Massachusetts Court Upholds Prior Bad Faith Ruling

The Massachusetts Appeals Court recently affirmed a lower court’s decision that an insurance company acted in bad faith by failing to tender a reasonable settlement offer once liability became clear. The court awarded additional damages to the Plaintiff based on the insurance company’s misconduct.

Rivera v. Commerce Insurance Company began with a 2003 head-on collision involving Mr. Rivera’s vehicle and a dump truck operated by Commerce’s insured party. After only nine days, Commerce determined that the defendant caused the accident. Despite this finding, Commerce refused to make a reasonable settlement offer until May 6, 2008 ― shortly before trial was scheduled to begin. As compensation for Commerce’s inaction, Mr. Rivera received an additional $55,000 plus interest on the entire amount, dating back to 2003.

Elements of a Bad Faith Claim

The policy behind bad faith law is that insurance companies should not use their financial advantage to extort a favorable settlement from the plaintiff. Some insurance companies make the plaintiff wait while unpaid bills accumulate, and then use that financial pressure as a bargaining chip. That being said, Massachusetts law imposes a rather high standard of proof in a bad faith claim. The plaintiff must prove conduct that is “immoral, unethical, oppressive, or unscrupulous” which “causes substantial injury.” The conduct must rise to the level of “rascality that would raise the eyebrow of someone inured to the rough-and-tumble world of commerce.”

The Massachusetts court punished Commerce Insurance Company for its stubborn intransigence. If the insurance company is dragging its feet in settling your claim, a similar action may be appropriate. Call me and I’ll examine your case for free.