AIG class action settlement relating to workers’ compensation premiums approved

March 16, 2012 by

A $450 million settlement of a class action suit brought against American International Group Inc. for its alleged underreporting of workers’ compensation premiums has been formally approved.  U.S. District Court Judge Robert Gettleman approved the settlement in an order and memorandum on February 28, 2012.  The money is to be paid by New York-based AIG to 1,300 other commercial insurers.

The insurers had alleged that they paid states more than their fair share of residual market assessments because AIG was assigned an improperly small share of high-risk workers’ comp policies.

While Judge Gettleman granted a final approval of the settlement in December, the order was delayed until last week’s order and memorandum.

Boston-based Liberty Mutual Group Inc. and two of its subsidiaries — Safeco Insurance Co. and Ohio Casualty Insurance Co. — had objected to the settlement.  In part, they argued that the amount was a “product of collusion and that it was discounted to account for AIG’s claims against the class members who had also been accused of underreporting,” court records show.

But Judge Gettleman said the settlement should stand because the objectors, which will receive about 22% of the settlement represent only a small portion of the 1,300 insurers in the case.

“Thus, using the number of class members as a metric, there has been amost no opposition to the settlement.  This indicates that the class members consider the settlement to be in their best interest,” Judge Gettleman wrote in the most recent order.

Judge Gettleman also ordered AIG to pay $14.8 million in attorney fees to Safeco and Ohio Casualty, and another $2 million in fees to Liberty Mutual.

Liberty Mutual said in December that it plans to review and appeal Judge Gettleman’s final order.

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.

Categories: Class Actions of Interest


Steve Larson
An experienced trial lawyer who handles both hourly and contingent fee cases, Steve has expertise in class actions, consumer cases, antitrust litigation, securities litigation, corporate disputes, intellectual property disputes, unfair competition claims, employment matters, and disputes involving family wealth. Steve regularly represents individuals and businesses in federal and state court and has obtained class-wide recovery in multiple class actions. A veteran practitioner, Steve's clients value his creative approach to resolving complex litigation matters.

Legal Disclaimer

The information contained in this blog does not constitute legal advice, and does not create an attorney-client relationship. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained in or linked to this blog.