Fraud Suit Reinstated Against The Hartford
November 18, 2008
Reuters is reporting that a U.S. appeals court reinstated a lawsuit today that accused The Hartford Financial Services Group of concealing kickbacks and bid rigging by insurance brokers.
The lawsuit brought by two pension funds in October 2004 was dismissed in July 2006 by a federal judge in Connecticut who ruled that the complaint was filed too late under the statute of limitations, Reuters said.
The judge ruled that by July 2001 public documents should have suggested to investors that The Hartford was likely to be one of the insurance companies under investigation at the time for the kickbacks known as "contingent commissions."
"We disagree with the District Court's conclusion that Appellants were on inquiry notice of their claims against The Hartford by July 25, 2001," said the ruling published Monday by the U.S. Court of Appeals for the 2nd Circuit in New York.
"Accordingly, we vacate the judgment and remand the case to the District Court for further proceedings."
The appeals court did not address other grounds made by Hartford for dismissal.
Attorneys for the Alaska Laborers Employers Retirement Fund and the Communication Workers of America employees pension plan could not immediately be reached for comment, the news service reported.
Reuters reported a representative of The Hartford could not immediately be reached for comment. At 2 p.m., The Hartford's shares traded at $10.18, down $2.47, or 19.5 percent.
New York and Connecticut state prosecutors investigated the arrangements between insurers and brokers that were prevalent before October 2004. Insurance brokers would receive payments from insurers for steering business their way.The pension plans sued The Hartford and its executives, claiming investors acquired the stock at artificially inflated prices due to the firm's "omissions, misrepresentations, and fraudulent concealment regarding kickbacks, bid rigging and price manipulation schemes engaged in by insurers and brokers."
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