The Massachusetts Appeals Court has upheld a Superior Court decision that defendant, Norfolk & Dedham Mutual Fire Insurance Co., did not engage in unfair settlement practices in its handling of a personal injury claim. The court also reversed the portions of an amended judgment awarding damages, prejudgment interest, costs and attorney’s fees for Norfolk & Dedham’s failure to offer postjudgment interest.
The case, Mark Silva vs. Norfolk & Dedham Mutual Fire Insurance Company, comes after a series of events leading the plaintiff, Mark Silva, to file a personal injury claim against Norfolk & Dedham’s insured, Dorothy McQuinn, which Norfolk & Dedham refused to pay after investigating the claim.
On March 9, 2005, Silva, a tow truck operator, was assisting a vehicle stuck in a snow drift in Provincetown, Mass., according to the court decision document. Silva had pulled his truck to the side of the road and hooked up a tow line to the disabled car. The road conditions were “snowy, slushy, and icy,” the decision said.
McQuinn was driving with her windshield fogged up, obstructing her view of the road, when she rear-ended Silva. The next day, Norfolk & Dedham, McQuinn’s insurer, was informed of the collision and opened a claim. McQuinn had bodily injury coverage of $250,000 per person and $500,000 per accident. However, the court decision stated that Norfolk & Dedham’s initial efforts to obtain information regarding Silva and his injuries were mostly fruitless.
Silva’s automobile insurance carrier and his workers’ compensation carrier were initially reluctant to disclose to Norfolk & Dedham any information from their own investigations, the decision document said, adding that Norfolk & Dedham did not obtain access to Silva’s medical records until more than three years after the accident and after Silva filed his personal injury suit against McQuinn.
As Norfolk & Dedham gathered information, it began to cast doubt on the genuineness of Silva’s claimed injuries.
“The question…is whether [Norfolk & Dedham] refused to pay the claim without conducting a reasonable investigation based on all available information,” according to the Superior Court judge.
The appeals court agreed with the judge that Norfolk & Dedham had conducted a reasonable investigation of this matter.
Six days after learning of the accident, Norfolk & Dedham assigned an independent adjuster to investigate the claim. Through its own claims adjusters and other sources, including private investigators, Silva’s workers’ compensation carrier, Silva’s automobile insurance carrier and Silva’s discovery responses and deposition testimony, Norfolk & Dedham also gradually acquired information that gave it “a reasonable basis for regarding as suspicious” Silva’s claim, the court document said.
Norfolk & Dedham additionally looked to the opinions of Dr. David Gushue, a biomechanical engineer, and Dr. Mark Weiner, a neurologist, regarding the cause and extent of Silva’s injuries.
After Gushue and Weiner reviewed evidence of the accident and Silva’s medical records, according to Gushue, the impact of the accident would have generated “the same level of force [Silva] experiences on a daily basis while going about his usual routine,” the court document stated.
Indeed, a week after the accident, McQuinn told a Norfolk & Dedham claims adjuster “that she could not imagine how [Silva] could possibly have been injured.”
Eight days later, Norfolk & Dedham received information that after the accident, Silva had not only towed McQuinn’s car from the scene, but also “returned to complete the original tow he had been working on when the accident occurred,” the court document said.
This led Norfolk & Dedham to uncover multiple other reasons to be skeptical of Silva’s damage claims and the severity of his injuries following its investigation.
Within one month of the accident, a private investigator informed Norfolk & Dedham that Silva “was observed at [his automobile service station] and it appeared he was working a very full and busy schedule.”
Norfolk and Dedham’s skepticism continued when “Silva waited a year after the accident to claim disability from performing work as a tow truck driver, continued to work a full towing schedule while claiming he could only perform desk work, [and] sought workers’ compensation benefits while collecting unemployment benefits,” the court document said.
Norfolk & Dedham also learned through the investigation that Silva’s workers’ compensation insurer questioned the existence of causation between the accident and Silva’s claimed injuries.
The court document stated that “there was no testimony at trial identifying specific steps that Norfolk & Dedham should have taken but did not in investigating Silva’s bodily injury claim,” and that Norfolk & Dedham “had a reasonable basis for resisting liability.”
Silva argued, however, that some of the evidence relied on by the judge was not known to Norfolk & Dedham until after the judgment in the underlying personal injury trial and could not have been part of Norfolk & Dedham’s basis for doubting Silva’s claim. Specifically, Silva complained that the judge should not have considered certain bank and tax records showing wages and benefits Silva received in 2005, as well as investigative reports and summaries of surveillance indicating that Silva continued to work after the accident.
The court found that the judge was not wrong to consider this evidence, which served to confirm that Norfolk & Dedham had a reasonable basis to resist settlement and was cumulative of the facts Norfolk & Dedham had developed during its investigation.
That said, the Superior Court judge also found that after Silva obtained a substantial jury verdict on his personal injury claim, Norfolk & Dedham violated a section of Massachusetts law when it offered to settle the claim for the policy limit without also offering postjudgment interest, although the violation was not willful and knowing enough to warrant punitive damages.
Norfolk & Dedham argued it was incorrect as a matter of law for the judge to find a violation, while Silva argued the judge was wrong to find that the violation was not knowing or willful.
The court sided with Norfolk & Dedham in this matter.
When Silva and Norfolk & Dedham agreed to the terms of a settlement of Silva’s claims against McQuinn, Norfolk & Dedham paid the postjudgment interest due to Silva.
Correction: An earlier version of this story said the decision was rendered by the Massachusetts Supreme Court, not the Massachusetts Appeals Court. Insurance Journal regrets the error.
Was this article valuable?
Here are more articles you may enjoy.