938 F. Supp. 2d 177
D. Mass.2013Background
- Unum sued for return of advance commissions paid to Benefit Partnership and Ippolito after policies were canceled or rescinded.
- Multiple agreements governed commissions, including General Agent Contract, Advance Commission Amendment, Voluntary Workplace Benefits Agreements, Enrollment DOUs, and Administrative Services Agreement.
- Advances totaled $1,213,749.07; 146 insureds canceled after Unum investigated misrepresentations and eligibility issues.
- Investigations revealed misrepresentations, coaching of applicants, and suspicious fund transfers to third parties; Santiago later indicted in related fraud case.
- Unum terminated the agreements, demanded repayment, and recovered partial sums ($150,000 plus $50,000 from other funds); remaining balance sought in this suit.
- Court posture: Unum moved for summary judgment on breach of contract, negligence, and Chapter 93A claims; fifth amendment issues addressed in opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the breach of contract claim for repayment of advances is proven | Unum shows advances were made and repayments due under contract | Ippolito/Benefit Partnership dispute proof of receipt of funds and breach | Unum granted summary judgment on breach of contract against Ippolito; issues for Benefit Partnership limited to contracts it joined. |
| Whether the negligence claim is cognizable given the contract-based relationship | Unum relied on tort theory due to oversight failures | Economic loss rule bars tort claims when contract governs | Negligence claim denied; damages limited to contract terms; no independent tort remedy. |
| Whether Chapter 93A liability attaches for unfair or deceptive practices | Widespread ineligibility, coaching, misrepresentations, and large transfers support unfair practices | Need for evidence of misconduct within Massachusetts; activities tied to contracts | Summary judgment for Unum on Chapter 93A claim; evidence supports unfair practices and willful/knowing conduct. |
Key Cases Cited
- St. Paul Surplus Lines Ins. Co. v. Feingold & Feingold Ins. Agency, Inc., 427 Mass. 372 (Mass. 1998) (unfair practices and misrepresentation in insurance applications)
- James R. Marshall v. Stratus Pharm., Inc., 51 Mass.App.Ct. 667 (Mass. App. Ct. 2001) (massachusetts appellate consideration of related 93A issues)
- Kuwaiti Danish Computer Co. v. Digital Equip. Corp., 438 Mass. 459 (Mass. 2003) (center of gravity and 93A territorial reach in Massachusetts)
- United States v. Rylander, 460 U.S. 752 (U.S. 1983) (evidentiary burdens when asserting Fifth Amendment privilege)
- Baxter v. Palmigiano, 425 U.S. 308 (U.S. 1976) (adverse inference may be drawn against privilege in civil cases)