STATE v. ACORDIA, INC., SC 18756

Judicial District of Waterbury

Insurance; Whether Insurance Broker Violated CUIPA in Failing to Disclose to its Clients an Agreement to Steer Clients to Certain Insurers in Exchange for Commission Payments. The state brought this action against the defendant insurance broker, alleging that the defendant entered into a program, known as the Millennium Partnership Program (MPP), with selected insurers, whereby it would secretly steer clients to those insurers in return for commission payments.  The state asserted that the defendant's clients mistakenly believed that the defendant was recommending insurance products that offered the best coverage for the best price when the defendant was actually recommending products with the aim of maximizing its commissions under the MPP.  The state claimed that the defendant violated the Connecticut Unfair Trade Practices Act (CUTPA) and its fiduciary duty of loyalty and fair dealing to its clients.  The trial court ruled for the state on both claims. The court noted that the defendant sells insurance through its wholly owned subsidiaries and their respective producers and that the majority of producers had never heard of the MPP. It then determined that although the state had not proved that the producers acted improperly, it had proved that the defendant breached its fiduciary duty to its clients in failing to disclose the MPP.  In rejecting the defendant's claim that the producers' relationships with their clients could not be attributed to it and that it had no fiduciary duty to the clients, the court held that the defendant could not hide behind its corporate form after directing its subsidiaries to carry out its unfair and deceptive business practices.  It also found no merit in the defendant's argument that the state could not prevail on the CUTPA claim because it had failed to prove that the conduct violated the Connecticut Unfair Insurance Practices Act (CUIPA).  The court agreed that for insurance-related conduct to constitute a violation of CUTPA, the conduct must also constitute a violation of CUIPA.  It found, however, that CUIPA had been violated here because the defendant's nondisclosure of the MPP was "deceptive or misleading" under CUIPA.  Moreover, it ruled that the state's action was not barred by the "filed rate" doctrine, which precludes actions that question the amount of premiums charged to consumers if the rates are filed with appropriate regulatory authorities, which, in this case, would be the department of insurance.  It determined that the state was not questioning the reasonableness of any premium but was seeking to compel the disclosure of the MPP.  By way of relief, it ordered the defendant to account for all commissions earned under the MPP for its Connecticut clients so that it could determine how much of the defendant's revenues were derived from conduct that violated CUTPA.  In this appeal, the defendant argues that the trial court improperly found that it violated CUIPA and improperly engrafted a fiduciary duty of disclosure into CUIPA.  It also argues that the court improperly found that it had a fiduciary duty to disclose the MPP to its subsidiaries' clients and improperly ordered relief for damages that are barred by the filed rate doctrine.