Calculation of Punitive Damages Against Car Insurer Does Not Include Post-Judgment Interest for Accident Victim and Family, According to Massachusetts Appellate Court

An appeal before the Massachusetts Supreme Judicial Court addressed the measure of punitive damages to be awarded to a motor vehicle accident victim and his fpedestrianamily.  Insurance companies that delay payment, after liability has been demonstrated in a car accident claim, may be assessed additional damages for their conduct. The issue in this case centered on how to calculate punitive damages, specifically, whether post-judgment interest should be included in the amount to be multiplied.

The plaintiffs in this personal injury claim included the victim, his wife, and his daughter.  They filed a personal injury lawsuit for injuries after the victim was struck by a van driven by an employee of the defendant employer.  The victim had been crossing the street in Boston when he was struck and suffered serious injuries, including a fractured skull. The plaintiffs claimed negligent infliction of emotional distress, negligent operation of a motor vehicle, and loss of consortium.

The plaintiffs also pursued a separate action against the employer’s insurance company, alleging a willful and egregious failure to conduct a reasonable investigation of the plaintiffs’ claims, as well as other allegations.  These proceedings were stayed, pending the resolution of the tort action.

The jury awarded the victim $2,961,000 in the personal injury action, reducing this amount to $1,569,330 due to his comparative negligence. The victim’s wife and daughter were awarded $110,000 each.  The defendants paid the amount of damages and the post-judgment interest, which was $1,284,243.17.  This interest reflected the time period between the date of entry and the defendants’ payment.

Later, in the action that the plaintiffs brought against the insurers, a different judge found that the insurers had acted egregiously and with deliberate indifference, and awarded treble damages. The judge concluded that the amount that should be multiplied according to law was twice the underlying personal injury judgment, combined with the post-judgment interest that had accrued.

Both parties moved to modify the judgment.

The defendants applied for further review on the issue of whether post-judgment interest should be included in the “amount of judgment” to be multiplied, according to Massachusetts law.  The plaintiffs argued that the judge should have awarded more, since the maximum amount of punitive damages available is three times the judgment.  The judge increased the amount of punitive damages in an amended judgment to three times the underlying judgment and retained the post-judgment interest in the amount to be multiplied.

In their discussion, the appellate court stated that insurance companies commit unfair claim settlement practices when they fail to effectuate prompt and fair equitable settlements, especially when liability is reasonably clear.  Massachusetts law provides that when an insurer causes an injury by failing to effectuate a fair settlement in a willful or knowing manner, multiple damages must be awarded. Punitive damages shall be awarded, according to law, at up to three but not less than two times the amount of the actual damages.

In determining whether the “amount of judgment” includes post-judgment interest, the court looked at the plain language of the statute.  The court stated that whether a judgment to be multiplied for willful or knowing misconduct includes post-judgment interest is not clarified within the statute.  Laws on pre-judgment interest make clear that in personal injury lawsuits, interest is added to the amount of damages, forming part of the underlying judgment. It is multiplied when computing awards under G. L. c. 93A because it compensates for the time value of money that had accrued before resolving the dispute.

Post-judgment interest is not considered part of compensatory damages.  Instead, this type of compensation assists prevailing parties for delays in their payment.  Unlike pre-judgment interest, post-judgment interest is separate and distinct from the judgment.

The court rejected the plaintiffs’ argument that the post-judgment interest is part of the judgment itself, instead stating that since the judgment “bears” interest, it is not an inherent part of the judgment. Not only does the statutory language make this clear, but also the common understanding of the words supports a finding that the interest is separate and distinct from the judgment.

The court stated they would not read into the statute additional measures of punishment that the Massachusetts Legislature had not explicitly set forth.

The court vacated the judgment, remanding to the Superior Court for a revised judgment according to the appellate opinion.

Following a car accident, victims have a legal right to pursue compensation from an at-fault party.  At the Law Office of Michael O. Smith, we represent individuals and their families in personal injury claims for monetary damages resulting from motor vehicle accidents.  Contact our office to set up a free consultation with a skilled Boston car accident attorney. Call us at (617) 263-0060 or complete our online form.

More Blog Posts:

Massachusetts Appeal Court Affirms Verdict Awarding Pedestrian Damages in Lawsuit Against Driver Who Struck and Injured Her in Cambridge Crosswalk, Boston Car Accident Attorney News, February 3, 2017

Study Finds Truck Drivers with Poor Health May Increase The Risk of a Crash, Boston Car Accident Attorney News, January 19, 2017