American International Group recently settled a pending workers’ compensation dispute that was brought on behalf of all 50 states. Under the agreement, the company agrees to pay $146.6 million to settle its handling of workers’ compensation reporting that dates back many years. The company was said to have violated premium reporting rules in many states, including California.
The investigation stems from conduct by the company during the timeframe of 1975-1996. It was found that the company had undervalued many of its liabilities, which resulted in a reduction in premium tax payments to states for workers’ compensation insurance. Based on this discovery, legal action was started.
All 50 states and the District of Columbia will receive some compensation from the settlement. The settlement provides that the company will pay $100 million in penalties and an additional $46 million in premium taxes. The company has voiced its support in coming to the resolution of this matter. Meanwhile, other parties to the dispute stated that they were pleased with the company’s desire to bring this matter to a just conclusion.
It is the duty of all companies who employ individuals to carry workers’ compensation insurance. Such insurance is key for ensuring that workers injured on the job get the benefits they need and are due to make a full recovery. States regulate this aspect of the commercial environment and can’t do their job if insurance providers fail to be transparent about revenues and liabilities. Reporting violations can lead to severe penalties and fees, as was this case here.
Source: Insurance & Financial Advisor, “AIG to pay $146.5M to settle multi-state workers’ comp. allegations,” Bob Graham, June 4, 2012