Managed Care Matters

The latest insurance broker to plead guilty (without actually pleading guilty) is HRH, aka Hilb Rogal &Hobbs, who agreed to pay $30 million into a compensation fund plus a $250,000 fine to settle charges related to rebating, account steering, and broker compensation activities at it's Connecticut subsidiary.

According to Insurance Journal;

"The state complaint against HRH centered on its dealings with a hospital management company. The state claimed that HRH shared commissions with Women's Health USA Connecticut and steered clients to preferred brokers to win bigger commissions. State law forbids rebating by brokers to clients. Women's Health Connecticut has denied it received rebates or shared commissions. The settlement indicates that HRH's Hartford office disguised the deals…The (Connecticut State Attorney General Blumenthal) AG had alleged that HRH unlawfully steered clients to favored insurance carriers to qualify for larger bonuses and contingent commissions; moved blocks of clients to favored insurers to qualify for larger bonuses and contingent commissions; implemented a "carrier consolidation" program expressly designed to steer clients to a select group of insurers in order to qualify for larger bonuses and override commissions; placed clients in "producer captive" insurance carriers of which HRH owned all or part without disclosing that ownership interest to its clients; entered into undisclosed fee arrangements whereby insurers paid undisclosed compensation to HRH for the placement of insurance; paid improper premium rebates to clients in return for that client retaining HRH as its broker; and provided preferred insurers with first looks on books of business that HRH wished to move to preferred carriers in order to increase HRH's bonus and contingent compensation."

Leaving aside Blumenthal's penchant for the limelight and well-documented ability to gain publicity, what is particularly notable about this case is it represents a very significant financial penalty hitting one mid-tier broker for activities related to one client in one very small state.