Liberty Mutual lost its first legal effort to dismiss a bid-rigging suit from the New York State Attorney General's office.
New York State Supreme Court Justice Bernard Fried issued a ruling last week that will permit the bid-rigging case to proceed against nine Liberty Mutual subsidiaries including Wausau Insurance Cos., Liberty Mutual Fire Insurance Co. and Liberty Marine Underwriters Inc.
But charges against the Boston-based Liberty Mutual Holding Company were dismissed on grounds of personal jurisdiction.
Liberty Mutual issued statement expressing satisfaction that charges against the holding company were dismissed.
"We are disappointed that the court did not accept our substantive arguments. We continue to believe that the matter needs to be resolved through the judicial process. This is the first step in that process and we fully expect that we will prevail eventually," the statement said.
Last May, New York Attorney General (and now governor) Eliot Spitzer filed suit in New York Supreme Court that asserted in many instances brokers and agents responded to Liberty Mutual's explicitly stated incentives, steering their clients to the carrier, and in many cases violating their fiduciary duty to assist in finding the best insurance for the lowest price.
In the complaint, Mr. Spitzer said that from 2001 through 2004 Marsh repeatedly solicited from Liberty Mutual and other insurers fake bids – so-called "B quotes" – that were intentionally higher or otherwise less favorable to the customer to "support" or "protect" the bid of the favored insurer.
In August of 2005, a former Liberty executive, Kevin Bott, pled guilty to criminal charges in connection with his bid-rigging conduct while employed with the carrier.
In a statement last spring following the Spitzer action, Liberty said that it had been negotiating with the attorney general but found his demands "excessive and unreasonable."
While carriers such as American International Group, Zurich Financial Services and ACE have settled bid-rigging charges stemming from the Marsh investigations, Liberty remains the only holdout for total exoneration.
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