New York AG Spitzer Sues Universal Life for Fraud

New York Attorney General Eliot Spitzer (search) Friday filed suit against Universal Life Resources (search) (ULR), charging the life and disability insurance broker with taking fraudulent kickbacks for steering business to certain insurers.

The suit is the latest move by Spitzer in his wide-ranging probe into price-fixing in the insurance industry, and follows a similar suit against No. 1 insurance broker Marsh & McLennan Cos. Inc. (MMC).

Spitzer's suit, filed on Friday at the New York State Supreme Court in Manhattan, charges that ULR had secret agreements with insurers such as MetLife Inc. (MET), Prudential Financial Inc. (PRU) and UnumProvident Corp. (UNM). In those deals, the suit stated, millions of dollars were paid to ULR in exchange for steering the business of its clients to select insurers.

The suit names ULR, its Chief Executive Douglas Cox and two affiliated corporations — Universal Life Resources and Benefits Commerce. The suit seeks to end the secret agreements, disgorgement of improper payments, restitution for injured parties and punitive damages.

ULR, a closely held company based in San Diego, is already being sued by a consumer organization, United Policyholders, for allegedly taking undisclosed payments from a group of insurers.

According to a USA Today report, a class-action suit on behalf of an Intel Corp. employee has also been filed against ULR.

Earlier on Friday, Spitzer told the Reuters Finance Summit that his office could file a lawsuit against an unidentified insurance company stemming from his seven-month investigation into bid-rigging.

A lawyer representing Universal Life said earlier that the company had no knowledge of any suit. He was not available for comment after the suit was filed.

News of the suit sent shares of insurers lower. MetLife lost 2.71 percent at $38.74, UnumProvident was off 3.87 percent at $13.65 and Prudential slid 3.25 percent to $48.16, all on the New York Stock Exchange.