Hartford Settles Workers Compensation Class Action for $72.5 Million

Jenna Greene    06-11-2010

The Hartford Financial Services Group, Inc. this week settled a class action for $72.5 million alleging fraud in connection to personal injury and workers compensation payments.

The suit, filed in federal court in Connecticut in 2005, alleged that the insurance company shortchanged more than 21,000 class members who had previously settled claims with it.

“The settlement will put real money in the pockets of class members,” said plaintiffs co-counsel Carl Kravitz, a partner at Zuckerman Spaeder in Washington, in a statement.

According to the suit, which also alleged violations of The Racketeer Influenced Corrupt Organization Act, when Hartford settled personal injury or workers comp claims against its insureds, it often paid some or all of the settlement amount via a structured settlement.

With a structured settlement, payments are made to the injury victim over time, rather than in one lump sum. The payments are commonly funded with an annuity issued by a life insurance company.

The suit further alleged that Hartford, in funding the structured settlements, purchased the annuity from its own life insurance company without disclosure to the injury victim. As a result, Hartford allegedly retained 15 percent of the value of the settlement for itself.

In approving the settlement on Monday, Judge Janet Hall noted the agreement “resulted from arm’s-length negotiations by highly experienced counsel after almost five years of hard-fought litigation.”

Also representing the class was Silver, Golub & Teitell; Berger & Montague; and Risk Law Firm. Attorney fees have not yet been awarded.

Hartford was represented by William Jeffress, a partner at Baker Botts in Washignton, and James Bicks, a partner at Wiggin and Dana in Stamford.

This article first appeared on The BLT: The Blog of Legal Times.

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