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Appeals Court Continues to Define 93A and 176D for Massachusetts Insurers

Judge Massing, writing for the Appeals Court, today highlighted the common-sense application of 93A and 176D for Massachusetts insurers. Silva v. Norfolk & Dedham Mutual Fire Ins. Co. (2017).In a jury waived trial, the Plaintiff alleged the insurer violated Massachusetts General Laws c. 93A and 176D, Massachusetts’ consumer protection statute and its corollary, which require insurers to act appropriately in the investigation and settlement of claims. 


The Plaintiff argued that the insurer refused to pay the claim absent a reasonable investigation. While applying the “clearly erroneous” standard, the Appeals Court agreed with the trial court judge, finding that the insurer’s investigation, detailed over 66 pages of log entries made by claims adjusters and including assignment of an independent adjuster, private investigator and medical experts was sufficient. The Appeals Court, citing the well-known standard that, “So long as the insurer acts in good faith, the insurer is not held to standards of omniscience or perfection.” Bolden v. O'Connor Café of Worcester, Inc., 50 Mass. App. Ct. 56, 67 (2000), quoting from Peckham v. Continental Cas. Ins. Co., 895 F.2d 830, 835 (1st Cir. 1990), liability, which includes both fault and damages, was not reasonably clear and did not require settlement. Expanding on that, however, the Appeals Court further held that evidence acquired by the insurer after the fact which supported its decision to withhold an offer of settlement could be considered when determining whether the insurer violated 93A and/or 176D. 


Of interest in this case is the Appeals Court’s decision to uphold the trial court in excluding the testimony of an expert witness on the issue of whether the investigation of the claim by the insurer was reasonable. In doing so, the Appeals Court agreed that the trial judge has the ultimate authority and broad discretion to permit or exclude expert testimony. Further, expert testimony which is simply an opinion of law – here, the application of 93A is not a proper subject for determination by anyone other than the fact-finder. 


The insurer opted to make a conditional post trial settlement offer for the policy limit. Overturning the trial judge, who found that the insurer violated 93A and 176D for failing to include post judgment interest in the settlement offer, the Appeals Court clarified the holding in Davis v. Allstate Ins. Co., the seminal case in post-judgment offers of settlement. See Davis v. Allstate Ins. Co., 434 Mass. 174, 181-183 (2001). The Appeals Court clarified today, that after judgment enters for the claimant, if the insurer does not unconditionally offer its policy limit to satisfy the judgment, the insurer is responsible for post judgment interest on the entire amount of the judgment until an unconditional offer is made. 


The Massachusetts Appeals Court continues to take a practical view of the application of 93A and 176D to Massachusetts insurers. The appropriate investigation and documentation of that investigation continues to be of paramount importance. Further, the court continues to carefully consider the need and use of expert witnesses, both as supporting players in the investigation of a claim, and at the time of trial. - DeFronzo, J.