In a recent case in which a victim of a horrific motor vehicle collision in Medway sued the negligent truck driver that rear ended her, the Appeals Court found that the insurance companies have an obligation to make a reasonable settlement offer no matter what the demand. This case reassures victims of motor vehicle accidents and other personal injuries that insurance companies must make reasonable offers of settlement.
We won’t get into the injuries or damages for this article; however, they were extensive, including paralysis. The truck driver’s insurance company offered their full policy of $2 million, however, there was an excess umbrella policy administrated by AIG insurance. Notwithstanding having all of the medical records, and a high evaluation for the case, AIG decided to make a strategic low offer of settlement. Wherefore the case went to a jury which came back with a verdict of over $9 million, plus costs and interest of about $2 million. With appeals pending, AIG finally made a reasonable offer and the main case settled against the truck driver for the victim and her family. However, the plaintiffs did not settle their case against AIG for failing to effectuate a reasonable settlement in a timely fashion, under Massachusetts General Laws, Chapter 93A and 176D. That case went to the Appeals Court.
The Trial Court then held a trial on the case of violation of the Consumer Protection Statute, Massachusetts General Laws, Chapter 93A, and the insurance unfair settlement law, Chapter 176D. The decision from that trial was appealed to the Appeals Court. While the Trial Court found that AIG “failed to effectuate a prompt settlement” after determining that liability was clear and that the failure was “willful and knowing,” the Trial Court measured damages only from date of the verdict to the date of the final, accepted offer. The Trial Court also doubled the damages. The Appeals Court found that the damages were from the date that it found that AIG knew it should offer a significant settlement (before it began a series of delays). The Appeals Court used the “loss of use” measurement for damages. Thus, the monies awarded would be 1% per month from that date until actual settlement. Further, the Appeals Court sent the case back to the Trial Court for determination as to whether there would be double or triple damages, notwithstanding the fact that the Court had already doubled the damages under Chapter 93A.
In a dissenting opinion by Judge Berry, it was stated that the damages should be significantly higher. That is, damages should be doubled or tripled as to the full amount of the jury verdict, not just the loss of use portion of the award.
See Rhodes v. AIG Domestic, Mass Appeals Court No. 09-619, November 23, 2010.