AIG Delays Insurance Claims by Injured War Contractors
An investigation by the Los Angeles Times and Pro Publica reveals what insurance attorneys see all too often - big name insurers doing their best to delay or deny claims. The report, however, focuses on insurance disputes that strike a special chord – they involve denials and delays of insurance claims filed by civilian war contractors returning home after suffering injures in Iraq and Afghanistan.
While AIG was using its government-funded bailout money to treat employees to spa trips and pay itself bonuses, the company was also working hard to delay injury claims from policyholders who were injured in war zones.
Companies and contractors in Iraq and Afghanistan war zones must provide employers medical disability insurance to workers, including death benefit policies in case of fatalities. Back when the Defense Base Act was passed in 1941 to provide compensation to civilians working at military, air, and naval bases, there were very few civilian contractors and, therefore, fewer claims. All that changed after the Afghanistan and Iraq invasions. In 2008, more than 200,000 civilian contractors worked in the war zones, guarding bases doing translation work for soldiers, driving trucks, cooking, delivering fuel to troops, and performing dozens of indispensable tasks.
Between 2003 and 2007, the number of civilian contractors filing injury claims reached 11,000 each year, with 2008 seeing a drop to about 6,000 claims. Since 2002, insurance companies have drastically increased the premiums for these insurance policies. Who pays for them you ask? Tax payers. It has been a lucrative field for insurers and AIG was early in grabbing a large portion of the market share. The company dominated the insurance market and charged high premiums. There were no other reputed companies around, and so, defense contractors were unable to find policies with low premiums.
Even with these types of premiums, civil contractors returning home battered and injured from war zones found, to their dismay, that these companies are slow to pay out claims. Whether the necessary care requires a prosthetic leg for a civilian who had his leg blown out by a roadside bomb, a wheelchair, or simple basic psychological counseling, getting their insurer to pay their claims has been a long struggle.
One civilian who lost his leg when a roadside bomb exploded, returned home expecting to find easy and quick medical help. Instead, he found the process of gaining compensation would be much harder then he thought. According to truck driver John Woodson, AIG began to challenge the expense of almost every single medical requirement he needed. While military amputees are typically provided three prosthetic legs to enable walking, showering, and exercising, Woodson had to fight to get a single prosthetic - the prosthetic is not brand new as his doctor recommended and many of the original parts have been replaced.
This kind of behavior toward the men and woman who work in strange, foreign lands to keep the wheels of our military running smoothly, is appalling. They are locked in disputes and struggle to get the insurer to pay for their most basic medical needs. As insurance attorneys, we find such behavior saddening, but not very surprising.
