PIA commented on the recent dismissal of aspects of a major antitrust and racketeering lawsuit accusing brokers and insurers of conspiring to rig bids and steer customers to attain improper bonuses, in an article in this week’s edition of BestWeek. PIA National Senior Vice President Patricia A. Borowski noted that Chief Judge Garrett Brown, Jr. did the plaintiffs “a big favor” by granting them 30 days to amend their pleadings, because Judge Faith S. Hochberg, who presided over a previous layer of the mega-litigation, told them the same thing in October, and they didn’t listen.”

Like the decision issued in October 2006 by Judge Hochberg, the ruling by Judge Brown held that mere existence of a contingency compensation being available — and even earned by a producer — is not per se evidence that illegal acts have occurred. The opinion stated there is nothing illegal about these compensations, or the right or ability of producers to earn them, Borowski noted.

The case is a consolidation of many lawsuits that were filed after Eliot Spitzer — then New York’s attorney general and now the state’s governor — unveiled his investigation of the insurance industry in 2004.

The court has now twice made clear that the mere existence of a business relationship between these additional defendant brokers and the already named defendant parties (relationships that include contingency earnings) is not by itself a sufficient basis to allege the serious charges of RICO and antitrust violations. 

Judge Brown (as did Judge Hochberg) gave Plaintiffs additional time (30-days) to include such additional information to demonstrate specific deeds being entered into by specific brokers with specific insurers connected to specific earnings that would merit the Judge allowing the charges to move forward for formal consideration and adjudication.  Judge Brown also advised the parties that they the right to directly appeal his decisions – or they could come back with sufficient specific information more directly on-point to their allegations.  Should the latter happen, Judge Brown would then be faced with making an additional determination?

What It Means to Agents:  PIA will continue to monitor subsequent actions.  However, the articulations by both judges that mere generalizations about supposed wrong-doing by “all producers” based on the mere existence of such common, regular business relationships is not on its face singularly wrong – is very good news for PIA members.  This adds to the PIA advocacy efforts & actions with PIA affiliates in these matters.

N.J. Bid-Rigging Investigation Doesn’t End Litigation (BestWeek 4/16/07, page 5)

April 17, 2007