Articles Posted in INSURANCE BAD FAITH

This is the first of a two part Blogpost, where Massachusettts Personal Injury Attorney, Keith L. Miller, reviews and analyzes a recent First Circuit U.S. Court of Appeals decision. The case involves an employee disability claim and issues pertaining to a perceived conflict of interest.

liberty mutual.jpgIn this case, the U.S. First Circuit Court of Appeals remanded a case to the District Court, where an employee challenged the denial of her request for long-term disability benefits. The Plaintiff alleged that the employer’s insurer, who denied her benefits, both reviewed and decided on her eligibility and was responsible for the payments, which was a conflict of interest. She also alleged that a physician referral service the insurer utilized was biased, given it generated large revenues from its reviews, and usually recommended in favor of the employer.

The Court justified the remand, based on a recent decision of the United States Supreme Court in Metropolitan Life Insurance Co. v. Glenn, 128 S. Ct. 2343 (2008). The Supreme Court had previously reviewed a denial of benefits by an administrator that passed judgment upon and paid claims under an ERISA-regulated plan.  It concluded that courts should recognize that a conflict exists whenever a plan administrator, whether an employer or an insurer, is in the position of both adjudicating claims and paying awarded benefits.

fibromylagia.jpgIn this case, in 1996 a primary care physician had diagnosed the plaintiff employee as suffering from fibromyalgia, which is a disorder involving muscle and connective tissue pain. Patients note heightened and painful response to gentle touch, as well as debilitating fatigue, sleep disturbance, and joint stiffness. The plaintiff was a group leader employed by GenRad, Inc. In spite of the diagnosis, she continued to work. At the time she was covered under a short-term and a long-term disability insurance plan supplied by Defendant, Liberty Life Assurance Company (Liberty), who also administered both plans.

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In this two part Blogpost, Boston Accident Lawyer, Keith L. Miller, reviews and analyzes a First Circuit U.S. Court of Appeals decision, which considers insurance coverage issues for an accident involving a man whose arm was severed in a wool picking machine, while engaged as a contract worker for a Western Massachusetts recycling company.

PART ONE :  PERSONAL INJURIES FROM CONTRACT WORKER’S SEVERED ARM MAY NOT BE COVERED BY INSURANCE

On August 23, 2004, Raul Torres suffered serious personal injuries when his arm was severed in a wool picking machine while working at Carrabassett Trading Company  “CTC”) in North Oxford, Massachusetts. CTC is a recycling company, which collects and recycles waste fiber from textile mills, bales up the material and sells them to other manufacturers. 

wool picking machine.jpgTorres was not an employee of CTC. Rather, his services were provided to CTC by his employer, Venturi Staffing Company, Inc (“Venturi”). Because CTC has an inconsistent demand for its products, it hires such contract workers to supplement its permanent staff of five. Torres filed suit against CTC in Massahusetts state court.

CTC’s insurer filed a federal court action seeking a declaration that there was no coverage for the injuries due to “employer” exceptions in the company’s liability policy. The Court reversed a district court ruling in favor of the insurer, and remanded the case for further proceedings.

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This Blogpost by Boston Personal Injury and Accident Laywer, Keith L. Miller, anaylzes a battle between insurers over costs of construction accident.

Following a construction site accident where an insurer of a subcontractor refused to defend the general contractor, who then successfully filed a declaratory action to force the subcontractor’s insurer to share in the defense and settlement costs of the action, the Massachusetts Supreme Judicial Court has refused to permit the general’s insurer to recover the attorney’s fees incurred in successfully bringing its declaratory judgment action.
 
zurich.jpgIn January of 2001 a worker fell and suffered injuries while employed on a project in Uxbridge, Massachusetts. A year later he brought a negligence action against the general contractor and another subcontractor on the project. The general contractor was insured under a general liability insurance policy with Zurich American Insurance Company (Zurich). The subcontractor also had a policy issued by Worcester Insurance Company (Worcester), and was required by contract to list the general as an additional insured.

Upon filing of the complaint, the general called upon the subcontractor and Worcester to defend. They refused and Zurich defended. Zurich also brought a declaratory judgment action in the general’s name, seeking indemnification from the subcontractor and Worcester for their refusal to defend. Ultimately, the negligence case settled, with the general contributing $75,000 to the settlement.

The general contractor prevailed in the declaratory judgment action and Worcester was ordered to pay one half of both the settlement amount and the costs of defending the negligence action. However, the general contractor also sought an award of the attorney’s fees incurred to file and prevail in the declaratory judgment action, even though it was evident that it was Zurich who had paid the fees. The Superior Court judge denied the request and the general contractor appealed.

