Connecticut Insurance Commissioner Thomas B. Leonardi and Attorney General George Jepsen recently announced that it had settled with the Massachusetts-based insurance broker, William Gallagher Associates, Inc., over illegal billing and concealed commissions allegations. This agreement follows the almost $4 million dollar settlement between the company and The Commonwealth of Massachusetts in 2007 involving similar allegations. While the MA settlement had provided restitution to WGA clients in Connecticut, including Milford Power, Connecticut officials felt that a separate case was needed to redress grievances there.
As Attorney General Jepsen explains, “The conduct in this case was particularly egregious, warranting a separate prosecution and settlement in Connecticut. The company knew that it was violating Connecticut law while engaging in this conduct and took steps not only to hide it from its clients but also from the state. Under this agreement, WGA will forfeit nearly all of the unlawfully obtained overcharges not already returned.”
The Connecticut Insurance Department alleged that William Gallagher Associates, Inc. violated the State’s Unfair Insurance Practices Act and Unfair Trade Practices Act by concealing certain fees and commissions, issuing dummy invoices, altering original policies and keeping two sets of books to conceal the practice. As as result, Connecticut officials say the company’s questionable bookkeeping and billing practices resulted in Milford Power being overcharged by more than $2 million. Under the terms of the settlement agreement, however, WGA will not be required to admit any wrongdoing. It will, however, be required to pay the state $100,000 in civil penalties and forfeit $1.6 million which will be deposited in Connecticut’s General Fund.