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Four major insurance companies paid a broker tens of millions of dollars in hidden kickbacks in exchange for winning contracts with some of the largest U.S. companies, California Insurance Commissioner John Garamendi charged Thursday. A lawsuit filed in San Diego Superior Court names MetLife Inc., Prudential Financial Inc., Cigna Corp. and UnumProvident Corp. The suit also names Universal Life Resources Inc., which brokers employee benefit plans and insurance coverage on behalf of companies such as Safeway Inc., Intel Corp., Northrop Grumman and other Blue Chip names. Garamendi said he has agreed to drop the charges against Universal Life, based in San Diego, in exchange for “full and timely” cooperation in the investigation of the four insurance companies. Paul Salvaty, an attorney for Cigna, said he does not believe the company violated any laws or regulations. He also questioned why Garamendi agreed to cut a deal with Universal Life before completing his investigation. Prudential spokesman Bob DeFillippo said the company has not been served with papers yet and has no comment. The other companies did not immediately return phone calls seeking a response. Universal Life also had not called back. The legal salvo comes less than a week after New York Attorney General Eliot Sptizer sued Universal Life, alleging that it pocketed millions of dollars a year in hidden payments from insurers and from charges on clients’ unsuspecting workers. Garamendi characterized the San Diego lawsuit as an early step in a wide-ranging investigation of the insurance industry that involves regulators across the country. “We are in the opening pages of a very long and very sordid story,” Garamendi told reporters. “We’re going right up the ladder and we’ll see where it ends.” According to the lawsuit, Universal Life charged insurance companies exorbitant hidden fees — sometimes more than 3 percent of annual premiums — in exchange for steering business their way. The suit also alleges that Universal Life charged between $10 and $20 per employee to print brochures that cost only a few dollars to make. Spitzer’s lawsuit said Universal Life collected more than $11.5 million last year in hidden payments from UnumProvident, MetLife, Prudential and others for steering business their way and hiding the payments from customers. The company got another $5.6 million last year through the collection of “communication fees” from insurers that were passed on directly to insurance consumers without their knowledge, the Spitzer complaint said. The fees typically totaled $10 on each supplemental life insurance policy and $5 on supplemental disability policies. Spitzer’s suit mentions Metlife, Prudential and Unum Provident as among the companies writing policies brokered by ULR. Asked last week why the insurers weren’t directly charged in his suit, Spitzer said, “all in due course.” Copyright 2004 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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