|
by Lucy Komisar
~ o ~
November 13, 2009Marsh & McLennan to pay$435M under settlements Associated Press NEW YORK -- Insurance broker Marsh & McLennan Cos. said Friday it will pay $435 million to settle two class-action lawsuits filed in the wake of allegations of bid rigging and price fixing. The suits were filed on behalf of three retirement plans that experienced steep losses after the charges were made against the company in 2004. The company's stock dropped precipitously after Eliot Spitzer, then New York's attorney general, announced the charges. Marsh and McLennan said it does not admit to any wrongdoing under the latest settlements. Under one settlement, March & McLennan will pay $400 million to pension funds in New Jersey and Ohio. About half that will be covered by insurance, and the remainder will be paid for by cash on hand. The company also settled for $35 million another class-action suit filed on behalf of a Marsh & McLennan retirement fund. Insurance will cover $25 million of the cost. In 2005, Marsh and McLennan agreed to pay $850 million to end an investigation into charges it took payoffs from insurance companies to steer clients their way. The company also agreed at the time to change its practices and issue a public apology calling its conduct "unlawful" and "shameful." "After more than five years of litigation, MMC believes these settlements to be in the best interest of the company and its stockholders," the company said in a statement. "While the company continues to deny all of the claims in these lawsuits, the resolution of these matters puts the litigation arising from the events of 2004 largely behind us and reduces the company's ongoing legal costs." Shares of Marsh & McLennan slipped 13 cents to $23.86 in afternoon trading.
Copyright 2009 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed
HERE COME DA JUDGE!
Former Marsh executives
acquitted of bid-rigging
by The Associated Press Attorney Jerry Bernstein said his client, Joseph Peiser, former head of excess casualty at Marsh, and two subordinates were acquitted in a bench trial by State Supreme Court Judge James Yates.
Peiser, Greg Doherty and Kathleen Drake were indicted in 2005 by then-New York Attorney General Eliot Spitzer. The defendants were among eight former Marsh executives accused of colluding with brokers at American International Group Inc. and other major insurance companies to arrange noncompetitive bids for corporate customers.
Bernstein said Monday that Peiser feels "ecstatic and vindicated."
Attorneys for Doherty and Drake didn't immediately respond for a request for comment. A spokesman for the office of the current New York AG, Andrew Cuomo, couldn't immediately be reached for comment.
Peiser and Doherty had faced a maximum sentence of 25 years in state prison if convicted. Drake faced a maximum of 15 years in prison.
The 2005 indictments came after Marsh & McLennan Companies Inc., which owns Marsh Inc., agreed to pay $850 million in restitution to end a civil lawsuit brought by Spitzer, who accused the company of bid-rigging. New York-based Marsh & McLennan denied any wrongdoing in agreeing to the settlement. The broker also agreed in May of this year to pay $2.4 million to the state of Connecticut to settle claims of bid rigging, price fixing and receiving kickbacks.
AIG last year agreed to pay nine states and the District of Columbia $12.5 million to resolve charges that some of the company's subsidiaries participated in an intricate bid rigging scheme with Marsh & McLennan and other insurance brokers that led to policyholders being overcharged.
In February, former Marsh executives William Gilman and Edward J. McNenney were found guilty of an antitrust charge but acquitted of other charges; two more executives still are awaiting trial, The Wall Street Journal reported on its Web site Monday.
Plaintiffs fail to prove racketeeringby Marsh, insurers and brokersDismissal of corruption conspiracy charges follows earlier dismissal of antitrust complaint The same federal judge who early in September dismissed all federal antitrust charges against Marsh & McLennan Companies and a group of other brokers and insurers has now thrown out related federal charges of racketeering as well. Judge Garrett E. Brown Jr. of the U.S. District Court for New Jersey dismissed the racketeering complaint with prejudice, citing a lack of facts and logic. Dismissing with prejudice means the insurers and brokers will not face another suit on similar claims. The plaintiffs -- a group that included financial services, manufacturing and utility companies that were customers of the defendants -- alleged that these large insurance brokers and insurers engaged in a criminal conspiracy -- described as a hub-and-spoke conspiracy -- to control business in violation of the federal Racketeering Influenced Corrupt Organization statute. Brown found that the plaintiffs' legal arguments could not redeem the shortcomings in their factual pleadings, writing at one point: "The sole support for plaintiffs' allegations is limited to plaintiffs' self-serving conclusions. However, plaintiffs' conclusions unsupported by facts state no RICO enterprise and should be dismissed." The lawsuits stemmed from investigations initiated three years ago by Eliot Spitzer, then New York attorney general, involving price fixing, fake quotes, contingent commissions and steering of business. The lead defendant, Marsh, welcomed the development. In a statement Marsh said, "We are very pleased that the federal court has dismissed, with prejudice, all of the federal antitrust and RICO claims asserted against Marsh and other industry participants. This decision represents a major step forward for Marsh." The plaintiffs claimed that the defendants engaged in a series of fraudulent schemes. They charged that insurers paid kickbacks to brokers in exchange for having business allocated to them; kept their contingent commission agreements secret from their clients; and built the cost of the kickbacks into the premiums they charged their clients. But Brown ruled that the plaintiffs failed to prove their charges. He found that the defendants were involved in normal business activities without collusion. He ruled the plaintiffs had no proof that there was any sort of conspiracy. "In the case at bar, plaintiffs' allegations offer nothing more than a kaleidoscope of acts executed by a kaleidoscope of actors, and combine broker-defendants and insurer-defendants in such a fashion that the court is unable to discern any systemic permutation," Brown wrote. "While discussing dozens of transactions and hundreds of actors, plaintiffs fail to outline even a single set of actors that interacted with each other and executed their transactions systemically." Defendants in the suit that have now been cleared of federal antitrust charges are some of the largest insurance companies and brokerages including American International Group, The Hartford, Fireman's, Liberty Mutual, American Re, Travelers, Chubb, Marsh, Willis, Aon and Hilb Rogal & Hobb. The case was a consolidation of suits from around the country brought under federal statutes. These consolidated lawsuits took those charges to another level--claiming that they were part of a conspiracy among certain large insurers and insurance brokers and accusing the players of both federal antitrust violations and racketeering. Last month, Brown put related federal antitrust conspiracy charges to rest in granting the defendants' motions to dismiss. With this RICO ruling, Brown also rejected a plea from plaintiffs to be given another chance. "In view of the facts that (a) this matter was initiated almost three years ago but (b) plaintiffs, even after substantial discovery and three previous rounds of extremely voluminous pleadings failed to meet their pleading burden, the court concludes that granting plaintiff leave to amend would be futile, unduly prejudicial to defendant and not in the interests of justice," Brown concluded. http://www.insurancejournal.com/magazines/east/2007/10/08/currents/
CONTINUED AT...
MARSH & McLENNAN: THE MARSH BIRDS
~ o ~
|
