Probe Sought Of AIG Civilian Injury War Base Claims Handling

National Underwriter News
April 20, 2009

WASHINGTON -- Allegations that American International Group and other insurance companies are improperly handling injury and death claims of workers employed by war zone contractors have sparked a demand for a congressional probe.

The request by Rep. Elijah Cummings, D-Md., a constant critic of AIG activities including its bonus arrangements and other policies, was made to Rep. Dennis Kucinich, D-Ohio, chairman of the Domestic Policy Subcommittee of the House Oversight and Government Reform Committee. Rep. Cummings is a senior member of the committee.

His complaint is that AIG and other insurers who have been given contracts under the Defense Base Act have been "unnecessarily denying and prolonging" serious health insurance claims of civilian contractors who were injured or killed while participating in Iraq and Afghanistan.

DBA coverage is the federal equivalent of workers' compensation coverage in the states.

Rep. Cummings' letter follows a recent investigation by The Los Angeles Times, ABC News, and ProPublica.

AIG responded by saying it has a 45-year history of handling Defense Base Act (DBA) claims for clients, both DBA-insured contractors and their civilian employees.

Christina Pretto, an AIG spokesperson, issued a statement for the company saying, "The vast majority of the tens of thousands of claims that we process are paid without dispute when the proper supporting medical evidence has been received."

Some cases, Ms. Pretto said, "unfortunately take longer to investigate than others because of documentation issues, but the vast majority of them are paid once those issues are resolved."

In the event of a dispute, she said, AIG follows the formal DBA resolution process, which includes a hearing before an administrative law judge.

But, Rep. Cummings cites a report in The Los Angeles Times that describes alleged difficulties claimants have encountered in receiving benefits for medical care and disability payments.

The article also cites problems faced by the families of those killed in receiving death benefits.

"From prosthetic limbs to treatment for post traumatic stress disorder, the claimants have faced a 'reject first and investigate later' mentality from the insurers," Rep. Cummings said.

He noted that, in order to receive compensation, claimants reportedly must frequently resort to mediation or litigation.

Rep. Cummings said in his letter requesting the hearing that there currently are more than 31,000 current and continuing civilian injury claims, as well as more than 1,400 claims for death benefits.

He said AIG and other insurers have received some $1.5 billion in premium payments, while paying out $900 million in compensation and expenses.

According to the article, AIG is the primary insurer retained by contracting firms, handling some 90 percent of civilian claims filed in the war zones in 2007.

"The men and women who sacrifice their lives to protect our nation on the battlefield should be able to return to their families without having to wage another battle here at home to receive the health care they are more than entitled to receive," Rep. Cummings said.

"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," he said in a letter to Rep. Kucinich requesting a hearing.

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