Massachusetts Supreme Judicial Court Approves Equitable Contribution Among Co-Insurers And Rejects “Selective Tender Rule”
March 9, 2016

The Massachusetts Supreme Judicial Court recently rejected the application of the “Selective Tender Rule” as against Massachusetts law and public policy. On a certified question from the U.S. Court of Appeals for the First Circuit, the Court found that where two workers’ compensation insurance policies issued by different companies provide coverage for the same loss, an employer, by electing to provide notice of the claim only to one insurer, does not foreclose that insurer from obtaining equitable contribution from the other insurer. In confirming the adoption of equitable contribution, the court noted that the doctrine was rooted in equity, not contract, such that equitable contribution rights exist independently of the rights of the insured. The Court rejected the “selective tender” exception to equitable contribution, under which the insured’s decision to purposefully give no notice to the coinsurer would preclude equitable contribution because the coinsurer had no duty to provide coverage. The court reasoned that the “selective tender” exception was contrary to Massachusetts workers’ compensation insurance law, not in accord with Massachusetts law governing general liability insurance, which provides an insurer’s coverage obligation is potentially triggered by notice regardless of timing or the source unless the insurer is prejudiced, and would be contrary to sound public policy since it would reward insurers that try to ignore their coverage obligations at the expense of an insurer that honors them. A copy of the Court’s opinion in Insurance Company of the State of Pennsylvania v. Great Northern Insurance Company, (Doc. No. SJC-11897, March 7, 2016) can be found here.


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