More than 21,000 claimants in a class action lawsuit against Hartford Financial Services Group Inc will likely receive an average of $3,300 each from a $72.5 million dollar settlement. The settlement was approved by U.S. District Court Judge Janet C. Hall last week, according to The BLT: The Blog of Legal Times.
The lawsuit, initiated in 2005, alleged that Hartford didn’t pay out the full amount of insurance claims to its customers. Many of the claims were paid in “structured settlements”, which were typically funded by annuities, which are paid in multiple payments over time (in contrast to one lump sum payment). The plaintiffs claimed that Hartford violated federal racketeering law by developing a scheme to buy the annuities from its Hartford Life affiliate without notifying the claimants, and then setting the prices so that Hartford withheld 15% of the value of the structured portion of settlements. The lawsuit alleged that this practice constituted fraud, breach of contract and unjust enrichment.
As part of the settlement, Hartford did not admit to fraud. According to Patrick Hindert, author of the Beyond Structured Settlements blog, Hartford “denies plaintiffs’ allegations of unlawful or wrongful conduct, and denies that any conduct challenged by plaintiffs caused any damage whatsoever.”
Although Hartford doesn’t admit to any wrongdoing, “the settlement will put real money in the pockets of class members,” said Carl Kravitz, who is the member of the class council responsible for negotiating the settlement, according to the firm’s website.
“To put things in perspective one has to remember that despite a number like $72.5 million, a settlement is a compromise, says John D. Darer, Settlement Planner and Consultant, in his Structured Settlements 4Real blog. He continues, “The plaintiffs, through some very capable attorneys, made allegations of wrongdoing and sought to prove their case. After years of litigation and finally a mediation, the defendants, for their reasons, decided to settle and the plaintiffs agreed to settle.”
A final hearing is scheduled for September 21.
If you think you’ve been a victim of insurance fraud, Rocket Lawyer can help you find a lawyer.