The Associated Press

COLUMBUS - The Ohio Supreme Court has ordered Anthem Blue Cross and Blue Shield to pay a record-setting judgment of $32.5 million to a man whose wife died after the insurance company cut off payments for her cancer treatment.

The judgment included a record $30 million in punitive damages.

The 4-3 decision Friday mostly reverses a decision by the 5th Ohio District Court of Appeals, which had wiped out the bulk of the original $51.5 million award by a jury in Licking County. All three dissenting justices agreed with at least part of the majority ruling.

"We do believe that (the health insurers') actions in this case merit a historic punitive-damages award," Justice Paul Pfeifer said in the ruling. "Their industry's central role in the lives of so many Ohioans requires that."

The justices diverted most of the punitive damages to a special cancer-research fund they established at the Arthur G. James Cancer Hospital and the Richard J. Solove Research Institute at Ohio State University. The court noted that punitive damages are designed to deter bad conduct, not make plaintiffs rich.

The fund will be named after Esther Dardinger, who died at age 49 on Nov. 6, 1997. The ruling comes in a lawsuit her husband, Robert Dardinger, filed against the insurance company.

Robert Dardinger will get $10 million - plus approximately $9 million in interest - from the punitive damages. Once legal costs are subtracted from the other $20 million, the rest will go into the fund.

Anthem paid for the first three of a scheduled 12 treatments earlier in 1997 of a new technique that involved injecting chemotherapy drugs directly into Esther Dardinger's brain. Though her doctor said the treatment was working, insurance officials said the payments never should have been authorized and denied future payments.

Fearful that paying the estimated $100,000 would ruin them financially, the Dardingers chose to delay treatments while they appealed. The notice that Anthem had denied the appeal arrived the day after her funeral.

Anthem on Saturday called Mrs. Dardinger's death a tragedy, but stood by its "medical policy on experimental treatments," the company said in a statement.