law, this is sufficient to expose MSIC to liability:

      Oklahoma does not impose the ratification requirement of Section
      909 of the Restatement (Second) of Torts; thus it would be possible

      2
        (...continued)
liability because the jury’s verdict, if not the only possible outcome here, was not
against the great weight of the evidence. See Escue v. N. Okla. Coll., 450 F.3d
1146, 1157 (10th Cir. 2006) (“The jury’s verdict . . . must be upheld unless it is
clearly, decidedly or overwhelmingly against the weight of the evidence.”
(quotation omitted)).

                                        - 13 -
      for the jury to have imposed punitive damages against [the defendant
      company] even without finding that it participated in or authorized
      the negligent acts of its employees. See Kurn v. Radencic, 141 P.2d
      580, 581 (Okla. 1943) (“In this jurisdiction [exemplary damages]
      may be awarded against a principal or employer for the act of an
      agent or employee even though the principal did not personally
      participate in, authorize or ratify the act complained of.”). See also
      Rodebush v. Okla. Nursing Homes, Ltd., 867 P.2d 1241, 1245-46
      (Okla. 1993) (holding nursing home liable for the intentional tort of
      its employee); Moore v. Target Stores, Inc., 571 P.2d 1236, 1240-41
      (Okla. Civ. App. 1977) (“Exemplary damages may be awarded
      against Target for the act of his [sic] agent even though the principal
      did not personally participate in or ratify the act.”).

Magnum Foods, Inc. v. Cont’l Cas. Co., 36 F.3d 1491, 1498 n.5 (10th Cir. 1994).

Oklahoma has consistently applied the doctrine of respondeat superior for

purposes of punitive damages, and as recently as 1999 the Oklahoma Supreme

Court confirmed that “[p]unitive damages may be assessed against a principal or

employer for the acts of its agents or employees if the agent or employee is acting

within the scope of his or her employment.” Sides v. John Cordes, Inc., 981 P.2d

301, 306 n.16 (Okla. 1999).

      Second, MSIC argues that the evidence at trial was insufficient to support

an award of punitive damages because its conduct “does not demonstrate the

elements of fraud or evil intent to which punitive damages are directed.” Opening

Br. at 45. But Oklahoma law specifically authorizes punitive damages when a

defendant is guilty of fraud or of “reckless disregard for the rights of others.”

Okla. Stat. tit. 23 § 9.1(B)(1); see Sides, 981 P.2d at 306. And, as we have

already amply outlined, sufficient evidence existed from which the jury could

                                         - 14 -
conclude that MSIC intentionally or recklessly misrepresented its insurance

coverage to induce Mr. Cook to purchase MSIC insurance, resulting in injury to

Mr. Cook. See supra Part II.

                                            B

      By way of a post-briefing Fed. R. App. P. 28(j) letter, MSIC argues that the

punitive damage award in this case was unconstitutional under Philip Morris USA

v. Williams, 127 S. Ct. 1057 (2007), because the jury should have been instructed

that it could not punish MSIC for injury to persons other than Mr. Cook. MSIC

admits that it did not object to the jury instructions on this basis in the district

court or request an instruction to this effect; neither did MSIC raise such an

argument in either its opening or reply briefs on appeal. Yet, it could have done

all this. The question whether such an instruction is necessary was hotly

contested in other cases at the time of this trial. 3 The Supreme Court granted

certiorari in the Williams case on May 30, 2006, before the district court’s June


      3
         Compare, e.g., Univ. Med. Assoc. of Med. Univ. of S.C. v.
UNUMProvident Corp., 335 F. Supp. 2d 702, 711 (D.S.C. 2004) (relying on
subsequent wrongful conduct to enhance punitive award because such conduct
“would result in precisely the type of repetitive harm contemplated in State Farm
as ripe for larger punitive damage awards”), with Gober v. Ralph’s Grocery Co.,
137 Cal. App. 4th 204, 223 (Cal. Ct. App. 2006) (refusing to consider subsequent
wrongful conduct because “hypothetical claims of other potential plaintiffs cannot
be used to increase” the plaintiffs’ punitive award), and Wohlwend v. Edwards,
796 N.E.2d 781, 786-87 (Ind. Ct. App. 2005) (trial court erred in admitting
evidence of subsequent wrongful conduct because of danger it would be used to
punish defendant for conduct other than that giving rise to plaintiff’s actual
damages).

