California Insurance Commissioner John Garamendi has filed a lawsuit against health insurer Cigna Corp., Philadelphia, and three life and disability insurers for allegedly taking part in an illegal kickback scheme.
The lawsuit, filed in San Diego Superior Court, is part of an expanding investigation into the insurance industry's broker-commission practices touched off by New York Attorney General Eliot Spitzer earlier this year.
Garamendi contends the insurers paid employee-benefits broker Universal Life Resources millions of dollars in secret commissions and other fees in return for steering business their way. "As a result of these unlawful practices, (the) defendants have and continue to increase their profits at the expense of California policyholders," according to the lawsuit, which seeks to permanently stop these practices and to freeze any "ill-gotten monies" in a trust.
The other defendants include MetLife, Prudential Financial and UnumProvident Corp. Universal is also named in the suit, but it signed a consent decree to help Garamendi build his case against the insurers, thereby exempting it from prosecution or fines.
"This lawsuit is one of many steps I will take to ensure that insurance consumers don't suffer because of backroom kickback deal," Garamendi said in press release.