While an insurance company is not obligated to settle every liability action that is filed against one of its insureds, those in the insurance industry do have certain obligations when it comes to the fair handling of claims.
A failure to comply with the law in this regard can result in substantial penalties being levied against an insurance company, including treble damages. The exact calculation of such penalties was the subject of a recent appellate court opinion.
Facts of the Case
In a case heard by the Supreme Judicial Court of Massachusetts, the plaintiffs were a husband, wife, and child who were allegedly injured after being struck by a bus owned by a health care system and driven by one of its employees. In a separate lawsuit against the tortfeasors, the plaintiffs obtained a substantial verdict. In the case to be discussed herein, the plaintiffs alleged that the defendants (the health care system’s insurers and claims representatives) had engaged in unfair or deceptive insurance settlement practices in violation of Mass. Gen. Laws ch. 176D, § 3 and ch. 93A, § 9 (3) with regard to their claim against the tortfeasors in the other case.
A bench trial in the settlement practices case resulted in an award of treble damages. In calculating the amount to be paid, the trial court judge included “the combined amount of the underlying tort judgment and the accrued post-judgment interest on that judgment.” The Massachusetts Appeals Court affirmed.
Decision of the Supreme Judicial Court
The state’s supreme court began its analysis by reviewing the statutory framework behind the plaintiffs’ insurance settlement claims, noting that an insurance company can be held accountable for an unfair claim settlement practice if it “fails to effectuate prompt, fair, and equitable settlements of claim in which liability has become clear.” If an insurer’s conduct is willful or knowing, the court is to award multiple damages of up to three, but not less than two, times the actual damages in the underlying action.
Thus, the court determined that the key issue was whether the amount of the judgment used to measure the “actual damages” included post-judgment interest that had accrued on the judgment before it was paid. Concluding that it did not, the court vacated the lower tribunal’s judgment and remanded the matter to the superior court for the entry of a revised judgment. According to the court, the plaintiffs had advanced no reason other than further punishing the defendants in arguing that the legislature intended a departure from its treatment of post-judgment interest in other contexts. The court thus declined to read an additional measure of punishment into the statute in question.
Contact a Knowledgeable Massachusetts Personal Injury Attorney
There are many reasons why it can be difficult to obtain fair compensation following an accident caused by an individual or business’ negligence. As this case illustrates, one of those reasons can be a lack of cooperation from the opposing party’s insurance company. If you or a family member has been hurt and would like to talk to an experienced Cape Cod bus accident attorney about your legal rights, call the Law Offices of John C. Manoog, III at (888) 262-6664. We will gladly schedule a complimentary case evaluation in our Hyannis or Plymouth offices, or we can travel to your home or hospital room, if you prefer.
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