CA sues Insurance Broker, Providers in Commission Scheme

According to a  Web site statement , Garamendi disclosed that a settlement had been reached with ULR requiring it to end these practices immediately.

Garamendi’s suit charged the defendants with violating state law by withholding from clients information about the secret deals struck with ULR. Garamendi alleged that ULR, a broker specializing in employee benefits, got the payments in exchange for steering to the insurers the business of corporations seeking group life, disability and other coverage. The kickbacks, the lawsuit said, led to higher insurance costs for the corporations and their workers.

The suit, filed in California Superior Court in San Diego, names MetLife Inc., Cigna Corporation, Prudential Financial Inc., and UnumProvident Corporation as defendants.

“Employers and consumers put their trust in brokers to help them find the best insurance at the best price,” Garamendi said in the statement. “But that trust has been broken. This lawsuit is one of many steps I will take to ensure that insurance consumers don’t suffer because of backroom kickback deals.”

The New York attorney general, Eliot Spitzer, filed a similar lawsuit against Universal Life Resources on Friday. In his suit, Spitzer said some of the same insurance companies paid incentives to encourage the broker to send them business. Spitzer did not sue any of the insurance companies (See  Spitzer Expands Focus in Insurance Probe  ).