Ed Liddy Keeps AIG Profits High by Denying Medical Claims for Iraq, Afghanistan Injuries
By: Jane Hamsher Friday April 17, 2009 12:30 pm
Ed Liddy's having a rough week of it. First, Ed Towns wants to know if AIG used TARP money to pay public relations firms to attack critics of the AIG bailout:
Under Rules X and XI of the House Rules, the Committee is investigating allegations that taxpayer funds invested by the federal government in AIG may have been used to pay public relations firms to attack critics of AIG and the federal bailout.
Then, we learned that "dollar a year" Ed has a $3 million stake in Goldman Sachs. Which doesn't look too good, considering Goldman got $13 billion funneled through AIG as a counterparty when Liddy was at the helm. But don't worry, he had nothing to do with it:
“A.I.G. is a large institution that engages in standard commercial activity with companies all over the world,” Ms. Pretto said. “These activities are handled in the normal, day-to-day course of business and rarely, if ever, rise to the level of the C.E.O.”
So, the defense seems to be -- $13 billion in government money out the door to Goldman, but Liddy couldn't be bothered. If it helped the value of his Goldman stock, happy coincidence.
Now it turns out that AIG, who recorded hundreds of millions of dollars in profits for taxpayer-funded medical policies for civilian contractors working in Iraq and Afghanistan, are routinely denying "the most serious medical claims":
The insurance system for civilian contractors has generated profits for the providers, primarily AIG, the war zone's dominant player. Insurers collected more than $1.5 billion in premiums paid by U.S. taxpayers and have earned nearly $600 million in profit, according to congressional investigators.
A military audit deemed AIG's premiums "unreasonably high."
Insurance companies initially rejected 44% of claims from contractors involving serious injuries and more than half of all claims related to psychological stress, records show. As a result, civilians maimed or traumatized in the war zone often must wage lengthy court battles for medical care and benefits.
Liddy may claim that he only makes a dollar a year in salary from AIG, but he has an "undisclosed stock package" at AIG as well.
Elijah Cummings is calling on Liddy to resign. But look at the bright side -- as long as he's still around, he makes Steve Rattner look good.
Some comments to the article
Earl - back in the day (over 15 years ago) I was lawyering for a firm that did insurance defense. I had, independent of my work, befriended someone who was working as an adjuster at AIG.
This is one of the ways that firms develop contacts in insurance companies which then lead to cases being sent out to that firm, with the concomitant legal fees.
I started working on business development with this adjuster, being wholly upfront about it. And, since the adjuster was a friend, it was mutually open.
After we started working toward developing a business relationship, I sat down to discuss it with the senior partner, since I was a mere associate at the time. He was all pleased that I was working to develop more business and so on.
Until I told him the name of the company I was working on was “AIG”.
He said: “Stop. Don’t bother with them. I never want AIG in here. Not only do they not pay on claims (not a bad thing from a defense perspective), but they don’t pay their lawyers either. They nickel and dime you and make you wait forever.”
So, FWIW (and this does not mitigate AIG’s horrendous conduct in not paying claims), they screw everyone. They’re equal opportunity offenders.
AIG has been slow paying, not paying and under paying claims since 1984 that I am aware of. I am sure they continue to pay claims slow, under paying or not paying in all 100 of their companies in which they operate. When they get sued for bad faith they stonewall, cheat, and otherwise litigate one to death and then they defraud their defense attorneys by not paying them, slow paying them and then if they pay, under pay. It has been a very profitible scam over a lot of years for them.
It must be understood the AIG’s entire business model is to not pay claims. This was related to me by a guy who is a former high level corporate finance guy. The smaller you are the harder they will fight the payout. A simple proven can’t miss strategy.
Note that they were eager to pay the giant financial institutions in full for their swaps. Note also that smaller players in CDOs didn’t make out so good. I am trying to track this down but I suspect that many of them are being offered as little as 20 cents on the dollar on their bets with AIG.
No matter how bad you think all this stuff is it is much much worse.