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New York Attorney General Eliot Spitzer widened his investigation of the insurance business by suing Universal Life Resources (ULR) for allegedly taking kickbacks from big life insurers. The civil fraud suit against the California based ULR alleges that they took "undisclosed payments" from insurance firms selling life, accident and disability policies to corporations. In return the broker steered work to the life insurers, a practice Spitzer argues "raised premiums for individual employees." The lawsuit further alleges that ULR hid these payment agreements by falsely representing its compensation, omitting its fees from mandatory government filings, and refusing to deal with insurers who would not go along with its concealed arrangements.
This action against Universal Life Resources is part of Spitzer's ongoing investigation into fraud and anti-competitive practices in the insurance industry. The lawsuit alleges some of the insurers agreeing to make the payments, called "override agreements" include MetLife, Prudential Financial, and UnumProvident.
Spitzer also comments about that the insurance industry which "demonstrates that the corrupt practices first laid bare in the Marsh suit are present in additional sectors of the industry... which have taken root in the employee benefits market as well."
"What is particularly egregious in this case is that the costs of ULR's concealed payments were ultimately borne by individual employees, who were in no position to know about or contest these illegal practices," said Spitzer in a press release. Since 1999, ULR has brokered life, accident, and disability insurance coverage for more than 4 million employees from various corporations including Intel, Colgate-Palmolive, Eastman Kodak, Marriott International, United Parcel Service, and Dell.
In addition to Spitzer's suit, the State Insurance Department of California issued citations against ULR and several affiliates alleging that they used fraudulent, coercive and / or dishonest practices and demonstrated untrustworthiness in violation of the New York State Insurance Law.
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