Roxborough, Pomerance, Nye & Adreani, LLP--Small Businesses Sue AIG Over Workers' Compensation Insurance Scheme--Lawsuits In California, New York, New Jersey Allege Decades-Long AIG Fraud

LOS ANGELES, Oct. 9, 2013 /PRNewswire/ -- Small businesses in California, New York and New Jersey this week initiated coordinated class action lawsuits in federal courts on both coasts against American International Group ("AIG"), its subsidiary companies, and former CEO, Maurice Greenberg, for unfair business practices, fraud and violations of the federal racketeering statutes. 

The businesses allege that for approximately four decades beginning in the 1970's, AIG engaged in a sophisticated scheme to misreport the amount of workers' compensation premium it collected in each state, thereby causing insured employers to pay more in certain workers' compensation fees than they otherwise would have paid.  By making it appear that less money in workers' compensation premium was collected in these states, AIG caused regulators, through no fault of their own, to assess artificially inflated fees on all insured employers for certain state mandated workers' compensation programs.

Attorneys for the businesses estimate that AIG saved itself hundreds of millions of dollars in workers' compensation fees and premium taxes, and cheated insured employers out of hundreds of millions of dollars that they should not have had to pay, and which could have gone back into the economy to create or preserve jobs.  This underreporting went on for decades, and although AIG has paid almost $150 million in fines, taxes, and assessments to various states, and has agreed to pay $450 million to resolve litigation brought by other insurance carriers, it has never compensated the many small businesses and other insured employers who were for decades defrauded into paying inflated workers compensation fees and surcharges.  These are the first lawsuits brought on behalf of those businesses. 

Plaintiffs' counsel Derek Brandt says, "AIG has resolved a significant amount, but not all of its liability, for this brazen scheme.  Our clients have not been reimbursed for the money they were cheated out of and we look forward to recovering that money for them."  Adds co-counsel Drew Pomerance and Nicholas Roxborough, "we seek justice for the thousands of insured businesses who were damaged for years and years by AIG's fraudulent and deceptive practices."

The lawsuits are:  Jayarvee Inc., dba Birdland and TMG – Emedia Inc. v. AIG, et al., S.D.N.Y., Case No. 13-CV-7137; JPS Collision Inc. v. AIG, et al., D.N.J., Case No. 2:13 CV-05990-JLL-MAH; and Franjo Inc. and DMS Facility Services v. AIG, et al., ND Cal., Case No. CV 13-4685 JCS.

The Class is represented by Derek Brandt and Deborah Rosenthal of Simmons Browder Gianaris Angelides and Barnerd, LLC based in Alton, Illinois and San Francisco, California; Nicholas P. Roxborough and Drew E. Pomerance of Roxborough, Pomerance, Nye & Adreani, LLP based in Los Angeles, California; and Andrea Bierstein and Thomas Sheridan of Hanly Conroy Bierstein Sheridan Fisher & Hayes, LLP in New York City.

For more information or for an interview, please contact:

Nicholas Roxborough, Partner:  [email protected]
Drew Pomerance, Partner:  [email protected]
Tel: 818.992.9999

Marlena Campbell, Public Relations: [email protected]
Tel:  310.728.5722

Roxborough, Pomerance, Nye & Adreani, LLP is a Los Angeles based law firm providing expert legal counsel and representation to the California business community. Established in 1995, the firm offers a broad range of legal services in all facets of civil litigation, with its primary focus on litigation, legislation and policymaking issues involving insurance and business related concerns.

SOURCE Roxborough, Pomerance, Nye & Adreani, LLP