Insurance broker William Gallagher Associates Inc. will pay $1.7 million as a settlement with Connecticut regulators over allegations that it overcharged a client.
The state regulators accused the Massachusetts-based broker of overcharging a local business, Milford Power Company, millions of dollars over several years.
The state alleged that the broker violated the state’s Unfair Insurance Practices Act and Unfair Trade Practices Act in its dealings with Milford Power.
Under the settlement agreement, the broker did not admit wrongdoing but will pay the state $100,000 in civil penalties and forfeit $1.6 million to be deposited in the state’s General Fund.
Connecticut regulators claimed that William Gallagher concealed certain fees and commissions, issued dummy invoices, altered original policies and kept two sets of books to conceal the practice. State officials said the questionable bookkeeping and billing practices dated back to 2002, resulting in Milford Power allegedly being overcharged more than $2 million.
“Under this agreement, William Gallagher Associates will forfeit nearly all of the unlawfully obtained overcharges not already returned,” said Connecticut Attorney General George Jepsen.
According to officials, the Connecticut agreement follows a nearly $4 million settlement in 2007 between the broker and Massachusetts authorities over similar allegations. That settlement provided restitution for the firm’s clients, including Milford Power.
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