The Supreme Judicial Court recently rejected a direct summary judgment appeal from AIG Domestic Claims, Inc. (“AIG”) concerning AIG’s handling of a workers’ compensation claim. The plaintiff alleged, inter alia, that AIG acted outside the claims-handling process by improperly pursuing criminal insurance fraud charges against him. AIG moved for summary judgment, arguing that: (i) it was immune from suit under St.1966, c. 427, because it had reason to believe the plaintiff committed insurance fraud and properly reported the suspected fraud to the Insurance Fraud Bureau (“IFB”); and (ii) the plaintiff’s claims were barred by workers’ compensation exclusivity under G.L. c. 152.

The Justices were unmoved by AIG’s arguments. They first held that while AIG enjoyed qualified immunity for its initial report of the plaintiff’s potentially fraudulent activity to the IFB, the trial court's denial of summary judgment was nonetheless appropriate because the plaintiff’s claims relied in part on conduct falling outside the scope of immunity – to wit, AIG’s alleged “active participation in pressing the proceedings through communications with prosecutors when it did not have cause to believe that [the plaintiff] had committed insurance fraud.” That is, the claims were not barred by St.1966, c. 427, because AIG was alleged to have “improperly lobbied the probation department and district attorney in an effort to secure [the plaintiff’s] incarceration and thus avoid paying his workers’ compensation benefits.”

A similar fate befell AIG’s exclusivity argument. The Justices held that workers’ compensation exclusivity did not apply because the complaint was not based solely on AIG’s claims-handling activities; rather, the allegations also concerned AIG’s fraud reporting and its contact with law enforcement officials that “had nothing to do with determining [the claimant’s] eligibility for workers’ compensation benefits.” AIG’s conduct was thus “better characterized as a collections effort” than a claim determination, the former not being subject to workers’ compensation exclusivity. While the decision does not change Massachusetts law with respect to exclusivity, it arguably cracks the door; expect it to be cited by plaintiffs as support for the notion that certain insurer conduct falls outside the scope of workers’ compensation exclusivity.

A copy of the decision, captioned, Maxwell v. AIG Domestic Claims, Inc.,  is available here.