AIG wins first round in dispute over state workers’ compensation pools

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A federal suit accusing American International Group of fraudulently cheating state workers’ compensation pools out of more than $1 billion was dismissed, but is not the end of the matter for the troubled insurer.

gavelJudge Robert Gettleman of the U.S. District Court in Chicago dismissed the case Aug. 20, but many are pursuing claims in a separate lawsuit seeking class-action status, according to Reuters.

Gettleman ruled that the National Council on Compensation Insurance Inc. lacked standing to sue AIG on behalf of several hundred insurance companies in its National Workers Compensation Reinsurance Pool, according to the report.

The judge said the insurer had for several decades understated workers’ compensation premiums resulting in at least $60 million of unlawful annual benefits, citing an investigation in New York and an internal AIG probe.

Nonetheless, Gettleman said that while NCCI claimed to rely on AIG’s false reports in administering the pool, it did not allege that the company’s actions harmed it or the pool, Reuters reported.

The judge added, however, that “there is no dispute” the pool’s members do have standing to bring claims separately against AIG.

A spokesman for the board of the National Workers Compensation Reinsurance Pool told Reuters the insurers plan to keep pursuing claims against AIG.

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