Sierra Health and Life Insurance Company, Inc. v. Sandra L. Eskew, as Special Administrator of the Estate of William George Eskew

The Constitution requires that “a person receive fair notice not only of the conduct that will subject him to punishment, but also of the severity of the penalty that a State may impose.” BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 574 (1996). In Gore, the Court held that the “fair notice” principle requires that punitive damages awards be reviewed for excessiveness under three due process guideposts. In this case, the Nevada Supreme Court held that the Gore guideposts were inapplicable and affirmed a $160 million punitive damages award that was eight times the largest such award ever upheld in Nevada history. The court explained that a constitutional excessiveness review was unwarranted because Nevada has a statute capping punitive damages awards—and it exempts from the statutory cap badfaith claims against insurers like petitioner. Thus, in the Nevada court’s view, petitioner had the constitutionally mandated “fair notice” that punitive damages could be imposed in any amount. The question presented is whether Gore’s constitutional protections against excessive punishments are inapplicable in cases where punitive damages are imposed under statutes that purportedly authorize the award.