While the case was pending, Mr. Calandro made the following settlement demands:

1. October 12, 2011: $500,000;

2. November 12, 2013: $500,000;

3. March 2014: $1,000,000;

4. July 3, 2014: $1,000,000.

In early July 2014, a co-defendant physician settled with Mr. Calandro for $250,000.

The case went to trial. On July 21, 2014, the jury returned a verdict of $1,425,000 in compensatory damages and made a finding of gross negligence. On July 22, 2014, following additional testimony, the jury awarded Mr. Calandro $12,514,605 in punitive damages.

On July 31, 2014, Hartford offered to settle for $1 million but Mr. Calandro rejected this offer.

On August 1, 2014, the trial court entered judgment in the amount of $14,447,906.51, including pre-judgment interest and costs.

On September 30, 2014, Mr. Calandro sent a letter to Sedgwick demanding $40 million. Sedgwick received the letter on October 2, 2014 and responded to the letter on October 30, 2014 by offering $1,990,197. This offer represented the $1,425,000 compensatory award, prejudgment interest entered in the amount of $504,966, post-judgment interest through November 1, 2014 of $58,375 on the compensatory award, and the costs awarded to Mr. Calandro of $1,856.

Mr. Calandro rejected this offer.

In November 2014, Hartford settled with Mr. Calandro for $16 million, reflecting the $1 million policy limit and an additional $15 million. Of the total, $1,425,000 was acknowledged to be for the compensatory damages in the underlying suit. Hartford obtained releases for the Radius entities and itself, but it did not obtain a release for Sedgwick.

Mr. Calandro sued Sedgwick on December 5, 2014.

Sedgwick moved for summary judgment.

Massachusetts Law

Under Massachusetts law, an insurance company commits an unfair claim settlement practice if it:

[f]ail[s] to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear.

Mass. Gen. Laws ch. 176D, § 3(9)(f).

The law provides:

At least thirty days prior to the filing of any such action, a written demand for relief, identifying the claimant and reasonably describing the unfair or deceptive act or practice relied upon and the injury suffered, shall be mailed or delivered to any prospective respondent. Any person receiving such a demand for relief who, within thirty days of the mailing or delivery of the demand for relief, makes a written tender of settlement which is rejected by the claimant may, in any subsequent action, file the written tender and an affidavit concerning its rejection and thereby limit any recovery to the relief tendered if the court finds that the relief tendered was reasonable in relation to the injury actually suffered by the petitioner. In all other cases, if the court finds for the petitioner, recovery shall be in the amount of actual damages or twenty-five dollars, whichever is greater; or up to three but not less than two times such amount if the court finds that the use or employment of the act or practice was a willful or knowing violation of [ch. 93A, § 2] or that the refusal to grant relief upon demand was made in bad faith with knowledge or reason to know that the act or practice complained of violated [ch. 93A, § 2]. For the purposes of this chapter, 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, regardless of the existence or non-existence of insurance coverage available in payment of the claim.

(Emphasis added.)

The District Court's Decision

The district court denied the motion.

In its decision, the district court explained that a reasonable factfinder could find that Sedgwick had engaged in a “willful and knowing pre-judgment violation” of Massachusetts law and, as such, that Mr. Calandro was entitled to damages in multiplication of the compensatory damages of the judgment.

The district court reasoned that a reasonable factfinder could find that Sedgwick had engaged in unfair settlement practices that compelled Mr. Calandro into litigation. The district court noted that Mr. Calandro had originally filed his complaint almost three years before the case went to trial but the only offer Sedgwick had made to settle the case was in a joint resolution with a physician for $275,000.

Although Ms. Blair had been given settlement authority of $300,000, “she never made an offer to settle at that amount” even when a trial analysis suggested that defending the case on liability would be “very difficult” and estimated a verdict range of $300,000-$500,000. According to the district court, the record could reasonably support a conclusion that Sedgwick had knowingly and willfully forced Mr. Calandro into unnecessary litigation when liability was reasonably clear.

The district court then rejected Sedgwick's argument that it was not subject to Chapter 176D because it was not engaged in the “business of insurance.” The district court reasoned that Sedgwick had been hired by an insurer in this case to settle claims and it held that because Sedgwick was a TPA responsible for handling the administration of Mr. Calandro's claims on behalf of the insurer, Hartford, Sedgwick was “subject to Chapter 176D.”

The case is Calandro v. Sedgwick Claims Management Services, No. 15-10533 (D. Mass. April 25, 2017).