Insurance Antitrust Claim Dismissed in NJ
A federal judge in the U.S. district court in Newark, NJ has dismissed all antitrust claims made against dozens of insurers and brokers after almost three years of legal wrangling. The consolidated litigation was a result of proposed class action suits filed in the wake of industry-wide investigations into bid rigging and client steering launched by former New York Attorney General Eliot Spitzer in 2004.
Allegations included that numerous carriers were involved in an antitrust conspiracy in which they allocated clients, fixed prices and restrained trade in violation of The Sherman Act.
Judge Garrett E. Brown Jr. twice rejected conspiracy allegations against the insurers and brokers—who filed motions to dismiss—but earlier this year gave plaintiffs a final chance to amend their filings and bolster their case with supplemental pleadings.
The revised suit, however, still lacks factual support for claims of a widespread conspiracy, Judge Brown said in his opinion, filed last week.
“While plaintiffs present facts to support the possibility of inadequate disclosures by the brokers to the insureds, the complaints are bereft of allegations to demonstrate that this was more than brokers adopting subpar disclosure methods to protect their own, lucrative agreements,” the judge wrote.
In addition, “the adoption of similar disclosure policies and the opportunity to collude through various industry methods is not enough to infer that such a large group of participants engaged in a conspiracy.”
Policyholder claims under the federal Racketeer Influenced and Corrupt Organizations law remain pending, however.
“The decision on Friday dismissed the federal antitrust claim only; we’re still waiting for the judge’s decision on the federal RICO claim” said Mitchell J. Auslander, an attorney for defendant Marsh & McLennan Cos. Inc.
“We are pleased that Judge Brown has dismissed the antitrust claim for the third time,” said Mr. Auslander, who is a partner at the law firm of Willkie, Farr & Gallagher in New York.
Some of the defendants previously had settled allegations leveled as part of the consolidated class action.
In December, Arthur J. Gallagher & Co., based in Itasca, Illinois, agreed to pay about $37 million to end allegations that it, along with other companies, breached federal antitrust rules by conspiring to increase premiums for insurers and commissions for brokers.
Late last year, Zurich American Insurance Co. also settled allegations brought against it in the class action, agreeing to pay at least $121.8 million in refunds to commercial policyholders nationwide.
Published on September 5, 2007
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