MASSACHUSETTS BAD FAITH STATUTE DOES NOT INCLUDE PRE-JUDGMENT INTEREST IN THE MULTIPLIER

On Behalf of | Apr 8, 2021 | Insurance Law

The Massachusetts Supreme Judicial Court held in Anderson v. National Union Fire Insurance Co. Pittsburgh, PA 476 Mass. 377, 67 N.E. 3d 1232 (2017) that post-judgment interest on a judgment against a driver and owner were not part of the damages to be trebled under Massachusetts Bad Faith Statute. The facts of the Anderson case are not specific to the Court’s ruling. Suffice it to say that the judge concluded that the insurance company’s and claim representative’s misconduct involved in the case warranted the maximum available sanctions both as punishment for what transpired and as a deterrent to similar conduct in the future. As a result, the trial judge awarded Plaintiffs treble damages under Massachusetts Bad Faith Statute (G.L.c 93A and G.L.c. 176D) for their “egregious,” “deliberate or callously indifferent” actions, “designed to conceal the truth, improperly skew the legal system and deprive the [claimants] a fair compensation for their injuries for almost a decade.”
Under the statutory unfair claims framework, if the fact finder concludes that an insurance company has failed to effectuate a prompt, fair, and equitable settlement, which causes injury, the Plaintiff is entitled to the greater of actual damages or statutory damages of $25.00. See G.L.c. 93A, Sect. 9(3). Where the insurer’s action was “willful or knowing” the judge is required to award multiple damages. The judge is required to award punitive damages of up to 3 but not less than 2 times the actual damages in the underlying action. The statute also provides that for the purposes of the statute, the amount of actual damages to be multiplied by the Court shall be the amount of the judgment on all claims arising out of the same and underlying transaction or occurrence. See Anderson 477 Mass. at 381, 67 N.E. 3d at 1236-1237.
The question before the Anderson court was whether the amount of the judgment that served as the measure of actual damages to be doubled or trebled included the amount of any post-judgment interest that accrued on that judgment before it was paid. Id.
The Court in Anderson began its analysis of the question by noting that post-judgment interest was not an element of compensatory damages. Rather, post-judgment interest served to provide compensation to the prevailing party for delay in payment after a non-prevailing party’s underlying obligation had been established. 476 Mass. at 383-384, 67 N.E. 3d at 1238 (citing Chapman v. University of Mass. Med Center 423 Mass. 584, 587, 670 N.E. 2d 166 (1976). The Court found that post-judgment interest was separate and distinct from the underlying amount of the damages established in the litigated matter.
The trial judge in Anderson had included post-judgment interest in the amount to be trebled based on the Court’s determination that the “maximum available sanction” was warranted. Because of this, the Massachusetts Supreme Judicial Court considered the Plaintiff’s contention that the amount of the judgment needed to be multiplied properly to include post-judgment interest. For several reasons, the Court in Anderson concluded that the Massachusetts Legislature did not intend to include post-judgment interest in the amount of the judgment to be multiplied in order to protect parties against bad faith appeals by insurance companies. Instead, the Massachusetts Legislature established the statutory 12% post-judgment interest rate specifically to protect prevailing parties during the appellate process. Several other statutory and procedural means existed to discourage frivolous or bad faith appeals.
The Court in Anderson concluded that post-judgment interest was not to be included within the multiplier under Massachusetts Bad Faith Statute.

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