Federal Court in Massachusetts Denies Summary Judgment to Claims Service that Refused to Settle Nursing Home Negligence Case

Many civil lawsuits are filed each year in the state and federal courts – far too many to be handled efficiently by the court system if a full-blown trial is required in every case. For this and other reasons, settlements are highly encouraged.

Under Mass. Gen. Laws ch. 176D, § 3(9)(f), an insurance company has a legal obligation to effectuate a “prompt, fair, and equitable settlement” of claims in which liability is clear. When this does not happen, Mass. Gen. Laws ch. 93A, § 9 allows the person whose rights were affected by the violation of the law to bring a civil action against the insurance company to recover damages.

Facts of the Case

In a recent case heard in the United States District Court for the District of Massachusetts, the plaintiff was the administrator of the estate of a woman who died while a resident at a nursing home in 2008. At the time of her death, the resident was 92 years old. The administrator brought a negligence and wrongful death lawsuit against the nursing home operator and a certain physician. The physician settled his part of the claim for $250,000, and the remaining claims proceeded to a trial by jury. The jury found that the defendant was grossly negligent and awarded $1,425,000 in compensatory damages, $12,514,605 in punitive damages, pre-judgment interest, and costs. After protracted negotiations between the parties both pre-trial and post-trial, the insurance company for the nursing home finally settled the case for $16 million.

The plaintiff sued the defendant claims management service in federal court, alleging that the defendant violated chs. 176D and 93A by failing to make a reasonable attempt to settle the negligence and wrongful death lawsuit arising from the woman’s death either pre-trial or post-trial. Notably, the claims adjuster was only given $125,000 in settlement authority prior to trial. The defendant moved for summary judgment, urging that it made a “prompt, fair, and equitable settlement offer” within the safe harbor period set forth in ch. 93A.

Resolution of the Issue

The court denied the defendant’s motion for summary judgment, rejecting the defendant’s argument that it was not engaged in the business of insurance as required by the statute. According to the court, the defendant was hired by the nursing home’s liability insurance company to negotiate and settle claims on its behalf, thus subjecting the defendant to the requirements of the statutes at issue. The court further found that summary judgment was inappropriate because “the record could reasonably support a conclusion that the defendant knowingly and willfully forced the plaintiff into unnecessary litigation when liability was reasonably clear.”

Talk to a Cape Cod Wrongful Death Attorney

Wrongful death lawsuits and negligence cases arising from wrongful conduct by a nursing home can result in substantial damages. Even though the claims management service refused to recognize the true value of the underlying claim in the case discussed above, the jury awarded not only compensatory damages much greater than the adjuster’s settlement authority but also millions of dollars in punitive damages designed to “send a message” for the nursing home’s actions. If you believe a loved one has been a victim of nursing home negligence, the Law Offices of John C. Manoog, III, are here to help you evaluate your case. Call us at 888-262-6664 to schedule a free consultation in our Plymouth or Hyannis offices.

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