Insurance Broker Comp Now Draws Spitzer's Gaze

June 11, 2004 (PLANSPONSOR.com) - Three large U.S. insurance providers revealed Friday that they had been hit with subpoenas from New York Attorney General Eliot Spitzer seeking information on broker compensation.

The latest information demands to Aetna Inc., CIGNA Corp., and MetLife, Inc. are part of the attorney general’s broader investigation into whether fees that insurers pay brokers as an incentive to sell their products pose a conflict of interest .

Late Thursday, theHartfordsaid that it, too, had received a subpoena.   The investigation reportedly centers on compensation paid to brokers for exceeding sales goals and keeping down claims costs that may undermine the brokers’ loyalty to their customers, both corporations and consumers, who pay the same brokers fees and commissions to arrange coverage.  

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Several insurance brokers disclosed in late April that they had received subpoenas from Spitzer, including Marsh and Aon, the two largest in the world, and Willis Group Holdings, according to the NY Times.  

It’s the latest in a series of investigative forays for Spitzer’s office which, in addition to the mutual fund trading scandal, has recently initiated investigations of variable annuity practices (see  Spitzer Turns Regulatory Gaze on Variable Annuity Products ) health insurance companies (see  Spitzer Goes After Health Plans ), and ex-NYSE Chairman Dick Grasso’s compensation package (see  Spitzer Slaps Former NYSE Head Grasso with Pay Suit ).

Illinois Felon Judge to Get Retirement Payments Refund

May 23, 2003 (PLANSPONSOR.com) - Even though a former Illinois judge was convicted of extortion, he is still entitled to get back $113,400 he paid into a retirement fund, the state's high court ruled.

Illinois Supreme Court justices ruled that a legal loophole allows David Shields, former chief of Cook County’s chancery division, to collect everything he paid in over his 19-year judicial career in addition to benefits he already collected, the Chicago Sun-Times reported. Shields was sentenced in 1992 to three years in prison on charges stemming from a 1988 federal sting in which he took $6,000 in bribes to fix a case.

Shields retired in 1990 and received $75,349 in his $5,000-a-month pension before his conviction. At that point the state Judges’ Retirement System cut off his benefits. State law allows refunds to people who lose their pensions before collecting the full amount they paid in. And when a retiree dies, his family gets an amount equal to the difference between what he paid in and what he received.

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However, there’s no similar restriction in the portion of the law addressing pension terminations because of convictions, Justice Thomas Kilbride wrote in his opinion for the court. ”We will not presume that the Legislature intended to define rights or procedures where the statute is silent on the subject,” Kilbride wrote. ”We can neither restrict nor enlarge the meaning of an unambiguous statute.”

The decree overturned lower court rulings that granted Shields a refund of $37,873 – the difference between what he paid and what he collected. Otherwise, the courts said, a judge convicted of a felony would get more money than someone whose pension ended upon his death.

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