AIG settlement grows, declined by some rivals; Illinois debate continues on divisive workers’ comp legislation
Following up on our post of Dec. 28, we see that the settlement in the AIG workers’ compensation case has trebled in scope. In Illinois, cases mentioned in that Dec. 28 post and in our Dec. 30 piece are gaining momentum, too.
AIG case more triples in proposed cost
Last month the AIG settlement for under-reporting workers’ comp premiums was described as reaching nearly $150 million in fines, taxes and related assessments. Competitors and various authorities contend the nearly $2 billion in mistated costs not only hurt rival insurers but also allowed AIG to dodge payments it should have made.
According to a Jan. 7 piece at Bloomberg.com, “American International Group Inc., recipient of a $182.3 billion U.S. government rescue, agreed to pay $450 million to rivals to settle claims it shortchanged industry-funded pools that insure injured workers.
“Travelers Cos. and Hartford Financial Services Group are among the seven competitors that will receive the money, New York-based AIG said in a proposed settlement filed yesterday in Chicago. Liberty Mutual’s Safeco subsidiary filed a lawsuit in 2009 accusing AIG of ‘long-term fraudulent underreporting,’ seeking more than $1 billion. Liberty Mutual, which was seeking class-action status for the case, wasn’t included in the settlement.”
Some parties decline settlement
Another Jan. 7 article, from Rueters, posted at CNBC.com, explains more about parties to the settlement–and those that have so far declined to settle: “The civil lawsuit was filed in mid-2009 by two firms, Safeco Insurance of America . . . and Ohio Casualty Insurance . . . , on behalf of a group of insurance companies and alleged a $1 billion workers’ compensation under-reporting scheme at AIG.
“However, the proposed settlement was instead reached between AIG and seven other insurers that were among those affected by AIG’s conduct in the 1980s and 1990s and excludes Safeco Insurance and Ohio Casualty, both units of Liberty Mutual Insurance.”
Spokesman: Unfortunate that Liberty refuses ‘fair and reasonable settlement’
The article also quotes an AIG spokesperson, singling out Liberty Mutual’s recalcitrance as being against the “best interest” of members of the class-action suit: ” ‘It is unfortunate that Liberty is refusing to participate in this fair and reasonable settlement. As the seven other settling insurers have recognized in seeking to intervene in the action, Liberty’s preference to continue litigating is not in the best interests of the class members,’ AIG spokesman Mark Herr said in an email to Reuters.”
As we reported in preceding posts, it is now known that AIG had a longstanding practice of such under-reporting, in an attempt “to evade state insurance taxes and residual market obligations.”
According to a Forbes.com piece, AIG has decided on a plan to issue warrants for its stock–which has recovered into the low $60 range since plunging in 2008–in the ongoing pursuit of being able to repay its taxpayer bailout of more than $180 billion.
Illinois begins ‘official probe’ of Menard facility
In Illinois, “[s]tate insurance fraud investigators have opened an official probe of the Menard Correctional Center, where hundreds of guards and others have filed for or received taxpayer-funded settlements for ‘repetitive trauma’ they say was mainly caused by operating heavy cell locking mechanisms,” according to a Jan. 5 article at BND.com, the online version of the Belleville News Democrat.
In other words, there’s so many carpal-tunnel claims because the cell doors are too heavy? Makes you wonder how the warden qualified–but as it turns out, his lawyer says the warden was injured while on the job as a police officer, before being hired by the state to run the Menard facility. Also interesting is the number of state-paid, workers’ comp arbitrators who have their own claims, including the one who was involved in the case of the state trooper who crashed into the vehicle of two teenage girls who died:
Records show that some repetitive trauma awards for wrist and elbow injuries totaled more than $100,000. Menard warden David Rednour, 35, received $75,678 for a repetitive trauma injury his lawyer said actually occurred when he worked as a police officer before he was hired by the state in 2006.
Nearly one in four of the state’s 32, $115,800 per year workers’ compensation arbitrators or hearing officers, have filed for or received an award including for repetitive trauma, records show.
They include Jennifer Teague, the arbitrator in the case [in which] former Illinois state trooper Matt Mitchell is seeking an award for leg and other injuries.
Proposed legislation decried as unfair to workers
In the move to overhaul Illinois’ workers’ comp system, which as the nation’s third most costly is criticized as anti-business, State “Representative John Bradley . . . [ on Friday, January 7, 2011] filed House Amendment Number 2 to SB 1066. This amendment is scheduled to be heard on Sunday, January 9 at 2 p.m. in the House Executive Committee,” according to this Jan. 8 post at ChicagoNow.com, a site with job hunting news and tips.
An opinion piece, the blog post urges readers to contact the legislature and ask for a vote against the measure; five points are highlighted as the major disadvantages to workers if the bill is enacted–here’s an excerpt of those points:
1)Severe restriction on choice of medical care. This legislation limits the injured worker’s right to choose a doctor by forcing them to visit the doctor the company chooses first.
2) Utilization review — creates presumption in favor of UR which will be almost impossible to overcome. It takes away treating doctors discretion to determine the best treatment for an injured worker.
3) Wage Differential — Significant caps (67 years of age or 5 years) and reviewable for economic change 4 times per year. . . . These workers no longer have the ability or opportunity to earn the wage they once did.
4) Reduction of Medical Fee Schedule as well as other provisions designed to deny access to doctors chosen to treat work injuries . . . . This reduction will result in fewer doctors wanting to treat patients on worker’s compensation.
5) This legislation is an attempt to shift the cost of the workplace injuries to the taxpayers of Illinois.
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Frequently enough, a worker’s compensation case may be so complex as to demand legal representation. However, sometimes what seems like a cut-and-dried situation to an injured worker may result in a smaller award than envisioned–or even a denial. Have you, a friend or a loved one been injured on the job? Whether you’re merely seeking answers about your rights or believe a lawsuit may be necessary, be sure to seek counsel with attorneys trained and experienced in workers’ compensation. Here’s some resources:
