Ohio Investigates Bid-Rigging Among Insurers, Brokers

July 25, 2005

The Ohio Department of Insurance is investigating allegations that brokers across the state are engaging in bid-rigging and undisclosed commission arrangements with insurance companies, the Associated Press reported.

The state could take action against insurance companies or brokers by early fall, Director Ann Womer Benjamin said.

The probe began last November and was prompted by a New York case in which Attorney General Eliot Spitzer sued Marsh & McLennan Cos., the nation’s largest insurance brokerage, accusing it of rigging bids and using fees to dupe corporate customers into overpaying for property and casualty insurance.

Bid-rigging involves the improper steering of contracts to certain insurance companies. It sometimes involves inflated or fictitious bids.

Womer Benjamin declined to say how many brokers or insurance companies in Ohio may be violating state laws against deceptive or unfair business practices.

“We’ve gathered a lot of information, and we’ve found enough things to keep digging,” Womer Benjamin said.

The Insurance Department already has moved to strip Columbus broker Kevin Grady of his license to do business in the state.

The Columbus city school district hired Grady for $35,000 a year to review health insurance polices from different companies and to negotiate the best deal possible for taxpayers.

Grady recommended that the district go with Minneapolis-based United Healthcare. But Grady failed to disclose that United Healthcare was paying him to sell its policies to the district.

Because the district’s contract with Grady prohibited him from receiving commissions from insurance companies, school officials fired Grady in January and switched to another health care company in May.

The state recently sent Grady a notice to terminate his license. Grady has 30 days to request a hearing before the insurance department if he wants to fight the license revocation.

A message seeking comment was left at Grady’s office.

United Healthcare representatives have denied that its payments to Grady qualified as a commission.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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