Marsh Lawyer Says Fla. AG Ignores State Settlement

March 19, 2006

An attorney representing Marsh & McLennan says that a lawsuit filed by Florida authorities accusing Marsh of lying to clients and receiving improper commissions never should have been filed.

The giant insurance broker’s lawyer says the state has already agreed to a previous settlement over the claims.

The lawsuit by Florida Attorney General Charlie Crist charges Marsh & McLennan and its three subsidiaries with steering clients to insurance providers who paid the broker high commission fees, and not insurers who offered the best prices for their plans.

The suit seeks $26 million.

In January 2005, the New York company agreed to pay $850 million in restitution to end a probe by New York regulators into bid rigging and price fixing. That settlement later served as a template for other insurance company settlements.

Barry Richard, an attorney representing Marsh, said the Florida allegations were “cut and pasted” from an earlier lawsuit Marsh has settled.

“This complaint never should have been filed,” Richard said in a statement.

Marsh and its affiliates — Marsh USA Inc., Marsh Inc. and Marsh Placement Inc. — brokered around 15,000 contracts in Florida from 1998 through last year. The company represented more than 50 public agencies and small businesses in Florida, Crist’s office said in a statement.

“It is clear that this company took advantage of its clients,” Crist said. “Florida citizens and companies were cheated out of the best rates on insurance and did not receive the honest professional advice they paid for.”

The suit also charges Marsh with taking hidden commission fees in violation of the state racketeering rules.

Under the 2005 settlement, Marsh agreed to provide restitution over four years to clients, most of which were corporations. The payout included $130 million to customers in California, $94 million to New York clients, $58 million in Pennsylvania and $55 million in Texas. Companies that accepted the payment would agree not to sue Marsh.

Florida clients have overwhelmingly accepted the settlement, and the State of Florida has also signed documents releasing claims against Marsh, Richard said.

The lawsuit “distorts the facts, disregards the events of the past 18 months and ignores releases signed by the State of Florida itself,” he said.

Crist said his office has not made any agreement to release any claims.

The Jacksonville Electric Authority contracted with Marsh for services on a fixed fee, but the company then received hidden commissions totaling more than $180,000. The same allegedly happened with Miami-Dade county when Marsh took $140,000 in hidden commissions for services brokered on a flat fee, according to Crist’s office.

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