Bad Faith: Calandro v. Sedgwick Claims Management Services Inc.

The First Circuit recently held that an insurance claims adjuster did not act in bad faith in handling a wrongful death suit that yielded a $16 million verdict, finding that the adjuster made several “reasonable and prompt” offers to settle. While Chapter 176D creates a duty to settle when liability and damages become reasonably clear, “every case has twists and turns, and an insurance carrier is not to be held to a duty of prescience.”

After trial, the plaintiff attempted to “add to the spoils of that victory” by suing a claims-management firm for bad faith. “In this venue, the plaintiff comes out swinging. Hoping to land a knockout blow, he pummels many of the district court’s conclusions.” “The plaintiff is punching above his weight.”

The Court held that liability was not reasonably clear and that the adjuster did not act in bad faith. “A party who chooses to hold its litigation adversary to the rules of discovery can scarcely be said to be exercising bad faith by doing so.” “Perfection is not the standard that Chapter 176D imposes upon the handling of a claim,” and “in the absence of an antecedent finding that a Chapter 176D violation had transpired, no derivative liability could exist under Chapter 93A.”