The SJC affirmed and discussed at length its reasoning. Massachusetts generally follows the customary approach to the award of attorney’s fees in civil litigation, known as the “American Rule”. In the absence of some statute or other rule, successful litigants must nonetheless pay their own attorney’s fees and expenses.

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(This is the second post of a blog, from Boston Personal Injury Lawyer, Keith L. Miller, which considers protections afforded under a Massachusetts statute intended to protect non-profit entities from liability from accidental personal injury)

PART TWO – GL C. 231, S. 85V CONSIDERED 

General Laws c. 231, § 85V limits the liability of non profit sports programs to third parties for accidents and injuries arising from the conduct of such programs. However, the limit on liability is not absolute. Specifically, liability can arise for conduct relating to the care and maintenance of real estate which the association uses in connection with a sports program or related activity (G.L. c. 231, § 85V(iii)).

goal-post2.jpgThe Plaintiff articulated two reasons why the immunity provided by the statute should not apply to his facts. First, he contended that the statute did not apply because he was neither a participant, nor a spectator at an organized game or practice at the time of the accident. The Court rejected this theory on the basis that the immunity was not controlled by the status of the individual who was injured, but rather on the question of what was the status of the organization. If the injury arose from the conduct of the sports program, the immunity applied. Here, the placement of the goal posts on the field was irrefutably a part of the conduct of its soccer program.

The Plaintiff also contended that the real estate exception in the statute imposed liability on the association. He argued that the associations were negligent in their care and maintenance of Haskell Field by permitting improperly secured goal posts to be present on the property, and that this dangerous condition caused him serious harm. The Court rejected this argument, and an analysis that followed the common law duty of landowners to invitees with regard to unnatural and dangerous conditions on the premises.

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Accidents often arise out of situtions where someone’s conduct causes injury to another, and it appears that the act causing injury was carried out intentionally. The most obvious type of situation is an assault and battery. Someone hits you in the face with their fist and causes injury, requiring medical treatment. You obtain treatment, seek the services of an attorney and bring a claim. The individual who caused the injury usually resides in a home and may have liability insurance coverage under the policy insuring the home, even if someone else owns the house. 

Most homeowners’ insurance policies provide insurance coverage for household members for their conduct both within and outside of the home. However, there are usually exclusionary provisions, which preclude coverage for intentional acts, and more specifically, for intentional illegal or criminal acts.

At first blush, one might assume that in all such situations, where an act appears to be intentional, there will be no coverage. However, Courts in Massachusetts and elsewhere have interpreted insurance policies to preclude coverage only where there was an intent to cause a specific injury, rather than simply if the act itself was intentional.


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Thus, for example, if a group of children were throwing snowballs at one another in the yard, obviously intending to hit one another, and a snowball happened to hit a child in the face, causing injury to an eye, for example, it is likely that there would be insurance coverage for the accident. The act was intentional, but there was no intent to cause the specific injury. In this situation, there would likely be coverage afforded.

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PILGRIM INSURANCE COMPANY vs. MOLARD

No. 07-P-1676, December 16, 2008.

In a two car motor vehicle accident where a passenger in a taxi cab sustained injuries, which did not become apparent until after she had returned home, and thereafter, despite reasonable efforts, was not able to identify the operator of either the taxicab or the second car in the accident, The Massachusetts Appeals Court has reversed a lower court judgment denying uninsured motorist coverage from a policy issued to the injured girl’s mother.

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The passenger was an eighteen year old girl who was injured while riding in a taxicab in October, 2002. She was unable to identify either the taxi driver or the driver of the other vehicle involved in the accident, and therefore, because she lived at home with her mother, she filed a claim seeking uninsured motorist benefits under her mother’s policy. The insurer declined coverage on the basis that there was no hit and run accident and that it had been prejudiced by girl’s late notice of the claim. It then filed a declaratory judgment action in Superior Court and the girl counterclaimed. The lower court judge granted judgment for the insurer finding that there was a “hit and run accident” as defined under the policy, but that the late notice had prejudiced the insurer. The Appeals Court, however, concluded that genuine issues of material fact precluded entry of judgment for either party. More specifically, it found that a passenger in an at-fault vehicle who, unaware of her injuries or incapacitated by them at the time, leaves the vehicle without obtaining identifying information about the vehicle, may be entitled to recover under the hit-and-run provisions of the policy.

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Following an accident resulting in personal injuries, the injured party inevitably will come into contact with representatives of one or more insurance companies, either their own or the company that insures the party responsible for the accident. There will be an adjuster or adjusters who want to ask you questions, and often want to record or memorialize your answers. No matter how friendly or helpful they appear, the insurance adjuster is not your friend. His/her job is not to minimize the exposure of their company, regardless of whom they represent.

