What the Jury Doesn’t Know about Insurance Won’t Hurt Them

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The issue of whether a jury will be less inclined to award an insurance company plaintiff – versus an individual person or entity – a favorable verdict is a real one for subrogation professionals facing a potential trial. In states where the laws allow carriers to choose between filing in their own name or in the name of the insured, there are numerous factors attorneys must weigh before finalizing the caption. However, if a jury is allowed to know the extent of the carrier’s involvement, the notion of filing in the name of the insured becomes less appealing.

In Antoniadis v. Basnight, 99 Mass. App. Ct. 172, 2021 Mass. App. LEXIS 17 (2021), a case where a subrogating carrier proceeded in the name of its insured, the Appeals Court of Massachusetts set the parameters for when a jury can know of a subrogated carrier’s involvement. Vacating the trial court’s judgment and remanding the matter for a new trial, the appellate court held that evidence of a first-party subrogating carrier’s involvement should not be allowed unless its probative value outweighs its prejudicial effect.

In this case, George Antoniadis (Antoniadis) renovated his home in 2011. He retained Basnight, Buckingham & Partners (Basnight) as architects for the work. Antoniadis also hired carpenter Leandro Machado on Basnight’s recommendation and, on Machado’s recommendation, Shine Star Painting (Shine Star) to work on the hardwood floors. The house subsequently caught fire when one of Shine Star’s employees left oil-soaked rags in a bucket, which purportedly caused a spontaneous combustion fire. Antoniadis settled his first-party insurance claim with his carrier, Amica Mutual Insurance Company (Amica). Amica then filed suit against the contractors involved, settling with all but Basnight prior to trial. Amica originally filed suit in its name, but later substituted Antoniadis as the named plaintiff.

During the trial, the judge allowed the jury to hear about Amica’s involvement in the case and allowed in evidence involving Amica. Upon conclusion of the trial, the jury returned a verdict for the defendant. Amica then appealed the verdict, raising several issues, including that the trial judge improperly allowed evidence of insurance at the trial.

On appeal, the court began its analysis with the general proposition that a party’s insurance coverage information is not admissible at trial. It also cited the collateral source rule, which prohibits a jury from knowing about a plaintiff receiving other compensation for an injury. The court then focused on Massachusetts Rule of Civil Procedure 17(a), which allows a carrier to file suit in the name of its insured to “avoid any prejudice which a jury might harbor toward a plaintiff-insurance company.” Given the stated purpose of the rule, the court held that trial courts should not allow evidence of the plaintiff’s insurance unless the probative value of the evidence, as measured by the trial judge, outweighs its prejudicial effect.

In Antoniadis, the trial judge found the evidence of insurance probative because: a) the defendant wanted to use statements Antoniadis made to Amica during the course of negotiations, and b) Amica would have to prove its damages through documentation of its payments to Antoniadis. The appellate court held that both justifications for allowing such evidence were not probative enough to outweigh the potential for prejudice with the jury. First, the court held that defense counsel could have crossed-examined Antoniadis about his statements without revealing they were made to Amica. Second, it noted that plaintiff could have proven its damages through other means and/or redacted references to Amica in any necessary payment documentation. Furthermore, the court stated that to the extent the trial judge found the insurance information critical, it could have offered limiting instructions to the jury upon hearing the evidence.

This holding is important because it emphasizes the potential for prejudice that exists when an insurance carrier is a named plaintiff or the jury is aware of the carrier’s payments to its insured plaintiff. If litigating in a state such as Massachusetts where the courts have held that revealing evidence of insurance to the jury is prejudicial and can only be allowed in specific circumstances and in a limited fashion, subrogation professionals have more incentive to file in the name of the insured and should strongly consider doing so. Regardless, prejudice at trial is just one of several factors – factors that include client access, attorney-attorney privilege and others – that should be considered when deciding to file suit in the carrier’s name or the insured’s name.

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