Connecticut AG Sues Marsh, ACE Unit Over Commissions

January 21, 2005
By Associated Press

HARTFORD, Conn. -- Connecticut Attorney General Richard Blumenthal Friday sued insurance brokerage giant Marsh & McLennan Inc.  and a unit of the Bermuda- based ACE Ltd. insurance company for illegal commissions in connection with an $80 million state contract.

It was the latest in a series of actions that Mr. Blumenthal has taken since New York Attorney General Eliot Spitzer filed suit last October against Marsh & McLennan, which is headquartered in New York, for bid rigging, price fixing and demanding incentive fees from insurance companies in exchange for sending more property and casualty business their way.

Mr. Blumenthal's civil lawsuit accuses Marsh & McLennan of illegally steering an $80 million state contract to ACE Financial Solutions Inc. It alleges that ACE paid Marsh a $50,000 commission for a contract that managed 678 state worker's compensation cases.

The state Department of Administrative Services had chosen Marsh as its broker when it was seeking an insurance company to handle the cases.

The lawsuit said Marsh violated Connecticut consumer protection laws by accepting a commission other than the $100,000 commission paid by the state.

Mr. Blumenthal said he is investigating if ACE took additional commissions.

Spokesmen for both Marsh and ACE said their companies are cooperating with Mr. Blumenthal's investigation.

Mr. Blumenthal said that his office has subpoenaed nearly 30 insurance companies and 15 brokers and that his investigators have come away with hundreds of boxes of documents, including e-mails.

He added that more lawsuits are likely.

In December, Mr. Blumenthal announced that the insurance company Cigna Corp.  agreed to pay the state more than $870,000 to settle allegations that it concealed improper insurance commissions to a broker.

Cigna provides dental insurance to state employees and retirees. It had been paying New Haven broker Carl Feen a commission since 1990, Mr. Blumenthal said. Its dental contract with the state specifically prohibits the payment of fees to agents and brokers because the commissions are built into the premiums.

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