Conn. AG settles with Mass. insurance broker

Bryan Cohen Oct. 28, 2011, 2:27pm


HARTFORD, Conn. (Legal Newsline) - Connecticut Attorney General George Jepsen and Insurance Commissioner Thomas Leonardi announced a $1.7 million settlement Friday with a Massachusetts-based insurance broker over allegations that the company misrepresented and concealed commissions and fees.

The state alleged that William Gallagher Associates Inc., violated the state's Unfair Insurance Practices Act and Unfair Trade Practices Act in its dealings with Milford Power Company LLC, ultimately overcharging a Connecticut client millions of dollars over several years.

The state alleged that WGA concealed certain fees and commissions, altered original policies, issued dummy invoices and kept two sets of books to conceal the practice. State officials said the questionable billing and bookkeeping practices dated back to 2002, resulting in Milford Power allegedly being overcharged more than $2 million.

The state also alleged that when the insurance department asked the company in 2004 about inappropriate solicitation activities occurring within the company, WGA did not accurately and completely respond to the department's inquiry.

"The conduct in this case was particularly egregious, warranting a separate prosecution and settlement in Connecticut," Jepsen said. "The company knew that it was violating Connecticut law while engaging in this conduct and took steps not only to hide it from its clients, but also from the state. Under this agreement, WGA will forfeit nearly all of the unlawfully obtained overcharges not already returned."

Under the terms of the agreement, the company did not admit wrongdoing but will forfeit $1.6 million to be deposited in the state's General Fund and will pay the state $100,000 in civil penalties.

The agreement comes on the heels of a nearly $4 million settlement in 2007 between the company and Massachusetts authorities over similar allegations. That settlement provided restitution for WGA clients, including Milford Power.

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