WASHINGTON — Paul Jasmine, a dog trainer, was on his first mission hunting for explosives in southeastern Afghanistan when he stepped on an improvised bomb.
The blast hurled him 15 feet in the air, blew off his left foot, fractured his right leg and mortally wounded his bomb-sniffing dog, Chucky.
Permanently disabled at 36, Jasmine was transported home to Lake Charles, La., where he said he expects to receive enough workers' compensation benefits from a subsidiary of the American International Group to support him, his wife and their three children.
AIG's Insurance Company of the State of Pennsylvania, the workers' comp carrier for most employees of U.S. overseas contractors, has been sending him benefit checks amounting to $315 a week.
That's a small fraction of the $10,000 a month that Jasmine said he earned during three years in Iraq and of the $7,500-a-month contract that his employer, CAN-Am Protection Group, gave him for war zone duty in Afghanistan.
"I thought I'd be better taken care of, seeing that I was doing this for the country," Jasmine said in a phone interview.
AIG, the company through which more than $90 billion in federal money flowed out the back door to some of the same Wall Street banks whose risky behavior fueled the nation's financial crisis, is now being accused of short-changing its customers. Attorneys for hundreds of injured workers say AIG is dragging out insurance payments that their clients need to cover home mortgages, failing to pay full compensation benefits and refusing to pay medical bills.
Jasmine's Houston lawyers, Joel Mills and Gary Pitts, said that he's getting about a quarter of what he's due under workers' compensation laws because AIG wrongly based his benefits on his earnings in 2009, when he stayed home with his family and wasn't working.
Attorneys for hundreds of injured workers accuse AIG of dragging out payments their clients need to cover home mortgages, failing to pay full compensation benefits and refusing to pay medical bills.
Employees of civilian contractors working abroad are covered by the 83-year-old Longshore and Harbor Workers' Compensation Act and the 69-year-old Defense Base Act, laws that set a complex formula for determining compensation for disabled workers.
However, if a worker is injured as a result of a hazard of war, the insurer can seek compensation from the Labor Department.
AIG's Pennsylvania subsidiary has dominated the market for injuries to employees of military contractors, handling nearly 80 percent of the 55,988 claims filed from Sept. 1, 2001 (shortly before U.S. troops invaded Afghanistan), to Dec. 31, 2009, according to data from the Labor Department's Office of Workers' Compensation. Of those, 21,207 claims involved injuries that idled workers for four or more days, including 1,987 filed on behalf of workers who died.
Pitts, whose Houston law firm represents some 300 injured employees of overseas defense contractors, the biggest caseload in the country, said AIG's Pennsylvania subsidiary has fought claims for years.
"They just weren't acting like a normal insurance company," Pitts said, saying that "almost every case has gotten litigated" before Labor Department hearing officers, as opposed to the usual pattern in which 85 percent of claims are privately settled.
"If something's getting litigated, from our point of view it's because they're not getting the benefits they should be getting," he said. "Ultimately, we're winning about 95 percent of the cases. So you could say they're getting delayed about 95 percent of the time."
AIG spokesman Mark Herr declined to comment on individual cases, but said that some of the claims are "exceedingly complex" and must be decided under decades-old legislation "that is ill-suited for its purpose."
"We owe all these injured contractors a debt for their service to our country," Herr said. "We are committed to handling and resolving all their benefit claims professionally, ethically and fairly."
Charles Schader, the president of AIG's worldwide claims, said in congressional testimony a year ago that the company has provided "decades of unsurpassed service," including undertaking 2,000 medical evacuations of severely injured workers. However, he said that determining the validity of claims for workers "injured thousands of miles away from home, in a shifting war zone . . . where determining the facts of an accident — the location and the circumstances — can be a challenge."
A Labor Department official said that the Obama administration has taken a number of steps to improve what was a small program overwhelmed by the number and complexity of claims. Changes have included confronting insurers about unacceptable claims handling practices, monitoring their filing of initial injury reports and expediting the resolution of disputes, the official said.
