A California consulting company steered group life and disability policies to insurers in exchange for secret payoffs that drove up the cost of employee-paid premiums, New York state Attorney General Eliot L. Spitzer charged Friday.

The civil complaint charges Universal Life Resources Inc., a San Diego firm that helps Fortune 1000 companies -- including Bethesda-based Marriott International Inc. and supermarket giant Safeway Inc. -- choose group policies, with civil fraud for soliciting false bids, hiding payoffs and falsifying documents. The ultimate victims were the employees of ULR's customers who paid inflated prices for the life and disability insurance they bought through payroll deductions at work, according to the complaint.

Spitzer first went after the insurance industry last month when he brought a bid-rigging complaint against corporate liability insurance broker Marsh & McLennan Cos. At the time, he contended that kickbacks and fraud were widespread in the industry. This case moves into an additional area of insurance coverage, pointing to new victims and naming -- but not charging -- carriers UnumProvident Corp., Prudential Financial Inc. and MetLife Inc. as participants in ULR's alleged wrongdoing.

"Today's case demonstrates that the corrupt practices first laid bare in the Marsh suit are present in additional sectors of the industry," Spitzer said in a written statement. "Secret payoffs and conflicts of interest that infected the market for property and casualty insurance have taken root in the employee benefits market as well."

"What is particularly egregious in this case is that the costs of ULR's concealed payments were ultimately borne by individual employees, who were in no position to know about or contest these illegal practices," he added.

The stock markets reacted harshly to the news. Share prices of all three carriers fell, closing down 3.5 percent or more.

According to Spitzer's complaint, filed in New York State Supreme Court, ULR and chief executive Douglas P. Cox advised big companies seeking life, disability and other coverage for employees. Since 1999, the firm has placed insurance covering an estimated 4 million workers. ULR receives specific fees for advice from the corporations, but it also cut side deals -- many of them undisclosed to their insurance-buying clients -- with insurers. Some involved a small per-employee fee for preparing and distributing material about insurance policies, and others -- called "overrides" -- rewarded ULR for high renewal rates and good business. Of the San Diego firm's $25.3 million in revenue in 2003, more than $17 million came from side deals, the complaint said. Many of the fees insurance companies paid ULR were passed on to ULR's clients and their employees, the complaint said.

Spitzer alleged that ULR and Cox steered business to the carriers that paid them the most money, and the insurance carriers played along because they wanted access to Cox's clients and hoped to avoid competition that might drive profits down.

The complaint cited one Unum underwriter, who wrote that his carrier ought to pay a slightly higher premium to ULR for retaining profitable life cases, as that might be a cheaper way to maintain accounts than competing with other carriers.

Aetna Inc., which stopped paying the extra commissions to ULR in 2001, "has had virtually no success in securing new business" from ULR since then, the complaint said.

ULR and Cox referred calls to attorney Robert J. Cleary, who said he could not comment because he had not yet seen the complaint.

Representatives for all three insurers named in the complaint said their companies are cooperating with Spitzer's office. "We support full disclosure for this issue Spitzer has raised," said Mary Clarke Guenther, an Unum spokeswoman.

The complaint alleges that ULR would sometimes solicit fake bids to help steer business to favored carriers.

In December 2002, according to the complaint, Marriott was searching for life and disability insurance for its employees.

ULR said it would invite the three lowest bidders to make detailed presentations to the company, which would then consider non-financial factors such as service. Unum and two other carriers that paid fees to ULR were initially the finalists for life insurance, but Unum decided the business would not be profitable and wanted to pull out. The next highest bidder was Aetna, which paid no fees to the consultant. So ULR asked Unum to stay in the bidding to block Aetna.

An Unum employee wrote that the ULR representative "assured me we would not win the business at these rates due to the significant disparity between our offer and Prudential's. He understands that we are doing him a favor and is suggesting that he will reciprocate."

As promised, Unum did not win the life insurance business. But three weeks later, the firm won Marriott's disability contract, which it had wanted.

Marriott spokesman Tom Marder said the company had not yet seen the complaint. "As always, we will act in the best interests of our shareholders and employees," he said.

The complaint also alleges that ULR lied to clients, including the Safeway supermarket chain. A 2002 agreement between ULR and the supermarket chain said the broker would receive a fee of $50,000 that would cover both the process of soliciting bids and telling employees about the selected insurance plan. But ULR had secret deals with the chosen disability and life insurers and eventually also received a "communication" fee of between $5 and $10 per policy -- for a total of $500,000 -- from the insurance companies, charges that were passed on to Safeway's employees in the form of higher premiums, the complaint said.

Even when insurers wanted to tell the truth, ULR balked. Minnesota Life Insurance Co. said it was willing to sign a side deal but wanted to disclose the fees to its customers. Cox refused to agree to such a deal, according to the complaint.

Another troubling aspect of the case, according to Deputy New York state Attorney General Dieter Snell, is that ULR presented clients with documents containing false information. In 2004, Viacom Inc. hired ULR to help renew its group life and accident insurance with Prudential. According to the complaint, ULR asked Prudential to present Viacom with documents that overstated Prudential's charges.