An Appeals Court in Massachusetts affirmed a Supreme Court ruling that Norfolk & Dedham Mutual Insurance Company (N&D) did not participate in deceptive settlement practices in a personal injury case involving plaintiff Mark Silva. In addition, awards were reversed for damages, interest, and attorney fees for N&D's failure to include post-judgment interest in a settlement offer. Silva was operating a tow truck amid treacherous winter conditions in Provincetown, MA when Dorothy McQuinn, a passing driver whose vision was obstructed, rear-ended his truck. N&D was McQuinn's insurer and investigated the claim but refused to pay based on their findings.
McQuinn's policy provided coverage for bodily injury of up to $250,000 per person and $500,000 per accident. N&D claims that their efforts to gain access to the relevant documentation were limited by Silva's auto insurance provider and workers' compensation carrier. They were not able to view Silva's medical records for a period of three years. As N&D began to acquire information about the nature of the injuries, they began to suspect that Silva's injuries had been exaggerated. The court was to determine if N&D failed to conduct a sufficient investigation in their decision to refuse to pay the claim.
Within a week of the accident, N&D had an adjuster look into the matter, along with private investigators. Two experts, Dr. David Gushue and Dr. Mark Weiner, analyzed the accident and felt that the impact of the accident was fairly minor. Silva's report indicated he had three herniated disks, yet only one that did not heal. After the accident, Silva proceeded to complete the original tow he had been assigned at the time of the accident, and also then towed McQuinn's vehicle. One month after the incident Silva was apparently working a full-time schedule again.
Silva claimed that N&D was simply claiming that they doubted Silva's injuries in order to avoid paying the claim and questioned their surveillance reports. The judge in the Appeals Court stated that the evidence was properly considered. Once N&D and Silva agreed on a settlement, they did pay the post-judgment interest due.
During the pendency of the personal injury verdict, Silva expressed interest in settling the case for $1,011,873, N&D countered with an offer of $250,000, which was the policy's limit. The post-judgment interest was not included in the counteroffer and the original judge determined it was a violation, yet that it was not willful and intentional.
The judge cited a prior case that post-judgment interest is to be included in settlement offers, even if the judgment exceeds the policy limits. Further, if the insurer does not unconditionally offer the limit of the policy to pay the judgment, then the insurer is liable for the interest based on the entire judgment. The court found the offer by N&D to be proper. When the two parties reached a settlement agreement, N&D did pay the appropriate interest, and the court found them to not be acting deceptively.