Massachusetts Insurance Company Liable for All Tort-Related Costs in Unfair and Deceptive Settlement Case — Rivera v. Commerce Ins. Co.

Massachusetts has one of the strongest Consumer Protection Acts in the country. Under Massachusetts General Law Chapter 93A, known as Massachusetts Consumer Protection Act, the Attorney General or a consumer can bring a legal action against unfair or deceptive conduct in the market place. This includes unfair and deceptive settlement practices when insurance companies unreasonably delay settlement in personal injury cases. The rule is meant to encourage insurance companies to settle claims with injured parties when the company has determined that their insured party was solely at fault.

The Massachusetts Appeals Court recently ruled in Rivera v. Commerce Ins. Co. that insurance companies are liable for all tort related expenses when an insurance company unreasonably delays settlement in a personal injury case. Under 93A, if an insurance company finds its insured is solely at fault and delays settlement to the injured in order to obtain a smaller settlement, the insurance company will be liable for the legal expenses of the injured because of the delay. The issue at hand in the case was the extent of expenses for which an insurance company would be liable.

The case arose out of a 2003 accident when a dump truck struck the plaintiff’s vehicle head-on. The plaintiff was returning from his job as a day laborer. The dump truck company was insured by Commerce Insurance Company, the defendant in the case. Within ninety days of the accident, Commerce had concluded that the accident was the sole fault of its insured, the dump truck company. The plaintiff retained counsel and regularly provide Commerce with the plaintiff’s medical status. The plaintiff underwent several years of surgeries and physical therapies while unable to work and accruing mounting medical bills.

In order to avoid the statute of limitations, plaintiff commenced a personal injury lawsuit in 2006 when he offered to settle for the full insurance policy of $1 million dollars. Commerce declined the settlement offer even though it had previously determined the insured solely at fault. In June 2007, the plaintiff sent a demand letter to Commerce. Under Chapter 93A, in order to initiate a 93A claim, the consumer must send a demand letter in which the business has 30 days to respond. In response to the demand letter, Commerce made an offer of $340,000. The plaintiff declined the offer and proceeded to trial. In May 2008, a year later, on the eve of trial, Commerce made an offer to settle for the policy limit of $1 million dollars to which the plaintiff accepted and the personal injury case was settled.

The plaintiff then commenced the 93A claim based upon the delay from when the insurance company determined the insured had been at fault. The trial court judge found that Commerce had unreasonably delayed settlement until the eve of trial while plaintiff’s medical costs escalated in order to justify the lowest offer possible. Plaintiff was awarded actual damages in the amount of $55,000, which the judge trebled because of Commerce’s bad faith. However, the judge ruled that the plaintiffs had no right to recoup any tort-related litigation expenses including “fees for the certification of medical records, preparation of trial exhibits, and a videotaped deposition of an expert witness.” The plaintiffs appealed for the tort-related expenses.

Under Chapter 93A, expenses include all losses which were the foreseeable consequences of the defendant’s unfair or deceptive settlement practices. Citing DiMarzo v. American Mut. Ins. Co., the Appellate Court found a causal connection between the insurer’s delay and the tort-related could show the tort-related expenses were forseeable. The Appeals Court remanded the case giving the plaintiffs an opportunity to show a causal connection between the insurer’s delay and the tort-related expenses.

The decision helps protect the injured in personal injury cases by reinforcing 93A cases against the unfair and deceptive settlement practices of insurance companies. Furthermore, it add to the body of 93A claims by identifying the kinds of expenses that can be recovered under a 93A claim.

Injury or death resulting in personal injury cases can be emotionally and financially difficult. These cases can be complex, and you are encouraged to contact a local personal injury attorney that will be able to gather evidence and review the elements of your case. If you or someone you love has been harmed by the negligence of others, you are encouraged to speak to an attorney experienced in personal injury cases.

If you have suffered from a personal injury, we can ensure that you do not settle for less than the compensation you deserve. Local attorney, John C. Manoog III, has extensive experience handling personal injury cases. For a free initial consultation, call the office at 888-262-6664 or reach us by email. There is always someone available to talk to you about your case. Related Blog Posts: Massachusetts Supreme Court Upheld $18 Million Punitive Damages Award in Wrongful Death Action Massachusetts workers’ compensation: PT domestic workers next?