Claim Handled by Grocery Store’s Self-Insured Corporate Owner Was Not Subject to Laws Pertaining to Insurance Companies – Bingham v. Supervalu

Under Massachusetts law, insurance companies have an obligation to act promptly, fairly, and equitably with regard to the settlement of litigation between its insured and those who make claims against the insured in situations in which the insured’s liability is reasonably clear. They also have a duty to refrain from unfair or deceptive practices. Naturally, questions sometimes arise as to whether an insurance company has acted in accordance with the law.

In the recent federal case of Bingham v. Supervalu, another question arose:  was the defendant actually “in the business of insurance” so that it should be included in the provisions of the law pertaining to insurers?

The Underlying Lawsuit in Massachusetts State Court

The event that gave rise to several years of litigation happened in January 2006. An elderly customer was shopping at Shaw’s Supermarket when she was struck by a motorized cart. At the time of the accident, Shaw’s was a subsidiary of Albertson’s. As a result of the accident, the customer’s heel was lacerated in the area of her Achilles tendon. The injury caused a rapid decline in the customer’s health, and she died in September 2006.

Prior to her death, the customer filed a negligence lawsuit against Shaw’s in state court. By the time of the suit, Albertson’s had been acquired by Supervalu. Pursuant to the relationship between Shaw’s and Supervalu, Supervalu had the authority to negotiate and settle claims on Shaw’s behalf.

The executor of the customer’s estate was substituted as the plaintiff. Judgment was entered against Shaw’s, due to its failure to timely respond to interrogatories. Later, the court awarded damages to the estate. Supervalu then appealed the case to the Appeals Court of Massachusetts, which, in 2010, affirmed the lower court’s award of damages to the estate. Supervalu then threatened an appeal to the state supreme court, after which the estate accepted a settlement offer of slightly less than the original award.

Proceedings in the Federal Courts

In 2013, the estate brought suit against Supervalu in state court, and Supervalu removed the action to federal district court. In the suit, the estate claimed that Supervalu had violated Mass. General Laws Chs. 176D and 93A by its “willful” and “frivolous” delay in resolving the negligence lawsuit between the estate and Shaw’s. The district court granted Supervalu’s motion for summary judgment.

On appeal to the federal circuit court of appeals, the court affirmed. According to the court, Supervalu qualified as self-insured because it opted to bear the full risk of loss stemming from uninsured claims made against itself and its subsidiaries. As a result, Supervalu was exempt from Ch. 176D. The court noted that, during the pendency of the state court lawsuit, Supervalu owed an insurance agency, but the court found that the agency had no involvement in the adjustment, negotiation, or litigation of the estate’s claim.

To Speak to a Massachusetts Injury Lawyer

In this case, what started out as a rather routine premises liability accident spurred not one but two lengthy lawsuits, resulting in the case still being in litigation almost a decade after the event that gave rise to the suit. This clearly illustrates the point that insurance companies don’t like to pay settlements, and businesses fight hard to avoid judgments. If you have been hurt in a store or other business, you need to speak to an experienced premises liability attorney who will fight hard to see that justice prevails in your case. Call the Law Offices of John C. Manoog, III, at 888-262-6664 today to discuss your Cape Cod, Hyannis, or Plymouth injury case.

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