Judges Reopen Portions of Bid-Rigging Civil Suit
A decision by a federal court in Philadelphia has reopened some of the racketeering and antitrust lawsuits that were dismissed three years ago against insurers and brokers who allegedly participated in a bid-rigging scheme with mega-broker Marsh.
The lawsuit is a federal class action case filed by numerous businesses, municipalities and other organizations that claim they paid inflated premiums for commercial and employee benefits policies between 1994 and 2005.
The plaintiffs in the case — tied to the 2004 investigation against Marsh and other brokers and insurers, led by New York’s then-Attorney General Eliot Spitzer — allege a massive global conspiracy in the insurance industry through which brokers and insurers conspired to steer accounts to individual carriers, which in turn rewarded the brokers participating in the scheme with lucrative contingent commissions.
A federal judge for the District Court in New Jersey dismissed those charges three years ago, but the plaintiffs appealed. In a 200-page opinion issued earlier this week, a three-judge panel of the Third Circuit Court of Appeals vacated some of the dismissals by the New Jersey Judge, but upheld most others.
Marsh settled with the plaintiffs last year for $88 million, making the broker no longer a party to the case.
The decision — which remands the case to the federal district court in New Jersey — opens up the plaintiffs to continue pursuing claims against the other insurers and brokers based on antitrust and anti-racketeering laws.
The decision may open up legal battles for firms tied to the case, which include brokers Aon, Willis, HRH, large insurers including Liberty Mutual, Travelers, The Hartford, Chubb and dozens of other defendant companies.
The decision also allows plaintiffs to pursue racketeering claims against the Washington D.C.-based Council of Insurance Agents and Brokers (CIAB), part of an allegation that the members of the group used the CIAB, in part because it served as a mechanism for brokers linked to Marsh to trade information about insurance markets.