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Spitzer Opens Probe of Legal Insurance

Five insurers receive subpoenas related to malpractice policies for class-action lawyers.

December 08, 2004|From Bloomberg News

New York Atty. Gen. Eliot Spitzer's office interviewed class-action attorneys about difficulties they had getting malpractice insurance as part of his probe of collusion in the insurance industry, said Fred Isquith, president of the National Assn. of Shareholder and Consumer Attorneys.

Isquith and others say insurers may be seeking retribution against class-action lawyers, whom they blame for driving up the cost of litigation claims.

"A number of the members expressed curiosity that they never had trouble [getting insurance] in the past," said Lawrence Sucharow, past president of the consumer attorneys group.

Spitzer's inquiry represents a new area for an investigation that began with accusations of bid rigging and kickbacks among insurers and brokers.

Five insurers -- CNA Financial Corp., General Electric Co.'s Employers Reinsurance Corp., Hartford Financial Services Group Inc., American Financial Group Inc. and Arch Capital Group Inc. -- have said they received subpoenas related to legal malpractice insurance since Friday. They declined to comment on specifics of the requests.

Robert Hartwig, chief economist for the industry-sponsored Insurance Information Institute in New York, said there was nothing inappropriate about insurers backing away from policies covering class-action lawyers because the risks have increased.

"Legal malpractice is becoming a big problem, just like medical malpractice," Hartwig said. "It's the case today that lawyers will turn on one another and sue one another. This has a direct impact on the price and availability of insurance."

Isquith declined to name the firms Spitzer has contacted. At least one of the queries came from Spitzer's antitrust lawyers, he said.

Isquith and Sucharow declined to comment on whether their firms had been contacted.

Spitzer, who on Tuesday formally announced he would run for governor of New York in 2006, said in an interview Monday that it was too early to determine what his probe of the malpractice insurance might find.

He declined to be more specific about the nature of the probe.

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