AIG Found to Have Committed Fraud in Order to Reduce Payment to Injury Victim and His Family

gavel-5-1409595-mA recent Middlesex Superior Court decision in the case of Anderson v. AIG, which ordered AIG to pay over $7 Million to a lawyer who was struck by a negligently operated bus (which was insured by AIG), exposes the lengths a large, wealthy and powerful insurance company will go to in an attempt to deny full and fair compensation to an injury victim and his family.  In the Anderson case, AIG and its attorneys were found to have fraudulently created a fictitious version of how Mr. Anderson’s accident occurred in order to decrease its payout on the claim and save the massive insurance company a few million dollars.  You may recall that AIG, whose 2013 net income was over $9 Billion dollars (yes, billion), is the same AIG that received an $85 Billion bailout from our taxpayers (which includes Mr. Anderson, the victim of this accident and victim of AIG’s fraud).  Anyone other than plaintiff’s attorneys who routinely represent those harmed by the careless actions of others  in litigation against large, powerful insurance companies like AIG, may be shocked by AIG’s conduct which was exposed to the court in this case. Those of us who routinely handle these cases are not shocked by the findings, but rather relieved that AIG’s fraud was exposed for all to see.

Odin Anderson was a successful trial attorney in Boston.  In 1998, Attorney Anderson was returning to his office after a lunch meeting in downtown Boston.  He admitted that he had consumed an alcoholic beverage at his meeting, but there was no evidence that he had consumed enough alcohol to be impaired in any way.  As he was crossing a street in a crosswalk, he was struck by a Partners Healthcare shuttle bus operated by Norman Rice, a Partner’s employee.  Partners Healthcare and Mr. Rice were insured by AIG.  The bus accident caused Attorney Anderson to suffer a skull fracture, which resulted in serious neurological and cognitive impairments, including severe headaches, memory loss, sleep disorders and depression.  This injury caused Attorney Anderson to incur several hundred thousand dollars in medical bills and also severely limited his ability to practice law and earn for his family.

AIG’s initial investigation into the accident revealed that Mr. Rice’s negligent driving clearly caused the accident. AIG determined that Attorney Anderson was walking in the crosswalk and that Mr. Rice failed to look to his left (direction where Attorney Anderson was located) before stepping on the gas pedal and moving the bus forward directly into Attorney Anderson.  This information was obtained by way of the bus driver Mr. Rice’s own admissions.  AIG determined that they had no valid defense to the claim and that their insured, Partner’s Healthcare was clearly liable for the injuries caused to Attorney Anderson.

Instead of doing what they were required to do, under Massachusetts consumer protection laws (Chapter 93A/176D), which was for AIG to offer a reasonable settlement in consideration of the harm caused to Attorney Anderson (reimbursement of past and future medical bills, past and future lost wages, pain and suffering), AIG decided to retain “aggressive” defense lawyers.  These defense lawyers hid the statement of Mr. Rice, where he admitted he was at fault for the accident, and asserted that Attorney Anderson caused his own injuries because he was drunk, not walking in the crosswalk, and had darted out of nowhere in front of the bus.  AIG never offered a settlement that came close to fully and fairly compensating Attorney Anderson and instead took the case to trial with their newfound fictitious facts of the accident.  The AIG attorneys spent 18 hours preparing the bus driver Mr. Rice for his deposition, coaching him to now change his story and blame Attorney Anderson for causing the accident.  Unfortunately for Attorney Anderson, AIG’s tactics were effective, as the jury reduced the amount of damages awarded to Attorney Anderson by over 40% because that was the percentage of blame that they assigned to Attorney Anderson.

Thankfully Attorney Anderson and his attorneys brought a claim for unfair claims handling and settlement practices against AIG. After many years of denials and continued refusal to settle the claim, AIG’s fraud was finally exposed in the recent Middlesex Superior Court decision in the Chapter 93A/176D bad faith claim brought by Attorney Anderson against AIG.  The court doubled the damages originally awarded to Attorney Anderson, and awarded his attorneys fees and costs which amounted to over $7 Million.

This decision will hopefully serve as deterrent to AIG and other insurance companies in handling claims in such a deceitful and fraudulent manner.  The case illustrates the penalties that can be imposed against an insurance company when they choose to engage in such unfair settlement practices, namely the court’s ability to double or even triple the damages caused to the injured plaintiff.