Hartford agrees to pay $72.5 million dollar settlement in RICO case

Posted on: December 15th, 2010 by Steve Larson

On June 7, 2010, the U.S. District Court for the District of Connecticut granted preliminary approval of a $72.5 million dollar settlement between The Hartford Financial Services Group, Inc. (“The Hartford”) and a class of more than 21,000 members who had previously settled personal injury and workers’ compensation claims with The Hartford’s property and casualty company. On average, the settlement will provide each of the class members with approximately $2,200.

The class action suit alleges that when The Hartford settled personal injury and workers’ compensation claims asserted against its insureds, it often paid some or all of the settlement amount with what is known a structured settlement. With a structured settlement, payments are made to the injury victim over time, rather than in one lump sum payment. Those payments over time are commonly funded with an annuity issued by a life insurance company.

The suit further alleges that The Hartford, in funding the class members’ structured settlements, purchased the annuity from its own life insurance company, and in the process, and without disclosure to the injury victim, retained 15 percent of the value of the settlement for itself. The complaint asserted claims under The Racketeer Influenced Corrupt Organization Act (RICO) and for fraud.