The suit alleges insurance bid-rigging and price-fixing in commercial insurance and says Marsh violated antitrust and unfair trade practice laws.
Marsh filed a motion to dismiss the case. Superior Court denied much of the motion, allowing the case to continue, but dismissed the state's claim for damages to Connecticut's general economy.
Blumenthal appealed that dismissal and won Wednesday as the Supreme Court reversed the trial court.
"This decision allows my office to severely punish illegal and anti-competitive business practices that ripple through our state's economy, stealing hard-earned dollars from consumers and honest businesspeople alike," Blumenthal said.
He said Connecticut, Virginia and Nevada are the only states with laws allowing them to seek damages for such practices that hurt their general economies. Marsh's practices, he said, increased insurance prices for businesses across the state.
Blumenthal called the court's decision a "first-in-the-nation" ruling that "provides Connecticut with a unique and powerful weapon on behalf of our citizens when illegal business practices damage Connecticut's economy."
Christine Walton, Marsh's vice president of corporate communications, said Marsh will "continue to defend the company's interests vigorously in the lower court."
She noted that Wednesday's ruling "does not address the merits of the case before the Connecticut Superior Court, which contains allegations already resolved through a comprehensive regulatory settlement in 2005."
In the settlement with then-New York Attorney General Eliot Spitzer, Marsh has made more than $24 million in payments to Connecticut customers, Walton said.
She also said that clients in 50 states have "overwhelmingly accepted the settlement as fair compensation."
At the time of the accord, though, Blumenthal said Connecticut's share of Marsh's $850 million nationwide settlement with Spitzer was not sufficient because not all customers here applied for payment and some were not compensated enough.
Marsh was accused of rigging insurance bids so it could steer clients to insurers that paid the brokerage "undisclosed kickbacks."