The New York Attorney General's 2004 insurance investigation revealed compelling evidence pointing to the widespread practice of bid rigging and other improper transactions perpetrated by ACE, AIG, and Marsh, among others. ACE avoided a trial by paying a large settlement, agreeing to significantly change its business practices, and the company issued a formal apology to consumers who had been victimized.
"Too Little, Too Late," Judge Tells ACE Unit Fighting Lawsuit Interest Fees
June 15th, 2015 - First, ACE American Insurance Co. was ordered to pay client U.S. Bank $10 million toward settling a class-action lawsuit against the banking giant.
Now, a federal judge in Minneapolis has ordered the ACE Group unit to pay pre-judgment interest plus legal fees of $5 million that the bank expended on defending itself.
U.S. Bancorp and U.S. Bank were sued in 2009 and 2010 by three plaintiffs who claimed the company was settling customers’ debit card transactions in a way that improperly generated overdraft fees. U.S. Bancorp denied the charge. But after consulting with insurers ACE American and Indian Harbor Insurance Co. – both of which sold it liability coverage – it agreed on July 2, 2013, to a $55 million settlement.
Indian Harbor, a subsidiary of XL Specialty Insurance Co., and ACE had approved the settlement but reserved their right to challenge coverage. They did just that, and U.S. Bancorp sued.
U.S. Bancorp secured a summary judgment on December 16th, 2014, that declared that Indian Harbor owed it $20 million, and ACE owed it $10 million on its excess policy. Then the bank went after the insurers for pre-judgment interest and legal fees.
U.S. District Judge Paul Magnuson, in Minneapolis, has now determined that Indian Harbor owed the plaintiffs $3.3 million in pre-judgment interest and that ACE owes $1.66 million. Further, he ruled that ACE owes the $5 million in legal fees that U.S. Bancorp incurred during the early stages of defending itself.
ACE said it owed no pre-judgment interest because Minnesota law allows it only when coverage has been wrongfully denied, and that by terms of the exhaustion provision in its policy, its coverage obligation has not yet been triggered.
“ACE American’s argument is too little, too late,” wrote the court, noting that the summary judgment already held that the insurer wrongfully withheld coverage. Further, by failing to invoke that provision in a previous brief to the court, it could not now do so.
ACE American has given notice that it intends to appeal the ruling to the U.S. Court of Appeals for the Eighth District.
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