Florida Attorney General Charlie Crist has filed a civil complaint against Marsh & McLennan Companies Inc., alleging that the company illegally manipulated insurance markets to obtain improper commissions and engaged in bid-rigging.
In a joint action, the Attorney General’s Office and the Department of Financial Services charged the corporation and three of its affiliated and subsidiary companies with numerous violations of Florida’s Racketeer Influenced and Corrupt Organization Act (the “RICO Act”) and antitrust statutes.
The Attorney General’s Antitrust Division and DFS conducted a joint investigation leading to allegations that Marsh and its affiliates manipulated insurance markets.
The allegations state that Marsh and its affiliates improperly steered business to insurers that paid Marsh the highest commissions, rather than to insurers that would offer the best prices for Marsh’s clients.
The complaint also alleges that Marsh engaged in bid-rigging, with active participation from numerous insurers.
“It is clear that this company took advantage of its clients,” Crist said. “Florida citizens and companies were cheated out of the best rates on insurance and did not receive the honest professional advice they paid for.”
Marsh and its affiliates–Marsh USA Inc., Marsh Inc. and Marsh Placement Inc.–brokered approximately 15,000 insurance contracts in Florida from 1998 through 2004. Marsh’s clients included more than 50 public entities in the State of Florida as well as some small businesses and individuals, although the majority of the clients were large corporations.
Florida entities affected by Marsh’s undisclosed compensation scheme include the Jacksonville Electric Authority and a joint venture known as the St. Johns River Power Park. After contracting to provide services for only a fixed fee, Marsh allegedly received hidden commissions from insurers amounting to more than $180,000. Similarly, Marsh contracted with Miami-Dade County to provide coverage for services for a flat fee, but received from insurers an additional $140,000 in hidden commissions, officials charged.
The Attorney General’s Office issued subpoenas in November 2004 to Marsh and several other insurance brokers and insurers. Investigations into the other companies are ongoing.
Marsh is alleged to have violated Florida’s antitrust laws, Chapter 542, Florida Statutes, as well as the RICO Act. Florida’s antitrust laws allow fines of $1 million per corporate violation. The RICO Act and antitrust laws further provide for restitution up to three times the amount lost due to the unlawful conduct.
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