NY court: Case against ex-AIG execs can continue
Recent Cases
New York's attorney general can continue his legal effort to bar two former American International Group Inc. executives from the securities industry and forfeit any improperly gained profits, the state's highest court ruled Thursday.
The Court of Appeals for the second time refused to dismiss the lawsuit originally filed in 2005 by then-Attorney General Eliot Spitzer, ruling it should go to trial.
The suit claims ex-AIG chief executive Maurice "Hank" Greenberg and ex-chief financial officer Howard Smith had engaged in fraudulent reinsurance transactions to conceal from investors a deteriorating financial condition.
AIG itself resolved state charges as part of a $1.64 billion agreement with regulators in 2006. The insurance giant was bailed out by the federal government in the 2008 financial crisis.
Greenberg and Smith settled related federal Securities and Exchange Commission complaints without admitting wrongdoing in 2009.
Their attorneys challenged the state lawsuit, arguing that New York's Martin Act against securities fraud authorizes neither a permanent industry ban nor disgorgement of profits, and that releases from other settlements barred further financial forfeit.
"As we have previously stated, in an appropriate case, disgorgement may be an available 'equitable remedy distinct from restitution' under the state's anti-fraud legislation," Judge Leslie Stein wrote. "Moreover, as with the attorney general's claim for an injunction, issues of fact exist which prevent us from concluding, as a matter of law that disgorgement is unwarranted."
The court rejected another dismissal motion two years ago, concluding there was sufficient fraud evidence for trial.
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Workers’ Compensation Subrogation of Administrative Fees and Costs
When a worker covered by workers’ compensation makes a claim against a third party, the workers’ compensation insurance retains the right to subrogate against any recovery from that third party for all benefits paid to or on behalf of a claimant injured at work. When subrogating for more than basic medical and indemnity benefits, the Texas workers’ compensation subrogation statute provides that “the net amount recovered by a claimant in a third‑party action shall be used to reimburse the carrier for benefits, including medical benefits that have been paid for the compensable injury.” TX Labor Code § 417.002.
In fact, all 50 states provide for similar subrogation. However, none of them precisely outlines which payments or costs paid by a compensation carrier constitute “compensation” and can be recovered. The result is industry-wide confusion and an ongoing debate and argument with claimants’ attorneys over what can and can’t be included in a carrier’s lien for recovery purposes.
In addition to medical expenses, death benefits, funeral costs and/or indemnity benefits for lost wages and loss of earning capacity resulting from a compensable injury, workers’ compensation insurance carriers also expend considerable dollars for case management costs, medical bill audit fees, rehabilitation benefits, nurse case worker fees, and other similar fees. They also incur other expenses in conjunction with the handling and adjusting of workers’ compensation claims. Workers’ compensation carriers typically assert, of course, that, they are entitled to reimbursement for such expenditures when it recovers its workers’ compensation lien. Injured workers and their attorneys disagree.