AIG Fined $146 Million: Will North Carolina Workers’ Compensation Officials Adopt Deal?
On December 23, 2010, the AP reported that American Insurance Group Incorporated (AIG) and its various affiliates accepted a deal to pay approximately $146.5 million in fines, taxes and assessments. Officials from all 50 states – including North Carolina workers’ compensation officials — will have until March 1st to adopt a deal brokered by eight states: Pennsylvania, Indiana, Florida, Massachusetts, New York, Rhode Island, Delaware, and Indiana.
During the recent financial downturn, AIG served as a poster child of corporate insurance excess and mismanagement. The Federal Government and Treasury ultimately had to step in with $182 billion to rescue the company – the largest such bailout in the country’s history. In that context, this hefty $146.5 million settlement may look like a pittance. But what are these fines and assessments for?
Essentially, the company reported its workers’ comp premiums as commercial auto liability and/or general premiums. This subtle bookkeeping tactic allowed AIG to underreport its workers’ comp premiums to the tune of $2.12 billion. The violations occurred over a decade and a half ago. Nevertheless, per the arrangement, AIG only has until March 1st to re-file its statements. If it does not do so or fails to adhere to a 24-month monitoring regimen, the company could face another $150 million in fines.
In the political battle over how best to take care of the nation’s sick and injured workers, big insurance companies, like AIG, often get blackballed as “the enemy.” And while no one would defend poor bookkeeping and management practices – like underreporting workers’ comp premiums to rack up a profit – the Byzantine nature of most states workers’ comp programs should give us pause before we render judgment against the likes of AIG. Could there be a way to cut the Gordian knot? Can we, collectively – insurers, employers, employees, and interested government officials – adopt procedures, processes, and tactics to save money, help workers more, and ensure that businesses don’t get overrun by regulations, paperwork, or excess costs?
Unfortunately, so many participants — in the North Carolina workers’ compensation system and other state systems — seem so bent on blaming or punishing their “enemies” that we’ve collectively failed to give enough attention to win-win-win solutions. Strategies along those lines might include:
• Adopt better information processing and sharing throughout organizations, including government bureaucracies.
• Install better productivity rules, such as Parkinson’s Law and the Pareto principle (a.k.a the 80-20 rule)
• Ensure better ergonomic practices at work
• Make sure that employees take regular breaks to avoid fatigue
• Limit the availability of sugary processed foods in office vending machines and at grocery stores that service employees and employers.
Getting away from the abstract and back to a more practical discussion… if you or a relative or someone you care about has come down with an occupational illness or disease, a North Carolina workers’ compensation law firm can provide much needed guidance and strategic assistance.
More Web Resources:
AIG to pay $146M over workers compensation lawsuit
AIG Agrees to $100 Million Settlement in Probe
