Opinion ID: 1225642
Heading Depth: 3
Heading Rank: 1

Heading: Lawsuits

Text: Daniel v. Aon Corp. was filed in Illinois Circuit Court, Cook County, on August 19, 1999 by Alan Daniel, an Illinois insurance agent who had obtained an errors and omissions policy through Aon. Daniel v. Aon Corp., et al., No.1999-CH-11893 (Ill. Cir.Ct.1999). Mr. Daniel brought this class action against Aon Corporation and Aon Group, Inc., on behalf of purchasers of commercial insurance through Aon's brokerage services. The complaint alleged that Aon and its affiliates received undisclosed financial incentives from insurers that caused them to refer business to insurance companies even if the policy quoted by the insurer was not in the best interest of the customer. The complaint also referenced a 1999 New York Times article (another exhibit submitted by Appellees) for the proposition that large commercial brokers had an incentive to steer business to those insurers that offered the biggest kickbacks, rather than to those that provided the best coverage and lowest prices to the insureds. (J.A. 161.) Amended complaints were filed on November 1, 1999, and February 9, 2001. The Hartford was neither named as a party nor mentioned in any of the complaints. The Daniel lawsuit was mentioned in an insurance industry newsletter, National Underwriter, on October 2, 2000. None of the materials pertaining to the Daniel lawsuit (including the National Underwriter article) mentions The Hartford.
Turner v. Aon Corp. ( Turner I ) was filed on December 23, 1999, in California Superior Court, County of Monterey. Turner v. Aon Corp., et al., No. M 47230 (Cal.Super.Ct.1999). Plaintiff Scott C. Turnera California attorney who specializes in insurance lawsued major brokers, including Aon, Marsh and Willis Corroon (and their affiliates), on behalf of the general public. (J.A. 123-32.) The Turner I amended complaint alleged that, since at least 1986, and without policyholders' knowledge, defendant brokers entered into undisclosed agency contracts with insurance companies, pursuant to which the defendants were paid commissions based upon the amount of business they produced for the insurance companies. (J.A. 128, ¶¶ 23-24.) These undisclosed agency contracts allegedly created a conflict of interest between the financial interests of the defendants and the interests of their policyholder clients. Turner did not sue The Hartford, and the complaint mentioned the company only once, when it alleged, The insurance companies which entered into the undisclosed agency contracts with the defendants include The Travelers Insurance Group, The Chubb Group of Insurance Companies, The Hartford Insurance Group and, upon information and belief, other major property and casualty insurance companies. (J.A. 128 ¶ 24.) The October 2000 National Underwriter article mentioned above also noted the Turner I lawsuit, but as with the Daniel action it did not implicate The Hartford or any other insurer. The allegation from the Turner I complaint that is quoted above did not appear in the article, which stated only that the Turner I suit claimed that  brokers should have disclosed the fees to their clients earlier and that the fees should have been passed onto their clients. (J.A. 224 (emphasis added).)
Village of Orland Hills, filed on September 22, 2000, in Illinois Circuit Court, Cook County, was a class action alleging that Gallaghera brokerbreached its fiduciary duties by receiving undisclosed contingent commissions (kickbacks) from insurance companies for insurance placed on behalf of its insureds. Village of Orland Hills v. Arthur J. Gallagher & Co., No. 00-CH-13855 (Ill.Cir.Ct.2000). (J.A. 171 ¶ 1.) The complaint also alleged that Gallagher's contingent commission agreements with insurance companies created a conflict of interest, in breach of fiduciary duties, because the broker puts its financial interests first, secretly profiting at the expense of its clients by placing insurance policies with those insurance companies which pay contingent commissions. (J.A. 174 ¶ 15.) No insurer, including The Hartford, was named as a defendant. The Village of Orland Hills lawsuit was discussed in a brief (167 word) squib that appeared in the Chicago Tribune. The article succinctly summarized the allegations in the complaint. (J.A. 227.) Neither The Hartford nor any other insurer was mentioned in the Tribune article.
Turner v. Hartford Fire Ins. Co., et al. ( Turner II ) was filed by Scott C. Turner on July 25, 2001, in California Superior Court, County of San Francisco. Turner v. Hartford Fire Ins. Co., et al., No. 323192 (Cal.Super.Ct.2001); (J.A. 134-53.) Among the defendants were a number of insurance companies, including various Hartford subsidiaries, although not The Hartford Financial Services Group, Inc., the Defendant in this action. The Turner II complaint alleged that the defendants entered into Undisclosed Agency Contracts with brokers, whereby the defendants paid brokers millions of dollars in undisclosed fees and commissions based upon the amount of business produced for the defendants by the brokers. (J.A. 140 ¶¶ 26-27.) According to the complaint, these fees and commissions constitute kickbacks to brokers of premiums paid to defendants by policyholders. ( Id. ¶ 27.) The complaint also alleged that the defendants engaged in unfair business practices, and breached their duty of good faith and fair dealing by failing to disclose the contingent commissions (and the concomitant increased cost of premiums to cover these commissions), to their policyholders. (J.A. 144.) In addition, the complaint alleged that the insurer defendants helped brokers prepare statements to claimants that contained false or misleading information about the material fact that brokers had a conflict of interest. (J.A. 148.) The Turner II complaint contained many allegations that appear in the instant complaint concerning the broker-insurer commission scheme (though no allegations about bid rigging or price manipulation). However, this lawsuit apparently flew under both industry and press radar screens. Filed in a California state court, it was not discussed in any of the press articles submitted by Appellees. The lawsuit also was not mentioned in any of The Hartford's public filings. Based on the exhibits submitted by Appellees, the only way this lawsuit could have come to the attention of the investing public was if someone had encountered it while examining the docket of the Superior Court of San Francisco County.