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Congressman Calls For Inquiry Into AIG’s Handling of Contractor Claims

Posted by Chrissie Cole
Friday, April 24, 2009 1:57 PM EST
Category: In The Workplace
Tags: Financial Misconduct, AIG, Big Insurance, Protecting Your Family, Insurance Industry, Civilian Contractors

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IMAGE SOURCE: Congressman Elijah E. Cummings

Rep. Elijah E. Cummings (D-Md.), a leading congressional critic of AIG, has called for a probe to examine AIG’s handling of denied and delayed insurance claims for civilian contractors injured in Iraq and Afghanistan.

Also called into question is the Labor Department’s role in policing the federally financed insurance system for civilians working overseas.

After a joint investigation by ABC News, the Los Angeles Times and the non-profit group ProPublica, Cummings, requested committee Chairman Dennis Kucinich, (D – Ohio) to schedule a hearing to examine American International Group's (AIG) practices, reports the Los Angeles Times.

According ProPublica, the insurance companies responsible for their treatment have continually denied and delayed the most serious of medical claims made by returning civilians. Those insurers – largely AIG – recorded hundreds of millions of dollars in profits.

Insurers have collected at least $1.5 billion in premiums paid by U.S. taxpayers and have earned nearly $600 million in profit, according to congressional investigators.

Casualties among civilian workers in Iraq total more than 1,400 civilian deaths and 31,000 injured, the newspaper said.

An estimated 44 percent of all serious claims and 60 percent of claims for mental health services have been denied to returning contractors. As a result, civilians seriously injured or traumatized in the war zone are forced to wage lengthy court battles for benefits and medical care.

The high denial rate is partly due to government rules that give insurers only 2 weeks to decide the validity of a claim. In most instances, insurers reject the claim first and then investigate.

“The men and women who sacrifice their lives to protect our nation should not have to return home only wage a new battle to receive healthcare benefits that they are more than entitled to receive,” Cummings said in his request for an official inquiry.

“The majority of claims were processed without dispute,” said AIG in a statement. While Labor Department officials contend they’ve done their best to oversee the system despite limited resources.

The Defense Base Act

At the core of the controversy is The Defense Base Act, which requires federal contractors to purchase workers’ compensation insurance for civilians working overseas.

Claims have skyrocketed from hundreds a year to more than 11,000 in 2007. The increase is the result of the privatization of the wars in Afghanistan and Iraq, where troops are outnumbered by civilian contractors in battle zones.

AIG, the leading workers’ compensation provider, handles 90 percent of claims filed by the families of contractors that have died and injured civilians. The cost of the company’s premiums has previously been questioned by Congressional investigators, which are paid by taxpayers as part of a federal contract.

The government reform committee, last year, found that AIG had collected $1.3 billion in premiums on the insurance from 2002 to 2007, while paying out only $800 million – leaving the company with nearly 40 percent in profits. The Pentagon has recently launched an inquiry to determine a reduction of premiums. #


2 Comments

Posted by Standish
Sunday, April 26, 2009 1:42 AM EST

Since we taxpayers now own 80 percent of AIG, no doubt those at AIG who have ignored the claims will seek ways to get taxpayers to pay the claims. The claims for injured and dead civilian workers "must" be paid, if not out of the premiums AIG collected, then out of executives' salaries and bonuses, even if that means suing several of the executives individually - maybe for fraud.

Posted by Wayne Parsons
Saturday, May 02, 2009 5:54 PM EST

AIG is a leading contributor to the phony tort reform scam on American consumers as I pointed out recently: The History Of Tort Reform - A Story of Corporate Greed And A Conspiracy Against Justice For The People ( LINK )

To these corporations its all about money and people do not matter. Look at all of the financial misconduct on Wall Street. Who pays? We pay. The people pay. Thanks for exposing this story.

Comments for this article are closed.

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