The all-bark, no-bite pre-suit requirements of 93A

Issue January/February 2018 By Joseph A. Nett
Young Lawyers Division Section Review

A lawsuit in Massachusetts against an insurance company will almost always involve the “bad faith statute” codified as G.L.c. 93A. This famous statute is known to have multiple pre-suit requirements, including a demand letter listing the specific unfair and deceptive practices alleged which is to be mailed thirty days prior to suit being filed. These requirements are followed by attorneys to make sure that their bad faith claims are preserved and, hopefully, to reach an early resolution.

Technically, such requirements, along with the threat of treble damages and attorneys’ fees, are supposed to encourage settlement prior to the lawsuit being filed. However, my experience as a litigation attorney over the past five years has led me to believe that the pre-suit requirements of Chapter 93A have been misinterpreted and lost their bite. In turn, the goal of promoting pre-suit settlement seems to have been lost.

For example, the very language of the statute was interpreted by the Supreme Judicial Court of Massachusetts in 2016 to make it nearly impossible for many deserving companies to have the right to a 93A demand letter. The statute states that companies conducting business in Massachusetts are not entitled to such a letter if they do “not maintain a place of business or does not keep assets within the commonwealth.” The court held that having a place of business or assets in Massachusetts really meant that a company needed both in order to give it a right to a pre-suit demand letter. More often than not, companies and/or insurers in today’s society conduct business without necessarily having both a place of business or assets in the state. As a result, out-of-state companies are often out of luck when it comes to receiving a letter and having the opportunity to evaluate such claims before the lawsuit is filed. Therefore, the goal of the statute in promoting pre-suit settlement is non-existent against such companies and allows plaintiffs to stack on additional claims against said companies without consequences. 

For companies that are entitled to 93A letters, the pre-suit requirements of the statute are limited in their protection. Despite the language of the statute stipulating that a failure to mail a demand letter 30 days prior to filing suit will bar such claims from being brought, courts commonly allow plaintiffs to amend their complaints to add a Chapter 93A letter at nearly any point in the litigation. I have even seen 93A letters, and the claims associated with them, to be added to a complaint three years after the lawsuit was initially filed. As such, plaintiffs can file lawsuits alleging 93A claims with little worry of them being dismissed without ever mailing the supposedly required pre-suit letter. This puts an unfair burden on the defendant to protect themselves against claims without knowing, potentially for years, the specific practices alleged against them. This promotes the prevalence of Chapter 93A claims as they can be alleged in nearly every instance without requiring the plaintiff to provide any support for those claims until discovery has commenced or is completed.

The demand letter was supposed to promote pre-suit settlement. Instead, the fact the pre-suit requirements are barely enforced means the goal of the statute has vanished and Chapter 93A claims are almost boilerplate. Enforcing the pre-suit requirements, and requiring demand letters for out-of-state companies, would allow defendants to take such claims seriously and actually engage in pre-suit settlement. Now, while Chapter 93A claims are obviously evaluated when received, often defendants do not even encounter such claims until after the lawsuit has been filed. This clearly does very little to keep litigation out of the courts. Putting more bite into the statute’s pre-suit requirements may seem harsh, but it is the best to way to again promote the goal of ending cases before they are filed.