                                          - 15 -
12, 2006 ruling on MSIC’s motion for remittitur or a new trial, and before any

appellate briefing took place. The Court decided Williams on February 20, 2007,

two days before MSIC’s reply brief on appeal was due, yet even then MSIC

waited nearly three additional weeks after appellate briefing in this matter was

closed before first mentioning Williams in a March 12, 2007 Rule 28(j) letter.

      To be sure, we recognize that in some circumstances an appellate court may

allow a party to raise an issue out of time because of an intervening change in the

law. See Employers Reins. Corp. v. Mid-Continent Cas. Co., 358 F.3d 757, 776

(10th Cir. 2004). But the intervening law exception does not give litigants a

second chance to raise new arguments whenever any supporting decision is

handed down. Rather, our precedent indicates only that, if the intervening

decision overrules or is contrary to previously controlling circuit precedent or is

otherwise a material change in the law such that objecting or raising the argument

earlier would have been futile, a party will be allowed to raise an argument under

the new decision on appeal despite failing to preserve the issue. 4 If, however, the


      4
         See United States v. Novey, 922 F.2d 624, 629 (10th Cir. 1991)
(intervening decision overruled previously controlling precedent); Peterson v.
Shearson/Am. Express, Inc., 849 F.2d 464, 466 (10th Cir. 1988) (party not
required to make futile argument to preserve issue lest precedent be overruled);
Furr v. AT&T Techs., Inc., 824 F.2d 1537, 1546 n.6 (10th Cir. 1987) (intervening
decision contrary to previously controlling law of the circuit); see also United
States v. Charley, 189 F.3d 1251, 1278-79 (10th Cir. 1999) (Holloway, J.,
dissenting) (new argument should be considered on appeal when intervening
material change in the law could not reasonably have been anticipated, rendering
earlier assertion of the issue futile and overruling previous standard).

                                        - 16 -
intervening decision simply resolves an open legal question, continues the current

direction of the law, or provides further support for an argument, or if the issue

was one which the litigant should have been aware of earlier, we generally require

the party to have preserved the issue in the district court proceedings and its first

brief on appeal. 5

       The latter circumstance pertains here. Williams did not overrule or

contradict controlling Supreme Court or Tenth Circuit precedent, and an argument

about the punitive damages instruction would not have been otherwise futile. In

fact, the Williams decision was foreshadowed by State Farm Mutual Automobile

Insurance Co. v. Campbell, 538 U.S. 408 (2003), decided four years earlier,

where the Court held that “[d]ue process does not permit courts, in the calculation

of punitive damages, to adjudicate the merits of other parties’ hypothetical claims

against a defendant under the guise of the reprehensibility analysis.” Id. at 423.

The Court reversed the punitive damages award because it did not believe the

defendant “was only punished for its actions toward the [plaintiffs],” but rather

was punished for “conduct that bore no relation to the [plaintiffs’] harm.” Id. at

423, 422. Thus, as early as April 2003, defendants were on notice that jury

       5
         See Employers Reins. Corp., 358 F.3d at 776 (amended statute only
provided further support for argument and did not justify considering new theory
on appeal); Peterson, 849 F.2d at 467 (open state of the law on the issue and
discretionary nature of the doctrine indicated party should have raised issue at the
outset); Lusby v. T.G.&Y. Stores, Inc., 796 F.2d 1307, 1312 n.6 (10th Cir. 1986)
(denying benefit of the exception where the “issue was one which the parties
should have been aware of and raised during the trial”).

