Mass. Appeals Court Upholds Liability for Delayed Disability Benefits

The Massachusetts Appeals Court affirmed insurer liability for unreasonably delaying disability benefits.

In Constantino v. Paul Revere Life Insurance Co., the Massachusetts Appeals Court affirmed a judgment holding the insurer liable under Chapter 93A for unreasonably delaying disability benefits. The plaintiff sought presumptive total disability benefits under a policy covering the total and irrecoverable loss of use of both feet.

Medical evidence described the plaintiff's feet as paralyzed and functionally useless, yet the insurer denied the claim because the plaintiff could still walk with braces and a walking stick. After nearly two years without meaningful investigation or response to the claim, the plaintiff hired counsel and threatened litigation. Subsequently, the insurer reconsidered the evidence, reversed its denial, and retroactively paid benefits.

The trial judge criticized the insurer's "indefensibly aggressive interpretation of the policy" and failure to conduct a meaningful investigation for approximately two years. The Appeals Court similarly condemned the insurer's repeated shifting of policy interpretation and refusal to investigate the claim properly.

The court underscored that the insurer violated G.L. c. 176D, 3(9)(c) and 3(9)(f) by not adopting reasonable standards for prompt investigation and failing to promptly, fairly, and equitably settle the claim once liability became reasonably clear. Importantly, the insurer's eventual payment did not absolve it from liability since it failed to make a qualifying prompt and fair settlement offer within 30 days or respond adequately to the plaintiff's demands.

This ruling highlights the risks insurers face under Massachusetts law when they unreasonably delay or deny claims without sufficient basis. It affirms that consumer protection laws like Chapter 93A impose strict standards for timely and fair claims handling.