Liberty Mutual accused of inflating comp premiums

Liberty Mutual Insurance Co. is facing a putative class-action lawsuit filed by a former workers compensation client that alleges the insurer unlawfully overcharged for workers compensation insurance.

The lawsuit, Valley Container Co. v. Liberty Mutual Inc., was filed Tuesday in the U.S. District Court for the District of Massachusetts in Boston, alleging claims of breach of contract and unjust enrichment, as well as violations of the Racketeer Influenced and Corrupt Organizations Act and Massachusetts laws.

The complaint alleges that Boston-based Liberty Mutual and its affiliates “systematically, willfully and unlawfully” overcharged companies in at least 35 states for workers compensation insurance and engaged in misconduct by “knowingly” violating laws governing workers comp insurance in those stated, “directly resulting in excessive insurance premiums being charged” to customers.

According to the complaint, an employee of Bridgeport, Connecticut-based Valley Container Co. suffered a workplace injury, and the subsequent workers compensation claim, valued at approximately $47,000, was accepted by the company’s comp insurer, Liberty Mutual. Valley Container alleges that Liberty Mutual recovered all but $120 on the claim from a third-party lawsuit but failed to report the recovery to the Boca Raton, Florida-based National Council on Compensation Insurance. As a result, the experience modification rating used to determine Valley Containers’ premium in 2014 and 2015 was artificially inflated, and Liberty Mutual failed to reimburse the company for the excess premium, the company alleged in the complaint.

Valley Container also accuses Liberty Mutual of taking advantage of its relationship with NCCI to “defraud employers and obtain and retain greater premium amounts” in the states where the NCCI is the designated rating and statistical organization, by purportedly taking advantage of NCCI’s “lack of oversight and diligence” and “inaccurate data” to calculate premiums.

A spokesman from Liberty Mutual said the company does not publicly discuss litigation.

Business Insurance article by Angela Childers

About Daniel McKenna

Dan McKenna
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