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Estrada v. Progressive Direct Ins. Co.

United States District Court, D. Massachusetts

October 20, 2014

WANDA ESTRADA, WALTER ESTRADA, J.E, NATALIE ESTRADA, CARMEN BADILLO, and JOSE BURGOS, individually and on behalf of all other persons similarly situated, Plaintiffs,
v.
PROGRESSIVE DIRECT INSURANCE COMPANY, Defendant

For Alexander Sierra, Individually and on behalf of All Other Persons Similarly Situated, Plaintiff: Jeffrey S. Morneau, LEAD ATTORNEY, Connor Morneau & Olin, LLP, Springfield, MA; Robert A. DiTusa, LEAD ATTORNEY, Laura D. Mangini, Ryan E. Alekman, Alekman DiTusa, LLC, Springfield, MA; Stephen L. Holstrom, Connell & McCarthy, Westford, MA.

For Wanda Estrada, Individually and on behalf of All Other Persons Similarly Situated, Walter Estrada, Individually and on behalf of All Other Persons Similarly Situated, on behalf of, J. E., J. E., Individually and on behalf of All Other Persons Similarly Situated, Natalie Estrada, Individually and on behalf of All Other Persons Similarly Situated, Carmen Badillo, Individually and on behalf of All Other Persons Similarly Situated, Angel Santa, Individually and on behalf of All Other Persons Similarly Situated, Jose Burgos, Individually and on behalf of All Other Persons Similarly Situated, Armando Robles, Individually and on behalf of All Other Persons Similarly Situated, Plaintiffs: Jeffrey S. Morneau, LEAD ATTORNEY, Connor Morneau & Olin, LLP, Springfield, MA; Laura D. Mangini, Ryan E. Alekman, Alekman DiTusa, LLC, Springfield, MA; Stephen L. Holstrom, Connell & McCarthy, Westford, MA.

For Progressive Direct Insurance Company, Defendant: A. Hugh Scott, Choate, Hall & Stewart, Boston, MA; Peter B. Moores, Choate, Hall & Stewart LLP*, Boston, MA.

Page 485

MEMORANDUM AND ORDER ON DEFENDANT'S MOTIONS FOR SUMMARY JUDGMENT

F. Dennis Saylor IV, United States District Judge.

This is a putative class action alleging unfair and deceptive practices in the online sale of automobile-insurance policies.

Page 486

Plaintiffs Wanda Estrada, Walter Estrada, J.E., Natalie Estrada, Carmen Badillo, and Jose Burgos purchased automobile insurance from defendant Progressive Direct Insurance Company.[1] Plaintiffs were all denied personal-injury-protection (" PIP" ) benefits by defendant after they were involved in automobile accidents because they purchased insurance policies with an $8,000 PIP deductible. Plaintiffs have brought suit against Progressive, contending that they only purchased policies with a deductible because of defendant's unfair and deceptive practices. The complaint alleges violations of Mass. Gen. Laws chapters 93A, 176D, and 175. Jurisdiction is based on diversity of citizenship.

Defendant has filed two motions for summary judgment: one against plaintiffs who purchased their insurance by telephone and one against plaintiffs who purchased their insurance through defendant's website.[2]

For the following reasons, the motion for summary judgment against the telephone plaintiffs will be granted, and the motion for summary judgment against the website plaintiffs will be granted in part and denied in part.

I. Background

A. Factual Background

1. Personal-Injury-Protection Insurance

In 1971, Massachusetts instituted no-fault automobile insurance. The purpose of the new scheme was " to reduce the number of small motor vehicle tort cases being entered in the courts of the Commonwealth, to provide a prompt, inexpensive means of reimbursing claimants for out-of-pocket expenses, and to address the high cost of motor vehicle insurance in the Commonwealth." Flanagan v. Liberty Mut. Ins. Co., 383 Mass. 195, 198, 417 N.E.2d 1216 (1981).

As a part of the statutory scheme, every automobile insurance policy in Massachusetts must provide PIP coverage. Mass. Gen. Laws ch. 90, § 34M.

Under [Mass. Gen. Laws ch.] 90, § 34A, three types of PIP benefits are available: (1) medical-related expenses, (2) seventy-five per cent of actual lost wages, and (3) replacement services, that is, payments to someone outside of the household who has been hired to perform ordinary and necessary services that " the injured person would have performed not for income but for the benefit of his . . . household."

