In what business lawyers are calling an important decision, the state Supreme Court has reversed a trial court's ruling that one of the country's largest insurance brokerage firms had violated state statute when taking kickbacks to push clients to certain insurers.

The state Supreme Court, in a complex 25 page ruling penned by Justice Christine S. Vertefeuille, said the trial court should not have relied on a common-law fiduciary duty violation and that the basis for an unfair insurance practice claim can only come from what is expressed and listed in the statute itself.

Vertefeuille wrote that a look at legislative history in the state "demonstrates that the legislature intended to occupy the field of defining unfair insurance practices, thereby precluding courts from incorporating common-law principles as a basis for finding an unfair insurance practice."

In 2006, then-state Attorney General and current U.S. Senator Richard Blumenthal filed a lawsuit against Acordia, Inc, which is now called Wells Fargo Insurance.

The lawsuit alleged that Acordia violated the Connecticut Unfair Trade Practices Act (CUTPA) and its fiduciary duty of loyalty and fair dealing to its clients. Clients mistakenly believed Acordia was recommending insurance products that offered the best coverage for the best price when they were actually pushing clients towards certain insurers and receiving kickbacks for doing so.

Specifically, the state alleged that Acordia entered into various agreements with insurers such as the Hartford and Travelers, and besides the normal rate they received from the insurance carriers for the business, the agreement entitled Acordia to an additional 1 percent commission from the participating insurance carriers called a contingent commission arrangement or CCA. The added expense is passed on to customers in the form of higher premiums.

This process acted as a sales incentive for insurance agents to sell certain insurance companies' products over other insurance companies.

Acordia assured insurers that its agents would be told of the insurer's priority status within Acordia. Compliance by Acordia offices was tracked.

Acordia made the consequences clear to insurers who did not want to participate. One former senior vice president of Acordia told Kemper Insurance: "Please let me know if we can find a solution before our marketing plans for the next 18 months exclude you from growth potential."

Blumenthal claimed that Acordia, from 2000 to 2005, earned roughly $200 million in contingent commissions.

The case went to a bench trial for eight days in 2010 with four Connecticut consumers testifying. In the end, the judge ruled that Acordia violated CUTPA and had a duty to be open and honest with clients about the program.

By way of relief, the judge ordered the brokerage firm to account for all commissions earned under the CCA programs for its Connecticut clients so that it could determine how much of the defendant's revenues were derived from conduct that violated CUTPA.

Acordia then appealed and the state Supreme Court heard the case and reversed the verdict.

Acordia's lawyers included Mitchell R. Harris of Day Pitney, who declined comment and Alan Kildow of DLA Piper in Minnesota, who did not return calls.

Assistant Attorney General Matthew Budzik argued the case for the state. The Attorney General's Office declined to comment through a spokesperson.

Business lawyer Anthony R. Minchella, of Minchella & Associates in Middlebury said the state Supreme Court opinion was "significant."

"The common law is integral to our system of justice and now, for the most part, cannot be looked to, to protect consumers from unfair or deceptive conduct by those engaged in the insurance business," said Minchella. "That, in my view, is way too restrictive and runs afoul of the intent which is to protect consumers of insurance, one of the largest industries out there."

Minchella said the decision seems to make it easier to penalize a small local business than a large insurance brokerage firm.

"After this case, a small, family owned business can face an unfair trade practice claim, with all its penalties, based on common law principles under CUTPA, but the almighty insurance industry, for all intents and purposes, will not," Minchella said.