The Hartford Financial Services Group has agreed to settle a $72.5 million class-action lawsuit that accused it of using questionable business practices when paying personal injury and workers' compensation claims.
The case, which began in 2005, was certified as a class-action lawsuit in 2009 and eventually held more than 21,000 members. The average settlement will provide each of the class members with approximately $3,300, before payment of fees and expenses.
According to a release from Zuckerman Spaeder, LLP, the law firm that represented the plaintiffs, the class-action suit alleged that when The Hartford settled personal injury and workers' compensation claims against its insureds, it often paid some or all of the settlement amount with what is known a structured settlement.
With a structured settlement, payments are made to the injury victim over time, rather than in one lump sum payment. Those payments are commonly funded with an annuity issued by a life insurance company.
The suit alleged that The Hartford, in funding the class members' structured settlements, purchased the annuity from its own life insurance company, and in the process, and without disclosure to the injury victim, retained 15 percent of the value of the settlement for itself.
The Hartford was contacted for a response and a spokesperson for the company asserted its innocence while stating the reasons for settling the case.
"We are confident that every claimant received the amount that was specified in the structured settlement agreements," said the spokesperson. "[We] are settling to avoid the uncertainties and costs of continued litigation."
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