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Last week, AIG (American International Group, Inc.) won the dismissal of a lawsuit against it seeking more than $1 billion. The suit was filed in 2007 by the National Council on Compensation Insurance (NCCI), a provider of workers’ compensation insurance and one of AIG’s rivals. NCCI claimed that AIG had been underpaying state workers’ compensation pools for the past 35 years.

Most states require that insurance companies that sell workers’ compensation must also pay into emergency pools that are used to cover job injuries where the job poses extra risk. A Chicago federal judge threw out the suit on the basis that NCCI did not have the standing to sue on behalf of the 600 companies in its National Workers’ Compensation Reinsurance Pool.

The judge stated that NCCI has not been harmed by AIG and therefore cannot seek any damages on behalf of its member companies. The ruling did not address NCCI’s claim that AIG had underpaid for 35 years, nor did it address another claim brought by AIG in 2008 that three other insurance companies have underpaid into the emergency pools – Liberty Mutual Group, Inc., Travelers Cos., and Hartford Financial Services Group Inc. AIG plans to pursue that claim vigorously.

Previous AIG Payments

AIG has been accused before of underpaying to emergency pools, in 2006, by the then-New York Attorney General, Eliot Spitzer. At that time, AIG agreed to fund a $301 million program to cover underpayments between 1985 and 1996. Also in 2006, AIG agreed to pay workers’ compensation taxes to the tune of $42 million.

Insurance Bad Faith can take a variety of forms, it seems. If you have been hurt by another person’s carelessness and have run into trouble with your insurance company over fair compensation, please call or email our insurance bad faith attorneys today. We will be happy to give you a free consultation.

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