INSIGHTS On Massachusetts Personal Injury Law

Welcome to the SUGARMAN blog. We'll be sharing our perspectives on the state of the law and current legal issues in Massachusetts personal injury law. Issues relating to medical malpractice, construction site injuries, premises liability, product liability, motor vehicle accidents, insurance, and more will all be reviewed here by our team of lawyers who have prosecuted some of the most complex cases in Massachusetts personal injury law.

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Consumer Protection Laws: When Insurance Companies Act in Bad Faith

During the initial stages of bringing a personal injury claim, there can be extensive communications between a law firm representing the plaintiff (injured party) and the insurance company providing coverage to the potential defendant (liable party). On many occasions, the plaintiff’s attorney may send the insurance company relevant medical records and bills, documents establishing the defendant’s liability (such as police reports) and a written demand for settlement of the claim prior to the initiation of a personal injury lawsuit. The idea behind this is to attempt reasonable settlement of claims where liability is clear in order to avoid the expense and time that necessarily follows the filing of a lawsuit. Many times such personal injury claims can be settled prior to suit, but in some instances an insurance company may fail to respond or take a unreasonable position on settlement value or liability, effectively “stonewalling” the plaintiff. So what happens when the defendant’s insurance company fails to promptly and adequately settle an injury claim where the liability of its insured is clear?

Thankfully, Massachusetts law affords plaintiffs protection against such unfair settlement practices by insurance companies. Massachusetts General Laws Chapters 93A and 176D (commonly referred to simply as “93A” and “176D”) are the Consumer Protection laws that regulate the personal injury claims and settlement practices of insurance companies in Massachusetts. 176D defines the insurance practices that are statutorily “unfair”. 93A provides the mechanism for filing claims for violations of 176D and sets forth the awardable damages arising from such unfair practices. 176D, Sec. 3(9) defines the following, among others, as “unfair settlement practices”:

  • Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies;
  • Refusing to pay claims without conducting a reasonable investigation based upon all available information;
  • Failing to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear; and
  • Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds.

Not every potential negligent act by an insurance company gives rise to claims under Chapter 93A and 176D. The context and case specific circumstances in which the claimed unfair act took place is of great importance in determining whether the act was unfair or deceptive within the meaning of 93A and 176D. The plaintiff does not need to show that the insurance company intended to deceive the plaintiff, but must show that the unfair practice caused the plaintiff harm in order to bring a valid claim. The determination of whether legal liability is clear will depend on the case specific facts and relevant law applicable to the case. An insurance company can in good faith rely on its own investigations or any investigations conducted by law enforcement (i.e., a police report regarding a motor vehicle accident) in determining that liability is not clear.

Once a violation of 176D has occurred, 93A requires the plaintiff to send a demand letter to the insurance company. This letter must be sent at least 30 days prior to the filing of a lawsuit alleging violations of 176D and is a prerequisite to filing any claims for violations of Chapter 93A and 176D. The demand letter must describe with some specificity the alleged unfair act or practice and the injury or damages the plaintiff suffered as a result. After receiving a demand letter meeting the requirements of 93A, an insurance company has 30 days to respond with a written tender of settlement. If the insurance company fails to make a written tender of settlement or makes an inadequate tender, the plaintiff can then file a lawsuit against the insurance company for violations of both 93A and 176D. Typically, these claims are brought in the same lawsuit as the underlying action, i.e., the plaintiff’s claims against the negligent actor, with both the insured and his or her insurance company as the named defendants in the case. The 93A and 176D claims are then generally “stayed” or put on hold until the resolution of the underlying matter. Should the plaintiff be successful in the underlying action against the insured party, the 93A and 176D claims would then be litigated to determine whether the insurance company’s handling of the claim constituted an unfair settlement practice. If a plaintiff is successful in his or her 93A and 176D claims, 93A allows a Court to double or triple the damages from the underlying action and also allows a Court to award the plaintiff attorneys fees and costs.

SUGARMAN has extensive experience pursuing and litigating claims for unfair liability settlement practices pursuant to 93A and 176D. Although we hope to not have to bring such a claim on behalf of any of our clients, our attorneys are able and willing to pursue such claims where an insurance company has improperly failed to promptly and adequately settle claims prior to the filing of legal suit. Please contact us if we can assist in any way.

Call us at 617-542-1000 or email info@sugarman.com