A federal judge has thrown out the civil racketeering claim in a class action case against a number of brokers alleged to have been involved in conspiracies to steer insurance contracts to insurers in exchange for lucrative contingent commissions.
U.S. District Court Chief Judge Garrett E. Brown Jr. in Newark, N.J., threw out the remaining allegations on Friday against insurance brokers and carriers that under the Racketeer Influenced and Corrupt Organizations Act (RICO) they conspired to control the insurance market.
In a 73 page ruling, Judge Brown said the plaintiffs failed to show that the brokers engaged in a vast conspiracy with insurers to manipulate the insurance market.
"The Court concludes that the totality of plaintiffs' factual allegations, limited to mere naming of a string of defendants and a number of unrelated transactions, fails to suggest that actual RICO enterprises were in existence," Judge Brown wrote.
One of the most prominent defendants in the case Marsh, the insurance brokerage arm of New York-based Marsh & McLennan Companies Inc., said in a statement, "We are very pleased that the federal court has dismissed, with prejudice [the plaintiffs can not file suit again], all of the federal antitrust and RICO claims asserted against Marsh and other industry participants.
"This decision represents a major step forward for Marsh."
In late August, Judge Brown threw out claims that the plaintiffs engaged in a conspiracy to control the markets and restrain trade under the Sherman Act. That left only the RICO portion of the suit to be decided.
While the federal portions of suit were rejected, allegations of state violations of the Employment Retirement Income Security Act are still to be reviewed.
An attorney representing Marsh said back in September that the state violations were a smaller issue and not of the same magnitude as the federal violations.
This was the third attempt by more than three dozen commercial lines clients to pursue the suit against the industry.
The class action, titled Insurance Brokerage Antitrust Litigation/Employee-Benefit Insurance Brokerage Antitrust Litigation, was the consolidation of a number of suits filed beginning in 2004 against more than 20 insurance brokers, companies and their subsidiaries, alleging the defendants conspired to manipulate the allocation of clients between them and to protect market share.
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