AIG to pay 900K more in Big Dig settlement

John O'Brien Sep. 8, 2009, 4:51pm


BOSTON (Legal Newsline) - American International Group is paying almost $1 million more than the $58.5 million it agreed to spend to settle allegations involving its role in the Big Dig project.

Massachusetts Attorney General Martha Coakley said Monday that AIG paid an additional $900,000 as part of an ongoing reconciliation of premiums and residual market payments. AIG served as the Workers' Compensation insurer for the project, which was designed to ease traffic congestion on Boston's main highways.

AIG had already paid an extra $200,000 in Aug. 2008.

"In a long term, multi-billion dollar project like the Big Dig, it is imperative that we maintain vigilant oversight of the finances to ensure that all parties are performing as agreed," Coakley said when announcing the settlement in 2007.

"The Attorney General's office will continue our review of the project's expenses, and we remain committed to ensuring that the Commonwealth is not shortchanged."

The settlement represented $26 million in losses to the state, plus interest.

Part of AIG's contract with the Commonwealth required Massachusetts to reimburse AIG for any additional residual market loss attributable to the project's account.

Meanwhile, AIG was required to pass through to the Commonwealth any residual market surplus attributable to the account.

Coakley said her review showed that AIG failed to charge the state or pass along surplus monies.

The Big Dig project started in 1991 and was marred by litigation.

Settlements included $458.2 million from Bechtel/Parsons Brinkerhoff and other contractors for alleged various design errors and problems and $16 million from Powers Fasteners to resolve criminal and civil claims.

Those claims stemmed from the death of a woman who was struck by a piece of ceiling that fell from a tunnel.

The litigation concluded in March with a settlement between the Commonwealth and Gannett Fleming, the designer of a section of tunnel on Interstate 90 that collapsed and killed 38-year-old Milena Del Valle in 2006.

Coakley also reached a $200,000 agreement with Sika Corp., which manufactured that epoxy glue used on the part of the tunnel that collapsed. Gannett paid nearly $2 million.

Coakley recently unveiled plans to run for U.S. Senate in a special election that will determine the successor to the late Ted Kennedy.

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