Bailed-Out AIG Pampers Execs While Denying, Delaying Claims of Contractors Injured in Iraq

Investigation finds almost half of claims challenged by insurance giant.

April 16, 2009, 6:40 PM

April 17, 2009— -- Insurance giant AIG, the same company that rewarded its executives with millions in bonuses and spent hundreds of thousands of dollars on a spa retreat at an exclusive California resort and private jets, has been nickel and diming employees of private contractors injured in Iraq, with a pattern of denying and delaying their claims, a joint investigation between 20/20, the Los Angeles Times and the non-profit group ProPublica has found.

Click here to watch the full story on 20/20.

In a joint investigation with 20/20, ProPublica and the Los Angeles Times analyzed some 30,000 claims filed by people working for American defense contractors overseas, covered by AIG under a federally-mandated program. Almost half – 43 percent – of the most serious cases were challenged by AIG, the analysis found, particularly those where claims were made for treatment of post traumatic stress disorder.

"It's difficult for me to think it's anything but a concentrated effort just to ignore these guys," said Houston attorney Toby Cole, who represents many of the injured contractors. He said he's never seen one insurance company treat so many people so badly.

"The pattern is to deny, to delay and to fight," Cole said of AIG, which has been kept in business only because of $182 billion in taxpayer bailout money.

Private Contractors Fight Back Against AIG

Click here to see pictures of the people fighting AIG.

"They just threw me out on the street basically," said Preston Wheeler, who was driving a truck for the KBR contracting firm when he convoy was attacked by insurgents, of AIG. He watched as fellow drivers were murdered and took bullets in his chest and arm.

Click here to watch more on the insurgent ambush.

Wheeler, who still has nightmares and flashbacks, said AIG didn't believe him and tried to cut off his medical and disability benefits. After he retained an attorney and went to court, AIG agreed to reinstate his benefits, months after not giving him anything.

One of the bullets from the attack is still lodged in Wheeler's underarm, but he says AIG won't even respond to his request for a cat scan to see if he should have it removed."It's a foreign object," Wheeler told ABC News. "It doesn't belong in there, so it needs to come out."

AIG Won't Say How Much Money It's Making

At a hearing last May, congressional investigators said AIG's insurance business covering private contractors has been "extremely profitable" for the company.

Click here for the congressional investigators report.

AIG won't disclose how much it's making by handling what is essentially workmen's compensation for contractors. The company says it has a 45-year history of handling such claims and provides "quality service" to its claimants and clients.

Watch 20/20 tonight at 10p.m. E.T. to hear more stories of private contractors injured in Iraq.

Click here to read the story of John Woodson and watch his story in his own words.

Read more at ProPublica and the Los Angeles Times.

Click Here for the Investigative Homepage.