Plaintiffs file Consolidated Amended Complaint in litigation alleging decades-long AIG fraud involving workers’ compensation insurance scheme
A federal judge has appointed Simmons Hanly Conroy Shareholder Derek Brandt as interim co-lead class counsel in a pending national multidistrict litigation proceeding against AIG, its subsidiary companies and former CEO Maurice Greenberg. In an order dated May 28, the Honorable Robert W. Gettleman, of the United States District Court for the Northern District of Illinois, appointed Brandt and Elizabeth A. Fegan of Hagens Berman Sobol Shapiro LLP co-lead counsel for the plaintiffs in the litigation.
The multi-district litigation centralizes numerous lawsuits filed by businesses around the country alleging that AIG, its subsidiaries, and Greenberg violated federal racketeering statutes and other state laws in connection with a decades-long fraud in underreporting the amount of workers’ compensation insurance that they wrote. The suits allege that by underreporting or mischaracterizing the insurance that they wrote, the defendants caused states to over-assess insured employers for certain state insurance funds.
“We’ve now filed our Consolidated Amended Complaint and I’m looking forward to continuing our work with a great team of lawyers to ensure that we efficiently resolve this litigation and secure a fair result for the businesses harmed by the unlawful practices alleged here,” Brandt said.
The Consolidated Amended Complaint, filed June 10, combines the actions of numerous plaintiff businesses. It alleges that for approximately four decades beginning in the 1970s, AIG engaged in a sophisticated scheme to misreport the amount of workers’ compensation premiums it collected in states around the country. As a result, the suit alleges employers in fifteen states and the District of Columbia were forced to pay more in certain state insurance assessments than they otherwise would have paid.
By making it appear as though less money was collected in workers’ compensation premiums overall in a given state, the complaint alleges AIG caused state regulators to assess artificially inflated fees on insured employers. The 139-page complaint alleges claims on behalf of employers who purchased workers’ compensation insurance, dating back to 1970, in California, Connecticut, Georgia, Hawaii, Indiana, Kentucky, Maine, Minnesota, Missouri, Montana, New Jersey, New York, Oregon, Pennsylvania, West Virginia and Washington, D.C.
Although AIG has paid almost $150 million in fines, taxes and assessments to various states and has agreed to pay $450 million to resolve litigation brought by other insurance companies for injuries they suffered due to underreporting, it has never compensated the many businesses and other insured employers who were for decades defrauded into paying inflated workers compensation fees and surcharges, according to the complaint.
The case is In re: AIG Workers Compensation Insurance Policyholder Litigation, No. 14-cv-2528, U.S. Dist. Ct. N. Dist. Illinois (MDL No. 2519).
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