Creswell v. Medical West Comm. Health Plan, Inc., 419 Mass. 327, 328-29, 644 N.E.2d 970 (1995) (alterations in original) (quoting Mass. Gen. Laws ch. 90, § 34A). The statute requires insurers to offer at least $8,000 in PIP benefits. Mass. Gen. Laws ch. 90, § 34A.[3]

If an insured party has health insurance, " the automobile insurer [is] . . . responsible for the first $2,000 of medical-related expenses, after which the injured party's health insurer, if any, would cover the expenses. Additional medical-related expenses

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not covered by the health insurer [are] paid by the PIP carrier up to $8,000." Creswell, 419 Mass. at 330. Other PIP benefits, such as benefits for lost wages and replacement services, are payable by the PIP insurer up to $8,000 whether or not the insured has health insurance. See Mass. Gen. Laws ch. 90, § 34A.

Under the statute, " [e]very owner, registrant, operator, or occupant of a motor vehicle to which [PIP] benefits apply," is

made exempt from tort liability for damages because of bodily injury, sickness, disease or death arising out of the ownership, maintenance or use of such motor vehicle to the extent that the injured party is, or would be had he or someone for him not purchased a deductible authorized by this section, entitled to recover under those provisions of a motor vehicle liability policy or bond that provide [PIP] benefits or from the insurer assigned.

Id. pet differently, " the accident victim loses his right to recover in tort to the extent he is eligible for [PIP] benefits." Pinnick v. Cleary, 360 Mass. 1, 8, 271 N.E.2d 592 (1971).

The statute allows the insured to select a PIP " deductible" of $100, $250, $500, $1,000, $2,000, $4,000, or $8,000. Mass. Gen. Laws ch. 90, § 34M. That deductible reduces the amount of PIP coverage a person receives. Id. For example, a person who selects a deductible of $8,000 receives no PIP coverage at all. See Commerce Ins. Co. v. Scarcella, 8 Mass.L.Rptr. 465, at *1 (Mass. S.Ct. Jun. 3, 1998) (" At the time Scarcella purchased the policy from Commerce, he chose a deductible of $8,000, thereby waiving the entirety of his PIP coverage . . . ." ); Mallegol v. Divino, 2007 Mass.App.Div. 62, at 62 (Mass. Dist. Ct. 2007) (" [B]y virtue of the plaintiff's election of a deductible of $4,000.00 only $4,000.00 of the medical bills were paid by his insurer . . . ." ).

An accident victim who has a PIP deductible has " no right to claim or to recover any amount so deducted from any owner, registrant, operator or occupant of a motor vehicle . . . who is made exempt from tort liability by this section." Mass. Gen. Laws ch. 90, § 34M. As a practical matter, that means that a tortfeasor who causes an automobile accident is immune from liability for $8,000 in damages covered by PIP, even if the accident victim received less than $8,000 because of his or her PIP deductible. See Mallegol, 2007 Mass.App.Div. 62, at 63 (" We think it plain that the tortfeasor is entitled to an off-set up to the maximum of $8,000.00 for medical expenses resulting from an accident, regardless of any deductible chosen by the policyholder." ). For example, an individual with a $4,000 PIP deductible would receive up to $4,000 in PIP benefits and would have his or her maximum tort recovery limited by $8,000. See id. An individual with a $8,000 deductible would receive no PIP benefits and would also have his or her maximum tort recovery limited by $8,000. See Scarcella, 8 Mass.L.Rptr. 465, at *1.

2. Progressive Enters the Massachusetts Insurance Market

Progressive Direct Insurance Company has been selling automobile insurance since 1937. (Def. SMF ¶ 3). In 1997, it became the first insurer to sell automobile insurance online. ( Id. ¶ 5). By 2007, it sold insurance in every state in the United States except Massachusetts. ( Id. ¶ 4).

In November 2007, Progressive decided to enter the Massachusetts automobile insurance market. (Pl. SMF ¶ 1). According to plaintiffs, Progressive wanted to

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enter the Massachusetts market quickly in order to capture a larger market share than other national automobile-insurance companies such as GEICO. ( Id. ¶ 2-4). It designed its Massachusetts website in late 2007 and early 2008. (Def. SMF ¶ 12).

