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Judge gives final approval to $450 million AIG workers comp settlement

Judge gives final approval to $450 million AIG workers comp settlement

CHICAGO—American International Group Inc. has received final approval to pay a $450 million class-action settlement to a group of other insurers related to its alleged underreporting of workers compensation premiums.

In a ruling last week, U.S. District Court Judge Robert Gettleman granted final approval to New York-based AIG to move forward with the settlement, to be paid to hundreds of other commercial insurers.

This fall, the 7th U.S. Circuit Court of Appeals rejected Liberty Mutual Group Inc.'s request to appeal the judge's preliminary approval of the $450 million settlement.

The settlement has been stayed until Judge Gettleman issues a final order and memorandum on the issue, according to court records.

The judge granted preliminarily approval of the settlement amount in August, but the litigants were allowed to support or object to AIG's offer.

The case dates back to 2006, when then-New York Attorney General Eliot Spitzer accused AIG of underreporting workers comp premiums over several decades to avoid paying its fair share of residual market assessments.

The National Workers Compensation Reinsurance Pool, operated by Boca Raton, Fla.-based NCCI Holdings Inc., sued AIG in 2007, alleging it violated the Racketeer Influenced and Corrupt Organizations Act.

In a statement Wednesday, Boston-based Liberty Mutual said it is “disappointed—but not surprised—with the judge’s order approving the settlement.”

“Liberty Mutual will review the judge’s final written order, and anticipates an appeal,” according to the statement.