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Employers file lawsuits against AIG over workers comp premiums

Employers file lawsuits against AIG over workers comp premiums

Employers have filed three federal class action lawsuits against American International Group Inc. and its subsidiaries, seeking restitution for the insurer's alleged underreporting of workers compensation premiums.

Complaints were filed Tuesday in U.S. District Courts in California, New Jersey and New York, according to court filings. Plaintiffs in the suits contend that AIG's “systemic practice of underreporting (workers comp) premium” caused policyholders to “pay improperly inflated state insurance surcharges and to suffer other damage” during a nearly 40-year period.

Each of the lawsuits seeks unspecified compensatory and punitive damages for alleged violations of the Racketeer Influenced and Corrupt Organizations Act, as well as claims of common-law fraud, negligent misrepresentation, unfair business practices and unjust enrichment.

In a statement to Business Insurance on Thursday, AIG said “the court filings attempt to recycle allegations of wrongdoing from decades past that AIG has already resolved via settlements with its regulators and with civil plaintiffs. AIG will defend the cases vigorously.”

New York-based AIG paid $146.5 million in 2012 to state regulators to settle similar long-running claims that the insurer underreported its comp premiums.

It also agreed in 2011 to pay a $450 million settlement to several rival workers comp insurers that claimed AIG's alleged underreporting allowed the company to avoid paying its fair share of residual market assessments.