Congressman 'Disgusted' By AIG Delaying and Denying Claims

Cummings wants hearings on insurance giant's handling of injured contractors.

April 21, 2009, 4:58 PM

April 22, 2009— -- A leading congressional critic of AIG is calling for hearings to examine the insurance giant's handling of disability benefits for civilian contractors injured in Iraq after a joint investigation by ABC News, the Los Angeles Times and the non-profit group ProPublica revealed that the company has been playing hardball with injured workers with a pattern of "delaying and denying" claims.

"I was absolutely disgusted to read about the atrocities that individuals are being forced to endure as they attempt to get treatment for the injuries they received while serving our country," said Rep Elijah Cummings, (D-MD), a senior member of the House Oversight and Reform Committee.

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Cummings has asked the chairman of key oversight subcommittee to schedule a hearing to examine AIG's practices.

"Over the last few months, AIG has engaged in a pattern of deception and reckless behavior with respect to taxpayer funds," wrote Cummings in a letter. "I am deeply disturbed that the firm may be withholding any payment contractually due to civilian contractors."

The joint investigation found that the insurance giant was "nickel and diming" disabled war workers, while it rewarded its own executives with millions in bonuses and hundreds of thousands more in lavish retreats.

Click here to see a slideshow of some of the affected private contractors.

"Everything's a struggle. They try to nit-pick everything to death, instead of just paying the bill," said Kevin Smith, a former truck driver who was badly injured in the leg during an insurgent ambush.

AIG cut off all of Smith's medical and disability benefits, and he feared losing his home until his lawyer got a federal judge to order AIG to start the payments again.

"They can pay millions and millions of dollars and they can do all this stuff with their employees, but they can't pay us?" said Smith.

An analysis by ProPublica of tens of thousands of claims filed by people working for American defense contractors overseas found that AIG challenged nearly half – 43 percent – of the most serious claims.

In a statement, AIG said that the vast majority of the claims are "paid without dispute when the proper supporting medical evidence has been received."

AIG 'Delaying and Denying' Claims, Attorney Says

Toby Cole, an attorney who represents Smith, says he sees a clear pattern of AIG "delaying and denying" claims of injured contractors.

"It's difficult for me to think it's anything but a concentrated effort just to ignore these guys," said Cole.

Injured contractors are entitled to medical and disability benefits under a federal law called the Defense Base Act. AIG covers about 90 percent of the claims for these overseas workers under this program.

Last year, congressional investigators said that AIG's insurance business for contractors had been "extremely profitable" for the company. The investigators also said that AIG had "perverse incentives" to dispute the claims for war-related injuries because of a provision under the law that requires that insurance company be reimbursed for the amount the company pays out on those claims and collect an additional 15 percent fee to cover its administrative costs.

Click here for the congressional investigators' report.

"It's in their interest to delay the payments, and it's in their interest to fight these payments as hard as they possibly can," said Cole.

AIG would not disclose how much the company has made from its business insuring workers for defense contractors, but said that it strives to provide "quality service."

Click here to read the personal story of one private contractor and watch his story in his own words.

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