Progressive based its Massachusetts website on the website it had designed for Ohio. (Pl. SMF ¶ 5). Ohio insurance law, however, differed from Massachusetts insurance law in several respects; one difference was that it did not include PIP coverage. ( Id. ¶ 7). As a result, Progressive had to add some Massachusetts-specific details and requirements to the website, including PIP coverage. (Def. SMF ¶ ¶ 12-13). According to plaintiffs, Progressive intended to handle PIP coverage in Massachusetts as it had in Florida, a state that also required PIP coverage. (Pl. SMF ¶ 9). Under Florida law, PIP insurance covered up to $10,000 in benefits, and it was customary to recommend a $1,000 deductible. ( Id. ¶ 10). On Progressive's Florida website, customers could select the amount of the deductible and the persons to whom the deductible applied. ( Id. ¶ 11).

On May 1, 2008, Progressive launched its Massachusetts website, which enabled it to sell automobile-insurance policies online directly to Massachusetts customers. (Def. SMF ¶ 18). The Massachusetts Division of Insurance did not review the website before it was launched. (Pl. SMF ¶ 16).

3. Progressive's Massachusetts Website from 2008-2010

Progressive's Massachusetts website was available at www.progressive.com. (Def. SMF ¶ 51). In 2008, " the website presented customers with a series of questions on successive web pages, including questions on (1) the customer's biographical and demographic information; (2) the make, model, and year of the customer's vehicles; (3) the identity of any insured drivers, and (4) any recent accident history." ( Id. ¶ 52).

Progressive asked customers using the site how many household members they had. (Pl. SMF ¶ 39). A customer could click on a hyperlink entitled " Number of Household Members," which would open a pop-up window stating, " Number of Household Members: Please include all members of the household including members that are under the driving age and yourself. This information will be used to recommend a Personal Injury Protection (PIP) coverage which best suits your needs." ( Id. ¶ 40). It also asked customers if they and their household members had health insurance. ( Id. ¶ 35).

Customers had the option of speaking to a trained insurance representative at any time. (Def. SMF ¶ 84). A sidebar labeled " Help Center" was placed on the right side of each page of the website, featuring the picture of a licensed insurance representative. ( Id. ¶ ¶ 85-86). If a customer clicked on the Help Center, it displayed telephone and e-mail contact information, featured hyperlinks with answers to common questions, and included a hyperlink to a printable summary of the consumer's price quote. ( Id. ¶ ¶ 87-91).

4. Progressive's PIP Defaults

If customers using the website indicated that they and their household members all had health insurance, Progressive generated plans and quotes that included an $8,000 PIP deductible. (Pl. SMF ¶ 38). If customers indicated that they or their household members did not have health insurance, Progressive generated plans and quotes with no PIP deductible. ( Id. ¶ 37). Progressive did not ask whether the customer had insurance that included other areas covered by PIP, such as disability insurance. (Pl. Resp. to Def. SMF

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¶ 58). Progressive contends that it set up the website this way to save customers money, so that they would not purchase duplicate insurance. (Wilton-Brancsch Decl. ¶ ¶ 6-12).[4]

After a customer answered the questions, the website used those answers to generate tabs with a series of coverage options. (Pl. SMF ¶ ¶ 33, 42). Between 2008 and 2010, those tabs were labeled " basic," " choice," " economy," " plus," " recommended," and " value." ( Id. ¶ 43). Progressive defined the " recommended" coverage plan as the one " most often bought nationally," but did not tell customers that was how it was defined. ( Id. ¶ 44).

The packages could be viewed side-by-side in columns. (Def. SMF ¶ 63). In the four-tab view, the different types of coverages were listed vertically in rows. ( Id. ¶ 67). The title of each coverage contained a hyperlink that would generate a pop-up window displaying Progressive's help text for that coverage. ( Id. ¶ ¶ 67-68). The hyperlink for PIP coverage read as follows:

Personal Injury Protection (PIP) (Part 2)
The state of Massachusetts requires you to carry Personal Injury Protection coverage to protect a driver or passengers injured in a vehicle and to pedestrians injured by your vehicle, regardless of fault. These coverages include up to $8000 per accident for:
1. Medical expenses
2. Work Loss Benefits: Loss of earnings from work
3. Replacement Services: payments for household services incurred within 2 years after the accident.
The insured can choose up to an $8000 deductible. This applies to the named insured and family members, but does not apply to ...

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