Marsh Admits Overcharging School Districts

December 3, 2004

State insurance regulators are investigating Marsh USA, which has acknowledged overcharging six Oregon school districts and Lane Community College since 2000.

Marsh, the nation’s biggest insurance brokerage, alerted the districts to the inflated bills in late October and has offered to reimburse them, said Ed Healy, managing partner of Marsh’s office in Portland.

In return for the $1.2 million in reimbursements, Marsh asked its clients to sign a release waiving their right to take legal action against the brokerage. Most of the districts rejected Marsh’s request, and the company agreed to repay them anyway.

The Oregon Insurance Division decided to investigate after learning of the matter last week, said Cory Streisinger, director of the Oregon Department of Consumer and Business Services.

Streisinger said Marsh deserves credit for admitting the overcharges and offering the reimbursements. But she was surprised to learn that Marsh had asked for legal releases in exchange.

“We would expect the brokerage to make restitution unconditionally,” she said. “If a district came to us with a complaint about that practice (of requesting legal releases), that’s certainly something we’d look into.”

School districts in Beaverton and Eugene were told by Marsh that they each had been overcharged more than $180,000 since 2000, district officials told The Oregonian on Tuesday. Officials at Salem-Keizer schools and the Reynolds School District in Troutdale said they each had been overcharged by more than $200,000.

Healy said the overcharges were unrelated to accusations out of New York that the company masterminded widespread insurance bid-rigging.

Eliot Spitzer, New York attorney general, sued Marsh in October, claiming the company collected more than $800 million from insurance companies in return for engineering sham bidding and steering them new business.

Spitzer filed his lawsuit Oct. 14. Days later, Marsh alerted its Oregon clients about the overbilling.

Healy said suspicions first arose within the local Marsh office in August. The company then reviewed years of records, determining that a handful of clients had been overcharged.

“We have turned this place upside down,” Healy said. “We have confirmed that it is seven clients who were involved. That is the scope of it, period.”

The school districts and state regulators are not ready to accept Marsh’s version of events. The districts have asked Marsh to pay for an independent audit of Marsh’s services and billings.

Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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