Liberty Mutual appeals settlement over residual market assessments
More than 1,300 insurers alleged that they paid states more than their fair share of residual market assessments because of AIG's underreporting of premiums. "The settlement was based on $2.1 billion in under reported premiums, far less than the $6 billion in actual amount uncovered in the litigation," said Richard Angevine, a Liberty Mutual spokesman."Liberty Mutual remains committed to ensuring that AIG is held to fully account for knowingly under reporting workers compensation premiums for more than two decades to various insurance pools."
In its appeal filed last month in the 7th U.S. Circuit Court of Appeals, Safeco Insurance Co., and Ohio Casualty Insurance Co., said the settlement was based on "collusion and an improper reverse auction" between AIG and the insurers, whom AIG had accused of premium underreporting.
"Faced with liability arising out of AIG's claims, Defendant-Intervenors accepted, and then advocated for, a settlement that released their individual liability without requiring them to pay anything for such releases," the brief says. "Under these undisputed facts, Defendant-Intervenors had an interest that was not shared with other class members."
The filing says the losers in the arrangement were the class members "whose interests were not protected in settlement negotiations but who will end up paying for Defendant-Intervenors' releases from an inadequate and improperly discounted settlement fund." It says the result is disproportionate benefits to those that negotiated it, "at the expense of the class. AIG benefited by saving at least $100 million in its settlement payment. Defendant-Intervenors benefited by extinguishing any possible liability for AIG's claims, avoiding public disclosure of the extent of their misconduct, and ensuring they would not have to reimburse millions in Pool-advanced legal fees."
The filing asks the court to reverse the District Court's certification of the settlement class and counsel and the final judgment approving class action settlement, and remand the case for further proceedings.
Read more at the WorkersComp Forum homepage.
July 12, 2012
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