Blumenthal Suit Against Marsh Goes Forward

Connecticut's Supreme Court has ruled the state's attorney general can seek damages from Marsh for the harm its business practices caused to the state's economy.

In a decision last week, the court overturned a lower court ruling that state Attorney General Richard Blumenthal could not sue Marsh over harm to the state's economy because federal law trumped a state statute allowing the attorney general to seek such damages.

Mr. Blumenthal sued Marsh, contending that the broker's alleged kickback scheme, where the broker took part in a bid-rigging scheme and steered business to insurers paying lucrative volume-based contingent commissions, damaged the state's economy because commercial clients paid too much for their insurance.

In a statement, Mr. Blumenthal called the ruling groundbreaking and an affirmation of the state's right to seek damages where the state's economy is harmed.

“This law allows my office to strongly and severely punish illegal and anticompetitive business practices that ripple through the state economy, stealing hard-earned dollars from consumers and honest business people,” Mr. Blumenthal said in a statement.

The attorney general's suit goes back to 2005 when he sued for violations of state antitrust and consumer protection laws. He also sought money for damages to the state's economy, arguing that Marsh's alleged practices increased insurance costs for businesses statewide.”

Mr. Blumenthal said only three states–Connecticut, Virginia and Nevada–allow an attorney general to seek damages for illegal and anticompetitive practices that damage their state's economy.

In a statement, Christine Walton, a spokeswoman for Marsh & McLennan, Marsh's parent, said the “decision does not address the merits of the case before the Connecticut Superior Court, which contains allegations already resolved through a comprehensive regulatory settlement in 2005.

“Clients in all 50 states have overwhelmingly accepted the settlement as fair compensation, and clients based in Connecticut have accepted more than $24 million in compensation.

“We will continue to defend the company's interests vigorously in the lower court,” Ms. Walton said.

In the multistate settlement led by then New York Attorney General Eliot Spitzer, the broker paid a total of $850 million into a fund to compensate affected clients.