California Insurance Commissioner John Garamendi sued health insurer Cigna Corp., Philadelphia, and three life and disability insurers for allegedly taking part in an illegal kickback scheme. The lawsuit in San Diego Superior Court is among a growing number nationwide involving the insurance industry's broker-commission practices that were touched off earlier this year by an investigation by New York Attorney General Eliot Spitzer. Garamendi contends that 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. The suit seeks to stop the alleged practices and freeze "ill-gotten monies" in a trust.
The other defendants are MetLife, Prudential Financial and UnumProvident Corp. Universal is also named in the suit but is exempt from prosecution or fines in exchange for helping Garamendi build his case against the insurers. "This lawsuit is one of many steps I will take to ensure that insurance consumers don't suffer because of a backroom kickback deal," Garamendi said in a news release. -- by Laura B. Benko