An aspect of a major antitrust and racketeering lawsuit accusing brokers and insurers of conspiring to rig bids and steer customers to attain improper bonuses has been rejected. But the judge in the case has granted plaintiffs “one final opportunity” to amend their arguments, and they can also appeal to a higher court.

The case is a consolidation of many lawsuits that were filed after Eliot Spitzer -- then New York’s attorney general and now the state’s governor -- unveiled his investigation of the insurance industry in 2004. His first splash was a civil fraud and antitrust suit against insurance broker Marsh & McLennan Cos., which later settled for $850 million.

This is the same aspect PIA reported on when federal Judge Faith S. Hochberg last October rebuffed the same plaintiffs’ request in this action. Like the decision issued in October 2006, the mere existence of a contingency compensation being available – and even earned by a producer – is not per se evidence that illegal acts have occurred. The opinion stated there is nothing illegal about these compensations, or the right or ability of producers to earn them.

Crucial to PIA’s position is Chief Judge Garrett Brown, Jr.’s agreement with Judge Hochberg that the plaintiffs failed to prove violations. There were 35 broker defendants and more than 70 insurance company defendants in the case, including The Hartford Services Financial Group, The Travelers Cos. Inc. and Aetna. 

Judge Brown wrote that a “crucial flaw” in the argument is “the failure to state any fact indicating that there is an enterprise structure interrelating” the brokers. Allegations based on the mere similarities of how brokers operated “fail in the same way a claim alleging that all armed robbers in the nation comprise a RICO enterprise would fail,” Brown wrote. Lawyers for the businesses, individuals and public agencies that sued indicate they will continue to pursue the litigation.

Insurers Win One in Court (Hartford Courant 4/7/07)

April 11, 2007