About 24 years ago I won a trial on behalf of Liberty Mutual in an insurance bad faith action in which plaintiff’s counsel sought to multiply an underlying multimillion dollar judgment against the insured based on an alleged bad faith failure by the insurer to settle the tort claim. At the time, it represented – as best as I could tell – the first and best effort by a leading Massachusetts plaintiffs’ firm, Keches Law Group, to treble, based on bad faith under Massachusetts General Laws Chapter 93A, an underlying large judgment against an insured defendant. Had I lost, at the time it would have resulted in the largest Chapter 93A judgment against an insurer for bad faith failure to settle a claim in Massachusetts history, as well as established new theories of liability in this regard that would instead not be established until many years later, in a major case by a leading Big Law firm against a different carrier.

I bring this up because the wind brings news now of a $90 million bad faith verdict against Liberty Mutual obtained by the same Keches firm, pursuing the same goal, decades later, of having a trial court treble a large underlying judgment against an insured. Under Massachusetts law, an insurer that violates the claim practices statute in bad faith is subject to an award of damages equal to double or treble the verdict entered originally against the insured – that verdict here was over $26 million, well above the commonly accepted threshold to qualify as a nuclear verdict. The best sources I have found for reading about the verdict are this LinkedIn post and this PR distribution by the Keches firm.

As you can tell from this history, the plaintiffs’ bar in Massachusetts has clearly gotten better over the past quarter century at prosecuting these types of claims. Have insurers and their lawyers gotten better at defending these types of claims over that time period as well? I am not so sure about that. One of the things the plaintiffs’ bar has done a very nice job of over the past couple of decades is deciding which cases to press forward with in the interest of creating new law favorable to claimants on bad faith, as opposed to which ones to simply settle. I am not convinced that insurers and their counsel have successfully matched them in that regard, as many of the decisions that have created poor law for insurers over the years on bad faith in Massachusetts involve cases that, looking closely at their facts, probably should not have been presented by insurers to appellate panels with the power to craft and shape the law in this regard – they likely should have been settled long before that could occur. There are at least two or three that jump out at me in this regard even as I write this, and I suspect other lawyers would have their own list of different cases in this regard.

To be both fair and clear, I should note that much of this is only apparent in hindsight, after the appellate decisions have been issued. And more importantly, the current state of play in this regard is not all (or even mostly) attributable to insurers and their counsel allowing bad cases, with bad facts, to be used by the plaintiffs’ bar and the courts to make bad law for insurers – with the result that a nuclear verdict can now be multiplied into an additional $90 million verdict against the insurer itself. Much of it is instead due to the fact that, in the end, there is no and cannot be perfect claims handling on any claim, if you define perfection in this regard as being devoid of any decisions or omissions that a judge or claimant could later criticize as erroneous and harmful to the claimant in some way. Claims handling is an inherently human activity, involving an endless series of judgment calls made in circumstances of incomplete information, in the context of an adversarial relationship with a claimant who typically has no motivation to be completely open with an insurer on the facts or other issues of a claim.

There’s an argument to be made that we have reached a point where Chapter 93A and Massachusetts bad faith law penalize insurers, to a disproportionate extent, for routine and typical errors in claims handling, treating them too often as representative of subjective bad faith sufficient to justify massive bad faith judgments. It is probably well past time for the pendulum to swing back the other way, towards accepting that mistakes will routinely occur in claims handling and that a series of errors is not enough to justify a large bad faith award, absent evidence sufficient to fairly demonstrate a subjective intent on the part of an insurer to lowball or refuse, for nefarious reasons, to settle. At this point in the history of bad faith and Chapter 93A law in Massachusetts, large bad faith verdicts can be and are granted based on much less than that.

This is not intended to necessarily be a criticism of the decision itself or the Court’s deep analysis of the evidence and thorough consideration of the relevant case law (in fact, the court cites three or four of the decisions from my own cases over the years, and my understanding of the nuance of those cases makes me confident in commenting on the high quality of the Court’s analysis of existing law). It is more intended to suggest that the current state of the case law, which the Court accurately explained and applied, may have swung a little too far in one direction over the years.

Indeed, the Court itself acknowledged that the size of the award it was required under existing law to enter raises questions and concerns about the current state of the law in this regard. And so perhaps, on appeal, this decision may be the right lever for redirecting the course of the case law on these issues.