NU Online News Service, Sept. 28, 12:42 p.m.EDT

Marsh & McLennan Companies agreed to pay Ohio $4.75 millionto settle an antitrust lawsuit stemming from allegations that thecompany's insurance brokerage firm engaged in a bid-rigging andkickback scheme in return for lucrative contingent commissions.

Yesterday, Ohio Attorney General Richard Cordray said MMCsettled a lawsuit filed in Cuyahoga County Common Pleas Court thataccused MMC's brokerage subsidiary Marsh of "conspiring withvarious insurers to eliminate competition in the commercialcasualty insurance industry."

The suit accused Marsh of conspiring to provide customers withfictitious quotes that created a false impression that competitivebidding had produced the best possible price during the years 2001to 2004.

The accusation stems from the investigation by former New YorkAttorney General Eliot Spitzer that alleged Marsh engaged in abid-rigging and kickback scheme over the placement of insurancewith carriers paying lucrative volume-based contingentcommissions.

MMC paid $850 million into a settlement fund in 2005 to end theNew York investigations. As part of the agreement, MMC gave uptaking contingent commissions, which was a substantial part of itsrevenues at the time, resulting in tremendous disruption to thecompany.

At the beginning of this year, Marsh, along with Aon, reached anagreement with New York, Connecticut and Illinois attorneys generalthat would allow them to once again accept contingents but undernew disclosure rules being mandated by the New York InsuranceDepartment for all producers.

A total of 26 public entities–including universities, schools,municipalities, retirement systems and public authorities–willreceive portions of the recent Ohio settlement.

In a statement, MMC said, "We are pleased to have resolved thismatter, which relates to events dating back to 2004 and earlier.The settlement makes no findings against Marsh, includes no finesor penalties, and expressly does not include any admission ofliability by the company."

A spokesperson for Marsh said there are no more attorney generalcases pending regarding this matter, but a handful of privatepolicyholder lawsuits remain.

"This settlement regains a piece of what we lost as a result ofsecret conspiracies that ultimately cost Ohioans millions inpremium payments by schools, universities, cities, counties andothers," said Mr. Cordray in a statement.

A spokesperson for the Attorney General said in an e-mail thatwhile the settlement is a mutually agreeable resoluion to thelawsuit, and does not contain any admission of liability, thesettlement should not be "construed as a statement by the AttorneyGeneral that his lawsuit was not well-founded."

Regarding the settlement payment, MMC paid Ohio $3.5 million.The other $1.24 million will come from a class action settlementfrom a federal suit filed in New Jersey. If Ohio policyholders donot receive at least $1.25 million from that settlement, MMC willpay the difference.

The Attorney General's office said it has recovered more than$27 million as a result of the lawsuit against Marsh and insurancecarriers. Earlier this year, Mr. Cordray settled with AmericanInternational Group and Hartford Financial Services Group for morethan $9 million.

Cases are still pending against ACE American Insurance Co. andThe Chubb Corp. related to the Marsh allegations, the attorneygeneral said.

The Attorney General's spokesperson said the office sought notonly a return of damages, but also disgorgement of ill-gottenrevenue.

"For Marsh, that revenue took the form of commissions and fees;for the insurers, that revenue took the form of premium," theAttorney General's spokesperson said.

This story was updated at 2:53 p.m. EDT with an additionalstatement from the Ohio Attorney General's office.