Not Settling A “Reasonably Clear” Case Results in A $90 Million 93A Finding Against Liberty

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The case dates back to the 2014 Longfellow Bridge Rehabilitation Project

A Justice of the Suffolk Superior Court Business Litigation Session has ordered three Liberty Mutual entities—Peerless Insurance Company, Liberty Mutual Fire Insurance Company, and Ohio Casualty Insurance Company—to pay over $90.9 million in damages for unfair claim settlement practices.

The Court’s 68-page decision in Peerless Insurance Company v. Rooney offers a searing critique of “result-oriented” claims handling. It found that the insurers acted with “willful blindness” by ignoring objective evidence of their insured’s liability, clinging to a debunked defense theory, and failing to effectuate a settlement once liability became reasonably clear.

This judgment demonstrates the potential risk to a liability insurer in Massachusetts that fails to settle a clear liability case before it goes to judgment. Under G.L. c. 93A § 9, once an underlying case goes to judgment, the measure of damages for unfair claim practices is the amount of that judgment—regardless of the policy limits . This statutory provision triggers a mandatory damage calculation that can expose insurers to liability far exceeding their contractual obligations when they fail to settle reasonably clear liability claims.

The Underlying Cause of Rooney’s Injury: A “Single Plank” vs. Reality

The case dates back to May 9, 2014, on the Longfellow Bridge rehabilitation project. John Rooney, a union mason with 27 years of experience, was working inside a tower on interior scaffolding erected by the General Contractor Joint Venture (“JV”). While moving across the scaffold, he fell through a two-to-three-foot gap in the planking, suffering catastrophic spinal injuries that required nine surgeries.

Rooney sued the JV, alleging negligence for maintaining an unsafe worksite with non-OSHA-compliant scaffolding.

From the beginning, the insurers anchored their defense on a specific narrative: the “Single Plank Theory”. Based on a 2015 investigator’s report summarizing a single witness’s statement, the insurers convinced themselves that Rooney had placed a single plank across the tower in a rogue-style manner and had fallen while walking on it.

This theory had a fatal flaw: it lacked any admissible evidence. The witness later testified under oath that neither Rooney nor anyone from his company placed the plank. Yet, for six years, the claims team clung to this narrative, refusing to adjust their view, even as discovery dismantled it.

The Procedural Twist: Liberty Sues First

Following a 2021 jury verdict awarding Rooney $26.6 million (totaling over $45 million with interest), the insurers offered their full policy limits of $19.5 million. Rooney rejected the offer, signaling an intent to pursue bad-faith claims for the failure to settle before the verdict.

In a tactical move, the Liberty insurers initiated the litigation, filing a complaint for a declaratory judgment seeking to exonerate themselves from liability under G.L. c. 93A and 176D . Rooney counterclaimed, alleging that the insurers’ failure to investigate and settle the claim constituted willful and knowing violations of the unfair claim practice statutes: C. 93A and 176D.

The Court’s Findings: A Case of “Three Wise Monkeys”

Justice Squires-Lee characterized the insurers’ handling of the claim as typifying “the three wise monkeys,” refusing to “see, hear, or speak” the evidence that established the JV’s liability .

The Court identified a series of willful failures that prevented a fair assessment of the claim:

1. Ignoring the Contract and Safety Manual Despite handling a complex construction loss, none of the claims professionals read the contract between the JV and MassDOT or the JV’s Site-Specific Safety Manual. Had they done so, they would have known the JV had a non-delegable duty for safety and was required to perform documented daily inspections . The claims adjuster, Michael Ince, even testified that he did not recall receiving any training about the impact of OSHA violations when assessing construction cases .

2. The “Red Herring” of Missing Records The JV failed to produce a single safety inspection record for the scaffolding. Defense counsel had learned as early as 2016 that the JV had “tossed” all the scaffold tags. The insurers dismissed this lack of evidence as a “red herring”. The Court found this dismissal reckless; the absence of records was powerful evidence that no inspections occurred, constituting a direct breach of the duty of care.

3. Ignoring OSHA Violations Photographs produced during discovery showed gaping, two-and-a-half-foot holes in the scaffolding—a clear OSHA violation. The claims team failed to document these violations in their internal Roundtable Reports, instead repeatedly noting “nothing wrong with the scaffolding” .

4. The “Flippant” Dismissal of Duty In a Roundtable Report from May 2019, the adjuster dismissed the JV’s failure to maintain a safe worksite by writing that the JV could “not police every single part of the project 24/7”. Justice Squires-Lee labeled this comment “flippant,” noting that it “flatly contradicts the JV’s legal and contractual obligation” to build OSHA-compliant scaffolding and to inspect it daily.

The “Trial Observer”: A Case Study in Confirmation Bias

One of the most notable aspects of the decision centers on the insurer’s reliance on a “trial observer” over its own experienced defense counsel. This portion of the judgment illustrates the dangers of relying on vendor-hired monitors who may simply validate a pre-existing position.

As the underlying trial progressed in July 2021, the defense began to collapse. The JV’s own counsel, David Cain—an attorney with 25 years of experience who had tried dozens of cases—warned the insurers that the case was lost. He texted the claims manager that “the buck stops with us” regarding safety inspections and predicted the jury would find the JV negligent. He assessed the chance of a defense verdict at only 25%.