                                         - 17 -
instructions permitting direct punishment for harm to non-parties or unrelated to

the plaintiff may be objectionable. Notably, the extent and import of State

Farm’s lessons were debated roundly in the federal courts after 2003, 6 and many

courts soon came to read State Farm to mean what Williams ultimately confirmed

it did mean. 7

       Further, Mr. Cook would likely be prejudiced by our consideration of the

new issue at this stage. Because MSIC did not interpose an appropriate and

timely objection to the district court’s instructions on punitive damages, Mr. Cook

had no opportunity to establish a record or suggest alternative jury instructions;

and because MSIC did not raise the argument in its appellate briefs, Mr. Cook’s

only written response to MSIC’s argument was by rule limited to filing his own

Rule 28(j) letter. See Fed. R. App. P. 28(j) (limiting supplemental letter to 350

words). This defect – that both parties’ arguments on a novel and complex issue

are confined to the parameters of the Rule 28(j) letter – would also impair our



       6
         See, e.g., Williams, 127 S. Ct. at 1061 (defendant objected to jury
instruction); Merrick v. Paul Revere Life Ins. Co., 500 F.3d 1007, 1015 (9th Cir.
2007) (defendant objected to jury instruction on the basis of State Farm); cf.
Southstar Funding, LLC v. Sprouse, No. 3:05-CV-253-W, 2007 WL 812174, at *3
n.2 (W.D.N.C. March 13, 2007) (denying the defendant the benefit of the post-
trial Williams decision in part because the defendant “did not raise a Williams-
type objection” at trial).
       7
         See e.g., Williams v. ConAgra Poultry Co., 378 F.3d 790, 797 (8th Cir.
2004) (tying punitive damages to the harm suffered by plaintiff); Johnson v. Ford
Motor Co., 113 P.3d 82, 93-95 (Cal. 2005) (ruling punitive damages cannot be
used to punish defendant for harm to non-parties).

                                        - 18 -
consideration of the issue in this case and “run the risk of an improvident or ill-

advised opinion, given our dependence as an Article-III court on the adversarial

process for sharpening the issues of decision.” 8 Headrick v. Rockwell Int’l Corp.,

24 F.3d 1272, 1278 (10th Cir. 1994) (White, J., sitting by designation) (internal

quotation omitted).

                                          C

      In contrast to our de novo review of MSIC’s legal arguments challenging

the jury’s punitive award, we review the district court’s denial of MSIC’s motion

for remittitur or a new trial due to excessive damages under a highly deferential

standard, reversing only if we can discern a “manifest abuse of discretion.”

Vining v. Enter. Fin. Group, Inc., 148 F.3d 1206, 1216 (10th Cir. 1998). Thus,

the jury’s award is inviolate unless we find it “so excessive that it shocks the

judicial conscience and raises an irresistible inference that passion, prejudice,

corruption, or other improper cause invaded the trial.” Id. (internal quotation

omitted).

      MSIC argues that the jury’s award of $550,000 in compensatory damages,

primarily for mental and emotional distress, is excessive. Our case law, however,


      8
          MSIC also argues, for the first time on appeal, that the punitive damages
award is unconstitutionally excessive according to the factors of BMW of North
America, Inc. v. Gore, 517 U.S. 559 (1996). We may not consider this issue,
however, because, again, MSIC did not raise it in the district court and offers no
reason for us to stray from our general rule against considering issues raised for
the first time on appeal. See Singleton, 428 U.S. at 120; Hicks, 928 F.2d at 970.

                                         - 19 -
supports Mr. Cook’s contention that this is not necessarily so. For example, in

Vining, which similarly involved an insurance denial of approximately $10,000,

we upheld a $400,000 damages award for mental suffering as not excessive – and

did so a decade ago. Id. at 1216-17; see Consumer Price Index, www.bls.gov/CPI

(calculating $400,000 in 1998 equal to $531,612.27 in 2008). There, the deceased

had purchased a credit life insurance policy to cover his car payments in the event

of his death; upon his death, his widow sought to collect the $10,000 policy but

the insurance company denied payment in bad faith. We concluded that Mrs.

Vining did not need to show “severe mental distress or outrageous conduct,” and

that her testimony regarding “the distress she experienced as a result of . . .

fighting the insurance company over the claim” was sufficient to support the

$400,000 award for emotional distress. Id. at 1217. See also Malandris v.

Merrill Lynch, Pierce, Fenner & Smith Inc., 703 F.2d 1152, 1167-71 (10th Cir.

1983) (upholding $1,030,000 award for emotional distress where financial loss

was only $30,000, on fraud and intentional infliction of emotional distress

claims); Chandler v. Denton, 741 P.2d 855, 867-68 (Okla. 1987) (holding

$600,000 award for intentional infliction of emotional distress and invasion of

privacy not excessive).

