It is to be expected that an insurance company will do everything within its power to limit the payout on a Cape Cod personal injury or wrongful death case. However, there are limitations on just how far an insurance company can go in its attempt to protect its pocketbook. Under Massachusetts’ consumer protection laws, “unfair or deceptive” practices are illegal, as are unfair claim settlement practices.
When a claimant believes that an insurance company has violated the law with regard to the investigation of his or her claim, he or she should talk with an attorney as soon as possible. In fact, it is usually best to consult an attorney before even speaking with an insurance adjuster about a personal injury or wrongful death case.
Facts of the Case
In a recently decided federal case, the original plaintiff was a young woman who, at the age of 20, was seriously injured in a 2010 car accident. The wreck happened shortly after the plaintiff had left the original defendant night club, where she was employed as a dancer and where she had allegedly been served alcohol despite being under the legal drinking age. The young woman sued the night club in state court, and the parties entered into a $7.5 million consent judgment under which the night club’s liability insurer tendered policy limits and the night club agreed to pay $50,000.
Thereafter, the young woman asserted counterclaims against the insurer in the United States District Court for the District of Massachusetts (in which the insurer had previously filed a declaratory judgment action) pursuant to Massachusetts General Laws chs. 93A and 176D , alleging that the insurer had refused to pay her claim without conducting a reasonable investigation and had failed to effectuate prompt, fair and equitable settlements of her claim, in which she asserted liability was reasonably clear. The federal district court ruled in the young woman’s favor on both of her state law claims, assessed actual damages of $1.8 million against the insurer, and, after concluding that the insurer’s violations were willful, awarded the young woman trebled damages of $5.4 million. Both the young woman and the insurer appealed.
The Court’s Decision
The young woman argued on appeal that the federal district court should have used the amount of the consent judgment as the base for trebling her damages and that the lower tribunal should have ruled on the claims against the insurer assigned to her by the night club in the state court suit’s settlement. The insurer insisted that the federal district court had been erroneous in finding that it violated ch. 176D, in finding that any violation of state law by it was willful, in the calculation of actual damages, and in awarding prejudgment interest on the treble damages award and not the actual damages amount.
The United States Court of Appeals for the First Circuit affirmed and left the parties “where they were” with one exception; the calculation of prejudgment interest. As to that issue, the appellate court reversed and remanded with instructions to the lower court to recalculate prejudgment interest based on the plaintiff’s actual damages rather than the treble damages figure. According to the court, the young woman’s measure of damages was her actual damages because no “judgment” – as that term is defined for purposes of her bad faith claims against the insurer – was entered in her case. In so holding, the court reiterated language from a similar state court lawsuit, in which the state’s highest court opined that adding prejudgment interest to penal damages would compound the penalty and violate the purpose of the state’s prejudgment interest statute.
In affirming the finding of liability against the insurer in all other respects, the court noted that the young woman had immediate and recurrent medical costs after the accident, had no insurance or means of support, was no longer able to work to support herself and a sibling, and was forced to move into disability housing. Under these circumstances, the court of appeals agreed with the lower tribunal that it was foreseeable to the insurer that the young woman would suffer emotional distress and mental anguish during the nearly two-year period between the filing of her claim and the receipt of any funds from the insurer in settlement of her claim.
Speak to a Massachusetts Injury Attorney
Devastating personal injuries can result from the negligence of a night club or bar. If you are suffering due to an accident caused by such an establishment, you should talk to a lawyer about filing a negligence lawsuit seeking maximum compensation for what you have been through and will continue to endure in the future. To schedule a consultation with a Cape Cod catastrophic injury attorney, call the Law Offices of John C. Manoog III, today at 888-262-6664. These types of cases demand prompt, thorough investigations, so please do not put off the call.