Whether a government consumer protection action “accrues” when the violation occurs, or when the government has reason to know of it.

Anawan Insurance Agency paid commissions to a broker from 1997 to 2001, even though the broker’s license had expired early in the relationship. The Massachusetts Division of Insurance discovered the payments to an unlicensed broker in 2004, and assessed fines of $30,000.

Anawan filed for judicial review of the fine, which was upheld by the Superior Court judge. The Appeals Court partially overturned the fine, holding that the statute of limitations barred fines for conduct occurring prior to 2000. The SJC granted the Division’s application for further appellate review.

The key question is when the Division’s cause of action accrued—when Anawan paid out the commissions to an unlicensed broker, or when the Division learned of them. Consumer protection actions “brought by any person, including the attorney general shall be commenced only within four years next after the cause of action accrues.” G.L. c. 260, § 5A. The Division argues that when consumers bring private causes of action, § 5A’s limitation does not begin to run until they learn of the injury, Lambert v. Fleet Nat’l Bank, 449 Mass. 119, 126 (2007), and the same should apply to causes of action brought by the government. The Appeals Court rejected that argument, holding that government enforcement actions are distinct because they merely require proof of violation, rather than damage, and therefore accrue when the violation occurs, analogizing to 3M Corp. v. Browner, 17 F.3d 1453, 1460 (D.C. Cir. 1994).

The other issues in the case, not raised in the FAR application and less likely to be significant, are whether G.L. c. 175, § 177 required a knowing violation prior to its amendment, and whether fines should have been assessed under G.L. c. 175, § 177 instead of G.L. c. 176D, § 2.

The question raised on FAR was an issue introduced by the Appeals Court, and has not yet been thoroughly briefed by either party. (Surprisingly, Anawan declined an opportunity to brief the SJC on the issue; the Division has not yet filed its brief.) The Appeals Court’s position—that consumer’s claims do not accrue until discovery, while the government’s claims accrue immediately, because only consumers must prove injury—is theoretically tenable. However, the Court’s reliance on 3M Corp. is not entirely sound. That case reasons that the “discovery rule” applies only to latent injuries, such as slow industrial poisoning, where the injury is not provable until the illness develops. That doesn’t explain why the discovery rule applies to consumer’s 93A claims, where the injury would often be provable by the plaintiff if only she knew the facts known to the defendant. The SJC will need to carefully examine the wide range of consumer protection claims covered by § 5A’s limitations period, and seek better support if it chooses to maintain the Appeals Court’s distinction.