       Here, as in Vining, the plaintiff’s distress resulted from an insurance

company’s refusal to pay benefits in the amount the plaintiff reasonably believed

would be paid, and Mr. Cook’s situation could be argued to be more egregious

                                         - 20 -
because Mrs. Vining’s liability was limited to $10,000, while at the time Mr.

Cook learned of MSIC’s fraud and his lack of insurance coverage, he faced an

unknown and potentially escalating series of bills related to cancer treatment.

Indeed, the jury heard testimony, to which MSIC does not now object, from Mr.

Cook about the distress and worry he and his wife suffered upon learning they did

not have adequate health insurance, facing unknown costs for cancer treatment

(knowing Mr. Cook could not obtain other coverage because of his condition),

and simultaneously dealing with the hospital’s collection efforts.

      While failing to distinguish adequately Vining or other authority supporting

the jury’s award, MSIC calls to our attention and asks us to rely on Fitzgerald v.

Mountain States Telephone and Telegraph Co., 68 F.3d 1257 (10th Cir. 1995) and

Wulf v. City of Wichita, 883 F.2d 842 (10th Cir. 1989). But neither case suggests

remittitur would be appropriate here. In Fitzgerald, the jury awarded the plaintiff

$250,000 for emotional distress resulting from the defendant’s refusal to contract

with the plaintiff for allegedly discriminatory reasons, and we remanded for a

new trial because the evidence suggested the award was the product of passion

and prejudice. 68 F.3d at 1265-66. MSIC does not point to anything that would

suggest the jury in this case was carried away by passion or some other improper

motivation – if anything, the record suggests just the opposite conclusion, given

that the jury found in MSIC’s favor on Mr. Cook’s bad faith claim. See Verdict

Form, Aplt. App. at 262. In Wulf, the jury awarded the plaintiff $250,000 for

                                        - 21 -
stress and frustration related to being fired in retaliation for exercising his First

Amendment rights, and we remanded for reconsideration of the damages based on

comparison to other cases from the previous four years in which the plaintiffs

were awarded significantly less (none of the awards approached even half of the

Wulf plaintiff’s award) for similar discharges in violation of the First

Amendment. 883 F.2d at 875. Here, by contrast, MSIC has not presented us with

any factually similar cases to demonstrate that circumstances such as Mr. Cook’s

are not compensated by awards this size. Accordingly, we cannot say that the

jury’s award in this case is so extreme as to “shock the conscience.” 9


      9
          In the district court, MSIC argued that evidence of Mr. Cook’s annual
income was relevant to damages because a person with his income would not
experience much mental anguish over a $10,000 insurance dispute. The district
court excluded evidence of Mr. Cook’s income, reasoning that Mr. Cook did not
seek lost earnings or contend he could not pay his hospital bill, his income had
little relevance to his mental pain and suffering, and any probative value was
substantially outweighed by the prejudice the admission of such evidence would
cause to Mr. Cook. MSIC now asserts this ruling was erroneous because Mr.
Cook’s annual income was relevant not only to damages but also to demonstrate
his sophistication in the insurance industry and counter his reliance on the agent’s
representations. As it happens, however, the jury had before it ample evidence of
Mr. Cook’s profession, success, and ability to pay, and MSIC has not presented us
with any authority suggesting that the dollar amount of a plaintiff’s income is
relevant to mental suffering. We therefore conclude the district court did not
abuse its discretion in excluding the evidence.

       Concerning the punitive damages award, MSIC also renews the only
argument it made for remittitur in the district court: that according to Oklahoma
law, if we were to reduce compensatory damages, we must reduce punitive
damages as well. See Okla. Stat. tit. 23 § 9.1(B)(2) (punitive damages may not
exceed the greater of $100,000 or amount of compensatory damages). Because
we have affirmed the compensatory damage award, this argument also fails.

                                          - 22 -
                                * * *

The judgment of the district court is affirmed.



                                ENTERED FOR THE COURT



                                Neil M. Gorsuch
                                Circuit Judge




                                 - 23 -
