American International Group for nearly 40 years has been underreporting workers' compensation premiums, causing insured employers to pay improperly inflated state insurance surcharges, three federal classes claim.
The coordinated suits were filed this week in San Francisco, Manhattan and Newarkagainst AIG and its subsidiaries and affiliates. AIG is accused of unfair business practices, fraud, unjust enrichment and violations of federal anti-racketeering law.
The California complaint, filed by Franjo Inc. and DMS Facility Services Inc., says it all began in the 1970s when AIG "devised, implemented, participated in, and carried out nationwide schemes - later characterized by AIG's own general counsel as 'permeated with illegality' - to miscategorize, falsely report, and falsely book the AIG companies' [workers' compensation] premium as other premium (for example, as 'general liability' premium), in order to reduce defendants' expenses, inflate their profits, and unjustly enrich themselves at the expense of plaintiffs and the class." (Parentheses in original.)
AIG allegedly falsified certified annual financial reports that underreported workers' compensation (WC) figures to evade its equitable shares of financial responsibility for state-levied taxes and assessments. It caused state insurance regulators, through no fault of their own, to assess artificially inflated fees on insured employers, according to the complaint.
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