Claims Manager Off the Hook on $14 Million Excess Verdict
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Claims Manager Off the Hook on $14 Million Excess Verdict

The administrator of a nursing home resident's estate sued a third-party administrator for the nursing home's liability insurer (TPA) under Massachusetts’ unfair claim-settlement practices law. The suit alleged the TPA failed to make any kind of reasonable attempt to settle the underlying wrongful-death case which resulted in a judgment for $1,425,000 in compensatory damages and $12,514,605 in punitive damages. The First Circuit held good faith does not require perfection and the TPA made reasonable and prompt efforts to settle the claim with its highest offer being $250,000. Therefore it was not liable for the excess verdict based on bad faith. The Court also found that the district court in assuming, without deciding, the claims management firm was “in the business of insurance” within the meaning of the statute, did not err when it found liability was not reasonably clear on either the wrongful death claim or the conscious pain-and-suffering claim.

Calandro v Sedgwick Claims Management Services Inc