Hartford Class Action Settlement of $72.5M Approved

Bridgeport, CN: A federal judge has approved a class-action settlement under which Hartford Financial Services Group will pay $72.5 million to settle claims that the company shortchanged some 22,000 injured claimants through structured settlements.

U.S. District Court Judge Janet Hall approved the settlement on Sept. 21, according to court papers. Hartford will place $72.5 million in an escrow account to settle the suit. Hartford did not admit to any wrongdoing.

The case, filed in October 2005, alleged the insurer settled personal injury and workers' compensation claims dating back to 1997 by using structured settlements written as annuities through its own subsidiary. Hartford allegedly did not disclose that it held back 15 percent of the structured settlements to pay itself for profits, taxes and expenses, the lawsuit said.

Plaintiffs' attorneys argued Hartford was engaged in racketeering in violation of the federal Racketeer Influenced and Corrupt Organizations Act, and had demanded a jury trial.

Hartford had disclosed the settlement in its first-quarter 2010 earnings report, which stated, "The resulting $47 million after-tax charge was reflected in the corporate segment of the company's financial results for the first quarter of 2010" (BestWire, June 12, 2010).

Each plaintiff could reportedly receive, on average, $3,300 from the settlement. Plaintiffs' attorneys will receive 30 percent of the settlement, or $21.8 million, plus $817,133 in expenses, according to court papers.

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Published on Sep-28-10