Casualty insurance companies, upon being notified of a covered accident and injury, have a legal obligation to properly and timely investigate and then effect a fair settlement If you are injured in an accident in Massachusetts because of the negligence of another who has insurance and responsibility for the injury is reasonably clear, the insurance company has an obligation to settle the case fairly and promptly.
Under Massachusetts law, it is an “unfair claim settlement practice” for an insurance company to fail “to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear.” M.G.L. c. 176D § 3 In circumstances where it is reasonably clear that another person is at fault for the accident and has insurance coverage, the insurance company must act promptly, fairly and equitably in attempting to settle the claim against the responsible party and to justly compensate the injured. Failure to do so, by the insurance company, may result in significant consequences or damages for the insurance company.
Anderson v. National Fire Ins. Co. of Pittsburgh PA is one example of a recent Massachusetts decision out of the SJC applying M.G.L. c. 93A and c. 176D to an insurer. On September 2, 1998 Odin Anderson was crossing the street in Boston when he was struck and injured by a bus. The bus was owned by Partners Healthcare Systems, Inc. as was operated by a Partners employee. As a result of the accident, Mr. Anderson suffered serious injuries including a fractured skull and intracerebral hemorrhage. Mr. Anderson, through counsel, attempted to reach a settlement with the defendants. The defendants rejected the plaintiff’s demand for settlement and refused to enter into settlement negotiations. In May 2001, Mr. Anderson sued Partners and the employee who was operating the bus at the time of the accident. In March 2003, Mr. Anderson filed a separate action under M.G.L. c. 176D, §3 and M.G.L. c. 93A, §9(3), alleging “willful and egregious failure to conduct a reasonable investigation of the plaintiffs’ claims, and failure to effectuate a prompt, fair, and equitable settlement, notwithstanding that liability had become ‘reasonably clear’ by the time the plaintiffs filed their initial complaint.”
Trial for the first case took place in June and July of 2003. The Jury found that Mr. Anderson had suffered $2,961,000.00 in damages but that he was “comparatively negligent” for 47% of his injuries which reduced the amount of the judgment to $1,569,330.00. Final judgment entered on July 10, 2003 in the amount of $2,244,588.93 (which included costs and prejudgment interest of approximately $450,000.00). The defendants appealed but in August 2008 the Appeals Court affirmed the judgment. In December 2008 the defendants paid the amount of damages due, plus five years of mandatory post-judgment interest ($1,284,243.17), for a total payment of $3,252,857.80.
In September 2013, the trial for the second case (for damages under M.G.L. c. 93A and c. 176D) was held in the Suffolk Superior Court. In April 2014, the Judge ruled that the defendant insurance company:
“violated G.L. c. 176D, §3 (9) (d), by failing to ‘conduct a reasonable investigation…based on all available evidence,’ including by suppressing unfavorable evidence and offering fictitious evidence; failing to ‘effectuate prompt, fair and equitable settlement of claim in which liability…ha[d] become reasonably clear’; and pursuing of an unreasonable appeal of the underlying personal injury judgment.”
The Judge further reasoned that the defendants violations of M.G.L. c. 176D had been “willful and egregious” thereby warranting punitive damages under M.G.L. c. 93A, §9(3). The amount to be multiplied under M.G.L. 93A was double the amount of the first case, combined with the post-judgment interest. Both parties filed motions for the Court to modify the judgment. The plaintiffs argued that the maximum award of damages under M.G.L. 93A is three times the amount of the judgment in the first case. The defendants argued that the Judge should not have included the post-judgment interest. The Judge issued an amended judgment to increase the amount of damages to three times the amount of the first judgment.
The outcome in this case illustrates the importance of having an experienced advocate fighting for you, particularly when dealing with an insurance company.