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AIG, Mass. reach Big Dig workers comp settlement


BOSTON—American International Group Inc. agreed to pay $58.5 million to settle accusations that it failed to pay surplus workers compensation funds to Massachusetts, under a settlement announced Monday.

An investigation by the Massachusetts attorney general's office found that AIG failed to pay certain surplus monies, related to residual market pool coverage, to the state as required under its contract as the workers comp insurer for the Central Artery Tunnel Project—a massive transportation project known as the Big Dig.

AIG has been the workers' comp insurer for the project that began in 1991.

The $58.5 million settlement includes $26 million in surplus payments owed to the state, plus interest. All recovered money, less $40,000 in attorney's fees, will be returned to the Central Artery Tunnel project that is overseen by the Massachusetts Turnpike Authority, said a spokeswoman for Attorney General Martha Coakley.

AIG has already paid a large portion of the funds, and the rest is to be paid no later than May 22, the attorney general's office said in a statement.

"In a long-term, multibillion-dollar project like the Big Dig, it is imperative that we maintain vigilant oversight of the finances to ensure that all parties are performing as agreed," Ms. Coakley said in the statement. "The attorney general's office will continue our review of the project's expenses, and we remain committed to ensuring that the Commonwealth is not shortchanged."

A spokesman for AIG said the insurer is "pleased to have settled this matter. Financially, the amount had already been fully reserved, so it had already been accounted for in previously recorded earnings."

Under the contract, AIG is to repay the state for surpluses related to residual market workers comp coverage when loss experience is better than expected.