Instead of heeding their veteran counsel, the claims supervisors chose to credit the daily reports of a vendor-hired “trial observer,” Eric Welsh.

The Court’s findings regarding Mr. Welsh were critical:

• Lack of Qualification: While Mr. Welsh was technically a lawyer, his experience consisted of residential real estate closings and document review. He had never tried a case and had never observed a trial as a lawyer before becoming a professional “observer” . At the time of this trial, he had observed 49 trials for Liberty Mutual.
• Bias: The judge noted that the observer’s reports were “biased” and seemed designed to tell the insurers what they wanted to hear. For example, while defense counsel found Rooney to be a credible, sympathetic witness, the observer reported that he was “hoping” Rooney would come across as “shady or manipulative”.
• Incompetence: The observer consistently reported skepticism about medical causation (whether the fall caused the injuries), failing to realize that the defense team had already conceded medical causation and was not challenging it .

Despite the observer’s lack of qualifications, the claims supervisors testified that they credited his optimistic reports (predicting a 60-65% chance of winning) over their own counsel’s dire warnings. The judge found this reliance incredible, concluding that the supervisors “preferred to credit the Observer’s much rosier, if ill-informed views” to justify their refusal to settle.

The Failure to Settle: Missed Opportunities

Under Chapter 176D, an insurer must make a prompt, fair, and equitable settlement offer once liability becomes “reasonably clear.”

The Court found that liability was reasonably clear by June 2021 (before trial). By that time, the insurers knew the JV built the scaffold, that it had dangerous gaps, and that masons were permitted to use it.

Despite this, the settlement history revealed a massive disconnect between the risk and the offers:

• 2019 Mediation: The insurers offered $350,000, a sum the Court noted was less than Rooney’s undisputed medical bills.
• The Reserve: As late as February 2021, the internal reserve was set at $700,000, based on an optimistic 75% chance of a defense verdict.
• Trial Offers: During the trial, as the defense case faltered, the insurers authorized a high-low offer of $500,000 to $2.5 million. Later, counsel explored a high-low of $1 million to $5 million, but Rooney rejected it.

Critically, the insurers’ own defense counsel had estimated a potential verdict of $3.5 million to $5 million. Yet, the insurers refused to offer a settlement within that range . The judge calculated that a reasonable offer in June 2021 would have been between $4.5 million and $5 million.

The Judgment: The Multiplier Effect

The Court found the insurers’ conduct was not merely negligent, but willful and knowing. The insurers “deliberately closed [their] eyes to known and available information” to maintain a low valuation.

This finding triggered the punitive damages provision of G.L. c. 93A § 9(3) . The statute mandates that if a violation is willful or knowing, the court shall double or treble the damages. Crucially, the “amount of actual damages” to be multiplied is the amount of the judgment on the underlying claim.

• Underlying Judgment: $45,485,806 (including interest).
• Multiplier: 2x (for willful conduct).
• Total Award: $90,971,612 (plus attorney’s fees).

The “Nuclear” Risk of Going to Judgment

This $90 million award highlights a specific, significant risk for insurers in Massachusetts in allowing a potential liability case to go to judgment.

Under Section 9 of Chapter 93A, the calculation of damages changes radically depending on whether the underlying case is settled or litigated to a verdict.

If the Insurer Settles Late: If an insurer unreasonably delays settlement but eventually settles the case before a judgment is entered, the plaintiff can still sue for unfair claim practices. However, the measure of damages is not the settlement amount. Instead, the plaintiff must prove “actual damages” caused by the delay—typically, the lost interest on the settlement money for the period it was withheld. While the insurer might pay legal fees and interest, it avoids the multiplier on the principal amount of a judgment.

If the Insurer Goes to Judgment: Once a judgment is entered on the underlying tort claim, the stakes go up. As the Court noted, citing Rhodes v. AIG, the judgment itself becomes the “actual damages” for the 93A claim . This means the entire verdict amount—not just the policy limit—is subject to multiplication.

By failing to settle Rooney’s claim for the reasonable figure of $4.5 million, the insurers exposed themselves to a multiple of the full $45 million verdict. As Justice Squires-Lee wrote, while this results in an “excessive punitive damages award,” the statute “offer[s] me no discretion”.

Conclusion

Peerless v. Rooney serves as a reminder that in Massachusetts, the duty to investigate and settle is proactive, objective, and unforgiving.

The decision underscores several critical points for consideration:

1. Objective Reality over Subjective Belief: A defense of “truly believing” a case is defensible is insufficient if that belief ignores objective evidence. The standard is what a reasonable insurer would conclude.
2. Read the Contract: In construction claims, the insured’s contract and safety manual establish the duty of care. Failing to review them can be evidence of willful blindness .
3. Sanitized Reporting: Roundtable reports should reflect the actual evidence, including the “bad facts.” In this case, the adjuster’s failure to document the lack of inspection records or the “tossed” tags created a paper trail of willful blindness.
4. The “Red Herring” Trap: When a piece of evidence is missing (like inspection logs), dismissing it as irrelevant can be perilous. The absence of evidence can be the most damning evidence of all.

When insurers close their eyes to liability, G.L. c. 93A may force them to open their wallets—far wider than they ever imagined.