Bad Faith

By Steven Plitt | August 1, 2019

The First Circuit U.S. Court of Appeals recently upheld a district court’s ruling that an insurance company’s claim administrator’s handling of a medical malpractice lawsuit was in conformity with Massachusetts statute regarding reasonable settlement.

In Calandro v. Sedgwick Claims Management Services, Inc., 919 F.3d 26 (1st Circ. 2019), Sedgwick, the third-party administrator, disputed causation for the injury while making settlement offers during the pendency of the malpractice case. The facts demonstrated that Sedgwick conducted a timely and good faith investigation by engaging defense counsel and an independent adjuster. The independent adjuster was required to make periodic reports as the case progressed. A medical expert was retained who contested medical causation. Additionally, settlement offers were periodically made. Against this backdrop, the Court held, factually, that Sedgwick did not violate Massachusetts law.