Hughes

This appeal arises from an action brought by Sally Hughes (hereafter Mrs. Hughes or respondent) and her estranged husband, Jurdy Hughes (hereafter Mr. Hughes), against Blue Cross of Northern California (hereafter Blue Cross) alleging several causes of action arising from the denial of insurance benefits for their son’s hospitalization. Upon petition of Blue Cross, the plaintiffs’ right to the disputed benefits was referred to arbitration and the arbitrator ordered payment. Mrs. Hughes then proceeded to trial to recover damages for Blue Cross’s alleged breach of its implied covenant of good faith and fair dealing. The jury rendered a special verdict awarding her $150,000 in compensatory damages and $700,000 in punitive damages. Although not covered by the Blue Cross insurance contract, Mr. Hughes also proceeded to trial on theories of breach of the implied covenant of good faith and fair dealing, unfair insurance claims practices, and negligent infliction of emotional distress. Finding that he had no standing to sue, the trial court directed a verdict against him and later entered a judgment of dismissal.

On September 6, 1981, Patrick Hughes, a young man 21 years old,…