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In certain instances, the misconduct of the insurer rises to a level of behavior, which is not only inappropriate, but may give rise to a separate and actionable claim. In Massachusetts and almost every other state, there are laws, which specify acts or practices of insurers, which are unlawful. These unlawful acts are often called unfair claims settlement practices or INSURANCE BAD FAITH.

Because insurers are required to deal fairly with claimants, when it is clear that someone is responsible for your injuries, the insurer must make reasonable offers of settlement. When the insurer refuses to offer to settle a case when liability is clear, the law permits claimants to sue the insurer directly.

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WEST LAKE ACADEMY v. THE TRAVELERS INDEMNITY COMPANY et al.
U.S. Court of Appeals, 1st Circuit, Nos. 07-2190, 07-2204

The U.S. Court of Appeals for the First Circuit has upheld a decision of the District Court that an general commercial insurance policy issued to a mental health care provider did not provide coverage for the sexual misconduct of one of its employees, who had sexual intercourse with a minor female patients, based on a sexual molestation exclusion in the policy.

The female minor patient had been involuntarily committed to West Lake Academy, a facility for mentally ill teenagers between 1993 and June 1995. In June 1995, a West Lake employee transported the patient alone between West Lake and a bus station on several occasions. More than once, the employee had sexual intercourse with the patient, who became pregnant and had his child.

The patient successfully sued the employee father and another West Lake employee, a supervisor, who she alleged had negligently failed to supervise the father of the child and recovered a large judgment against West Lake and the employees. National Union Fire Insurance Company provided a commercial general liability insurance policy to West Lake and their employees.

After the judgment, National Union refused to pay on the claim and in July, 2000, filed suit in the District Court in Massachusetts against its insureds, seeking a declaratory judgment limiting its exposure under the policy. The National Union policy included an exclusion, entitled “Abuse or Molestation Exclusion,” which limited coverage to $100,000 on claims based on abuse or molestation of anyone in the custody of the insureds.

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Keith L. Miller is a Boston civil trial attorney licensed to practice in Massachusetts and New York. He has been litigating in state and federal courts in Massachusetts, New York, New Hampshire, Rhode Island and Vermont for nearly thirty years. He graduated from Yale University in 1976 and from University of Virginia Law School in 1980. He began his legal career in Paris, France and is fluent in French. In 1981 he returned to the U.S. and opened his own law practice in Cambridge, Massachusetts. He spent several years in the late 1980’s with a boutique Boston litigation firm, where he handled all the firm’s personal injury work. In 1987, he left the firm to reopen his own practice and has maintained his own law practice ever since.

While Keith L. Miller has trial experience in many practice areas (including criminal, divorce and probate), his primary focus has been civil trial practice, with an emphasis on plaintiffs’ personal injury and products liability claims. Other practice areas include insurance bad faith, legal malpractice, construction law and general commercial litigation, representing both plaintiffs and defendants.

Keith L. Miller brings a unique approach to business litigation. Unlike most firms, which bill hourly fees for services and demand large up front retainers, he is often prepared to represent claimants on a contingent fee basis, receiving payment only upon a successful recovery by trial or settlement.

While not every claim is appropriate for contingent fees, Keith L. Miller is prepared to review and evaluate potential claims at no initial cost to the client, and when appropriate, will enter into fee agreements contingent at least in part on the success of the case. This permits litigants to prosecute or defend claims knowing from the outset what it will cost to proceed with a claim.

The key to success in litigation, and in particular contingent or fixed fee cases, is objective and realistic early evaluation of the merits of a claim. This requires cooperation from the client in providing all the facts and producing all the relevant documents from the outset. There should be no surprises after the commencement of an action.

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O’CONNOR vs. MERRIMACK MUTUAL FIRE INSURANCE COMPANY
No. 06-P-1750.November 24, 2008

After a fire destroyed a commercial building, a dispute arose between the insurer and the insured concerning the methodology used by the insurer to value the loss. The insured then brought an action against the insurer asserting numerous tort and contract claims as well as violations of G.L. c. 175, § 181, and G.L. c. 93A. After a jury-waived trial, the judge determined, based on the terms of the insurance policy, that the insurer had a choice of methods to calculate the loss and found for the insurer on all claims. The Appeals Court affirmed the lower court decision.

The insured had purchased an $800,000 property and casualty insurance policy. Under the terms of the policy, coverage on the building would be determined on a actual cash value basis up to the amount of the policy limit of $800,000. Although the policy did not define the term “actual cash value,” it expressly provided that the policy contained all the agreements between the parties concerning the insurance afforded and that the terms of the policy could be amended or waived only by endorsement issued by the insurer.

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