Liberty Mutual appeals as judge seals the deal on class action settlement

An order and memorandum issued by a U.S. District Court judge formally approved a settlement in the suit against American International Group. However, Liberty Mutual is appealing the agreement and says the $450 million is inadequate.

The money is to be paid to more than 1,300 commercial insurers that alleged they had paid states more than necessary for residual market assessments because AIG had allegedly underreported its workers' comp premiums. The settlement is based on an underreporting amount of approximately $2.1 billion, about one-third of what Liberty Mutual says is the actual amount.

"We respectfully and vigorously disagree that the settlement is fair, reasonable, and adequate," said a spokesman for Liberty Mutual."The settlement was negotiated by conflicted parties, and it is unfair because it reflects damages of $2.1 billion, far less than the $6.1 billion in actual damages demonstrated by the court-approved statistical model."

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Saying it was "disappointed but not surprised" with the order and memorandum, Liberty Mutual said it has filed an appeal.

"Liberty Mutual remains committed to making sure that AIG is held accountable for knowingly underreporting workers' compensation premiums to various insurance pools for more than two decades," the spokesman said.

In addition, AIG has agreed to pay the states $100 million in penalties and $46,507,385 in back taxes and assessments and has agreed to reform its workers' comp reporting.

Read more at the WorkersComp Forum homepage.

March 19, 2012

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