Lakin's AIG class action settles 10 days after bailout

Steve Korris Nov. 7, 2008, 8:45am



EAST ST. LOUIS – Class action attorneys of the Lakin Law Firm dropped a suit against insurer AIG like a hot potato when U.S. taxpayers bought the company.

Lakin client Thomas Springman withdrew a motion to certify a class action against AIG in U.S. district court at East St. Louis on Sept. 26.

"The parties have now reached a settlement in principle on an individual basis, subject to documentation," wrote Jonathan Piper of the Lakin firm.

Ten days earlier, Treasury Secretary Henry Paulson had announced that AIG would collapse if American taxpayers didn't prop it up.

He arranged for taxpayers to purchase 79.9 percent ownership of AIG.

Springman sued AIG Claims Services and Illinois National Insurance in Madison County circuit court in 2003.

He alleged that AIG Claims Services, processing a car crash for Illinois National, improperly reduced payouts on his medical bills.

Attorneys for AIG Claims Services responded that Springman sued the wrong outfit.

They reported that AIG Marketing handled his claim.

Last year, the Lakins amended Springman's complaint and sued AIG Marketing.

AIG Marketing removed the suit to federal court, arguing that a switch of defendants created a new action under the Class Action Fairness Act of 2005.

The act restricts new class actions to federal courts.

The Lakins moved for remand, and District Judge Patrick Murphy denied it.

On appeal, the Seventh Circuit in Chicago affirmed Murphy's decision to keep the case.

"The plaintiff learned by December 2003, or at the latest by November 2004, that he had sued the wrong party, yet he waited almost three years to substitute the right one," Judge Richard Posner wrote in an April 15 opinion.

"He offers no excuse for having waited so long to correct his mistake," Posner wrote.

"Throughout this period the wrong party, though knowing it is the wrong party, must keep tabs on the case, may have to report it to insurance and securities regulators as a pending case, or must incur the expense of seeking a dismissal, while the right party wonders why it hasn't been sued and must make preparations for an eventual suit by lining up counsel and preserving evidence," he wrote.

"What was AIGM to do?" Posner asked. "Petition the court to direct the plaintiff to sue it? Or should AIGC have told the plaintiff, please sue my affiliate?"

The case returned to Murphy on May 8.

On May 30, Jonathan Piper of the Lakin firm moved to certify a double class action.

One class would pursue a breach of contract claim against Illinois National.

The class would include all persons that Illinois National insured, or their medical providers, whose payments were reduced by certain software since 1997.

The other class would pursue a consumer fraud claim against AIG Marketing.

The class would include all persons that AIG insured whose payments were reduced through the same software since 2000.

AIG Marketing opposed class certification Aug. 6, and moved for summary judgment.

Joseph Whyte of Edwardsville wrote that Springman suffered no economic injury.

AIG Marketing cut $179.57 from bills his providers submitted, according to Whyte, and Springman did not have to pay that amount to the providers.

In fact, Whyte wrote, Springman paid nothing at all for his care after the crash.

Whyte, bracing for a battle, attached 34 exhibits to his summary judgment motion.

Now he can file the exhibits in his archives along with his Seventh Circuit victory.

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