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AIG can proceed with workers comp lawsuit vs rivals

NEW YORK (Reuters) - A Chicago federal judge has authorized American International Group Inc <AIG.N> to pursue a lawsuit accusing rival insurers of illegally conspiring to cause it harm in the workers' compensation market.

In a 50-page ruling made public on Thursday, U.S. District Judge Robert Gettleman allowed AIG and many affiliates to pursue racketeering and other claims against rivals including Hartford Financial Services Group Inc <HIG.N>, Liberty Mutual Group and Travelers Cos <TRV.N>.

Gettleman also dismissed an AIG claim alleging unjust enrichment, and rejected AIG's bid to dismiss related litigation against it by Liberty and a class of pool members consisting of rival insurers.

A lawyer for Liberty and the insurer pool referred a request for comment to a Liberty spokesman. The spokesman did not address the substance of Gettleman's ruling, but said "we continue to look forward to resolving the issues in court."

Mike Carlinsky, a lawyer for AIG, in an interview said the ruling "will force AIG's competitors to have to account for their own actions in reporting workers' compensation premiums, and ensure they will be held to the same scrutiny as AIG."

AIG had accused competitors of underreporting premiums in the workers' compensation market, making it responsible for a larger share of unprofitable insurance risks.

Gettleman last August had dismissed a $1 billion lawsuit by rival insurers against AIG that raised similar claims.

In Thursday's ruling, after acknowledging the litigation's "long and tortured procedural history," Gettleman said AIG had "provided scores of details of overt acts" to further their alleged conspiracy to harm the New York-based company.

"This is more than sufficient to state a claim for civil conspiracy," he said.

The alleged misrepresentation of workers' compensation premiums by various insurers dates to the 1980s. A trial could be years away.

AIG is trying to sell assets and keep litigation costs down as it tries to repay the U.S. government following a series of taxpayer-funded rescues valued at about $182 billion.

The case is American International Group Inc et al v. ACE INA Holdings Inc et al, U.S. District Court, Northern District of Illinois, No. 09-02026.

(Reporting by Jonathan Stempel and Paritosh Bansal; Editing by Phil Berlowitz)

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