BOSTON--William Gallagher Associates Insurance Brokers Inc. has agreed to pay $4 million to settle charges leveled by Massachusetts Attorney General Martha Coakley over its compensation and other business practices.

The suit, filed Wednesday in Suffolk Superior Court in Boston, alleges that the Boston-based broker billed clients undisclosed and unauthorized fees that exceeded customers' insurance premiums by 20% to 100%, and that it double-billed certain customers by charging brokerage fees while simultaneously charging undisclosed standard commissions.

"To deceive customers into paying such charges, the company allegedly altered documents it received from insurance companies, secured misleading premium financing contacts, and kept two sets of accounting records, one to track actual numbers, and the other to generate fictitious records for clients," the attorney general's office said in a statement. "Through these practices, WGA took millions of dollars in compensation that customers believed were part of their insurance premiums, according to the complaint."

The investigation further uncovered that, on several occasions, employees in WGA's energy and environmental practice instructed insurers to increase the prices offered to a WGA customer and kept a $125,000 premium refund that should have been returned to its client.

The suit also alleges that WGA misled customers about the firm's contingent commission practices and equity ownership in Mountain View Indemnity Ltd., for which it reinsured a portion of more than 100 of its clients' insurance policies.

"This investigation revealed certain deceptive practices that inflated insurance costs for numerous businesses," Ms. Coakley said in a statement. "We are pleased that under the consent judgment, these businesses will recover their losses, and the practices will cease and be appropriately remedied."

Under the consent judgment, filed Thursday in Suffolk Superior Court, WGA agreed to return a little more than $3 million to 11 clients within its energy and environmental group, pay at least $925,000 in sanctions and attorneys fees to the Commonwealth, and submit to a binding audit of its energy and environmental practice group.

The judgment also requires WGA to send statements to more than 700 clients to correct prior allegedly false representations the broker made regarding its employees' knowledge of continent commissions and its participation in reinsurance. Going forward, WGA also has agreed to provide enhanced compensation disclosures to customers by providing written notice of all fees and commissions.

In a statement, WGA said that during Ms. Coakley's three-year, broad investigation into its compensation practices, it shared with her its own internal investigation concerning disclosure of fees to certain clients within its energy and environmental group.

"We are very pleased with the outcome of this matter. The Massachusetts Attorney General and her staff have worked diligently with WGA to ensure a quality protocol for the return of these funds to these clients. The outcome of this investigation is a confirmation of WGA's continued commitment to transparency and fair dealing with its clients."

WGA noted that all the energy group employees implicated in the matter left the firm in early 2005.

A spokeswoman for Ms. Coakley's office said WGA's energy group was just one area where they uncovered problems. "The misconduct was widespread to other areas of the company," the spokeswoman said.