The Supreme Court of New York has dismissed most of a lawsuit against Coventry First LLC for alleged price fixing, while Florida regulators settled similar charges against the firm.

A justice in Manhattan dismissed outright 7 of 9 alleged bid-rigging transactions challenged by former New York Attorney General Eliot Spitzer, ruling that none involved sellers, brokers or conduct in New York. In addition to Coventry, the 2 exceptions involved AllSettled Group Inc., a New York life settlement broker, according to the court.

Coventry, Fort Washington, Pa., is in the secondary market for life insurance, buying policies and selling them to investors in the expectation the policies would ultimately pay off more than they cost.

Spitzer, now New York governor, filed a lawsuit against Coventry in October 2006, alleging “secret payments to suppress competitive bids” for life settlements in the state. He also charged the firm with fraud for concealing payments to brokers assisting in the deals.

The lawsuit seeks a restraining order against similar conduct by the defendants, repayment of all gains and payment of restitution and punitive damages.

Justice Helen E. Freedman dismissed 3 charges against Coventry, including fraud, but retained some others, including allegations of rigging bids and abetting a broker in breaching its fiduciary duty to a client.

“Coventry believes the few remaining claims are not based in fact and have no merit,” the company said in a statement. “Coventry is gratified by this ruling and remains confident that it will ultimately prevail going forward.”

The court rejected Spitzer’s claim of fraud, ruling the charge was “too speculative” in that it assumed the sellers might have been able to receive better prices if the bids were not rigged.

Moreover, the court threw out the attorney general’s claims that Coventry was unjustly enriched by purchasing policies at less than fair market prices, ruling that terms of signed contracts governed the issue.

The court set a preliminary hearing on the remaining charges for Oct. 16.

As a result of Spitzer’s lawsuit, the Florida Office of Insurance Regulation in May 2007 issued a cease-and-desist order against Coventry and opened an investigation of its practices in that state. With its consent order dated Sept. 28, the OIR has now settled all issues it had with Coventry, including a market-conduct examination it had opened 2 years ago.

The Florida OIR said it agreed to a settlement because the firm cooperated with its investigation into charges of fraudulent practices, including paying brokers not to place competitive bids on policies it was seeking to buy from policy holders.

Although the OIR imposed no fines or penalties on Coventry, the company agreed to pay $1.5 million to cover costs of the investigation and examination. Coventry also agreed to adopt a plan to improve its business practices, including disclosure of compensation paid to any intermediaries involved in a settlement if the insured requests it, according to the consent order.

The firm also agreed to support the OIR’s proposed rule designed to require settlement firms to improve disclosures to consumers and to enhance regulation of the industry in the state.

Among other conditions, the proposed rule would require all viatical settlement firms operating in Florida to identify to clients each broker that receives compensation and any compensation paid to each as part of a settlement.

Coventry also consented to an annual audit for the next 2 years, conducted by an independent firm selected by the OIR, to verify it complied with the order. It also agreed to submit quarterly reports to the OIR listing the total number of transactions it handles involving Florida consumers.

Moreover, Coventry agreed to provide an hour of training to each of its employees about its business enhancement plan.

For its part, the OIR said it intended to try to make the consent order the basis of a regulation governing all viatical settlements in the state.

The order charged Coventry with a number of breaches of Florida’s insurance code, including inconsistencies between an insured’s medical records and statements on an insurance application.

Alan H. Buerger, CEO of Coventry, notes the company admitted to no wrongdoing. He insisted, too, that his firm reports any evidence of insurance fraud to Florida regulators.

Coventry has purchased more than 5,000 life policies since 2001, paying more than $1.2 billion above what recipients would have received from their carrier for their policies’ cash surrender value, Buerger said.

Ultimately, the Florida settlement would be “terrific for the industry” by promoting improved regulation and “setting the bar for increased transparency and consumer protections,” he said.