N.Y. Insurance Suit Catches Attention Of School Districts

A legal assault on the world’s largest insurance broker by the New York state attorney general has stirred concerns that school districts may be among the victims of alleged fraudulent practices by the company.

In a 31-page complaint filed Oct. 14 in a state court in Manhattan, Attorney General Eliot L. Spitzer accused the New York City-based Marsh & McLennan Cos. Inc. and its Marsh Inc. unit of receiving improper “backdoor” commissions from insurance companies, of rigging bids to present to insurance customers that had hired Marsh as their broker, and of fabricating a spurious bid.

Some of the allegations, to which Marsh has not replied formally, involve a $910 million public school construction program in Greenville County, S.C. As the program’s insurance broker, Marsh failed in its duty to bring in insurance companies’ best offers to a fair bidding process, the complaint alleges. It states that “complicit and profiting insurance companies” may be involved...