November 19, 2004

Spitzer Sues, Garamendi Sues and Settles with U.L.R.

Continuing a series of legal actions against insurance brokers and insurers, New York Attorney General Spitzer and California Insurance Commissioner Garamendi have filed separate suits against Universal Life Resources (U.L.R.), a broker specializing in employee benefits programs for businesses. Links to the complaints and settlement documents are provided below.

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Mr. Spitzer's suit was filed Friday, November 12 in state court in Manhattan, and alleges that U.L.R. steered business to insurers in exchange for lucrative payoffs and that this practice raised premiums for individual employees.

In Mr. Garamendi's suit, according to a November 18 story in the New York Times, "Mr. Garamendi accuses Universal Life Resources, a broker specializing in employee benefits, of receiving kickbacks from the insurance companies in exchange for steering to the insurers the business of corporations seeking group life, disability and other coverages. The kickbacks, the lawsuit says, led to higher insurance costs for the corporations and their workers." The suit also names four insurance companies allegedly involved in the practices described in the complaint.

Commissioner Garamendi has announced that a settlement with U.L.R. has been settled simultaneously with its filing. To prepare his suit, Mr. Garamendi hired Lerach Coughlin Stoia Geller Rudman & Robbins, the same private law firm that brought a private lawsuit on similar grounds in October. It does not appear that a settlement has been reached with the four insurers.

According to the San Diego Union-Tribune, Mr. Garamendi told a news conference at the Superior Court: "We will be moving very vigorously against the four insurance companies using the information in the Universal Life files," The Union-Tribune also quoted a partner in Lerach Coughlin as saying: "Now that Universal Life Resources has agreed to cooperate, the state can focus more specifically on the illegal practices of the insurance firms, with full assistance from the insiders at Universal Life. * * * This is the tip of the iceberg."

Links to the New York Complaint are available in Mr. Spitzer's press release.

Links to the California complaint and settlement documents are available in Mr. Garamendi's press release.

Posted by dougsimpson at November 19, 2004 10:59 AM | TrackBack