Ruling goes against boat insurer

The nightmare worsened when his insurer, USAA Casualty, rejected his claim and contended he scuttled the boat.

USAA instigated a criminal prosecution in federal court on insurance fraud charges, although the case was based on evidence that had been altered, fabricated and hidden by company investigators.

Powers was acquitted, but years of litigation remained as he stubbornly sought vindication and compensation from USAA, one of the country's largest insurers.

A 1994 jury trial resulted in an award of $400,000 in compensation and $5 million in punitive damages. Four years later, the Nevada Supreme Court has upheld the verdict.

In a 4-1 decision, the high court also granted interest on the $5 million from the date of the jury decision. That means Powers' award jumps to about $8 million, according to his attorney, William Brenske.

Brenske said Powers is delighted by the high court decision, but added the Vietnam War hero is now 67 and has suffered recent health problems, limiting the opportunity to recoup his dreams.

"This incident consumed his life," the attorney said. "He was angry. It takes a lot of tenacity to fight a $3 billion company."

The lawyer also said USAA made some bad decisions in the case based on erroneous information and has not been able to admit it made a mistake.

A trial jury had concluded that USAA acted in bad faith by denying Powers' original $40,000 claim of compensation for the boat and instigating the federal criminal case based on bogus evidence.

But it wasn't a simple case for the jury because Powers had admitted lying to USAA originally about how his boat sank.

Initially, Powers said the exhaust pipe simply had deteriorated, allowing water to spill into the hold. He later said the pipe had just fallen off. He also confirmed that he cut off another part of the pipe in his effort to save the vessel.

But trial evidence indicated the problems leading to the sinking of the Mikimbi weren't intentional, and that Powers struggled for hours to save his sailboat before being ordered to abandon ship by the U.S. Coast Guard.

The Supreme Court decision, authored by Justice Bob Rose, concluded that the jury had considered all of the evidence before reaching its decision and there was substantial evidence to support the punitive damage award.

Chief Justice Charles Springer, in a 35-page dissent, said there were reasonable grounds for USAA to have denied Powers' claim and there was insufficient evidence to show bad faith by the insurance company.

USAA spokesman Hal Schade said Tuesday the company is "extremely disappointed with the opinion and is studying the implications this case holds for other Nevada policyholders."

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