In recent months, Pitts said, lawyers for the AIG subsidiary have offered to mediate several pending cases, perhaps signaling a more conciliatory approach now that a massive bailout by taxpayers has kept AIG afloat and out of bankruptcy court.
Truck drivers Kenneth Simons and Robert Purcella and safety inspector Randall Mead, who filed claims for serious injuries they suffered while working in Iraq, voice frustration and anger over their treatment by AIG.
Ed Barton, an attorney in the east Texas town of Orange who represents Purcella, Simons and Mead, said that AIG is "worse to deal with" than other insurers and that he hasn't noticed any improvement.
He said the insurer frequently refuses to authorize medical treatment, including mental health care for traumatized workers, and is slow to produce medical and employment records.
Truck driver Kenneth Simons, 55, slammed his left hand into the underside of his truck while he was strapping in a load in January 2004 for Service Employers International Inc., a Cayman Islands-based subsidiary of Houston contractor KBR.
When his hand didn't respond to treatment, Simons was diagnosed with disabling Reflex Sympathetic Dystrophy Syndrome, a rare, incurable condition that caused chronic intense pain that gradually worsens and can spread to an entire limb. Barton said that the pain can be excruciating.
"I've had doctors say that sometimes people beg to have a leg amputated," he said.
Simons said he cringes in pain if only a breeze brushes his hand.
AIG challenged the diagnosis, Simons' need for a pain medication pump and his request for disability compensation based on his pay in Iraq. Simons said he looked up attorney Ed Barton after he'd gone months without a compensation check and was "sitting here trying to starve to death."
A hearing officer ruled that Simons was disabled, but limited his weekly compensation to $648 based on his prior annual income of $7,300 to $38,000 in his hometown of Kirbyville, Texas, rather than his projected earnings of up to $90,000 in Kuwait and Iraq.
Barton appealed to the Labor Department's Benefits Review Board, which ordered the hearing officer to recalculate his benefits based on his expected overseas income.
Last month, an administrative law judge awarded Simons the weekly maximum of $1,031 plus retroactive compensation, interest and penalties of $123,776.
Because of the insurer's tough stance, Simons said, he hasn't "been able to support my family like I should."
AIG, he said, is "a big, big company and they're continually jacking with you about the money. I'm getting my checks because I have a judgment against them."
Simons said he found it particularly aggravating to watch the news after the government rescued AIG and learn that executives of its London-based Financial Products unit were being paid hundreds of millions of dollars in bonuses.
"I just wonder what they're doing to get the bonuses," Simons said.
Randall Mead was a safety and environmental inspector for Houston-based EG&G Technical Services, a division of San Francisco-based URS Corp., when he injured his back on Oct. 25, 2007, while trying to transport a couple of heavy boxes from Dubai to Baghdad. That ended his 16-month tour in the Middle East.
A Dallas neurosurgeon recommended surgery, and a company doctor agreed, Barton said, but AIG refused to pay for the operation for a year while Mead struggled in pain.
Two months after the complicated operation in early 2009 to implant cadaver bones into his spine, Mead was still in pain. His doctor advised him that the surgery had failed, and that he needed a second operation.
Barton said the insurer directed Mead to its own doctor. As he sat for hours in the doctor's office in Dallas, Barton said, Mead looked out the window to see the offices of WorldSource, an AIG subsidiary that processes workers' comp claims. The company's doctor told Mead he didn't need a second surgery, Barton said.
Mead, 39, a husband and father of two children, likened the pain to an electrical shock "shooting up and down your leg." He said he could do few of the activities he enjoyed in the past.
"I'm very upset about it," he said. "I don't understand how, me being as young as I am, that they can let this go on for so long."
Robert Purcella, 46, of Colorado Springs, Colo., said he earned a six-figure income from Halliburton ferrying military supplies in 18-wheelers to troops in Iraq before he was hurt and flown home.
"I got hit four times — three times with an IED (improvised explosive device), once with a rocket-propelled grenade," he said. "A bullet came through the windshield and threw glass in my eye."
Purcella said the attacks also broke both his shoulders, leading doctors to remove his collarbone, and damaged his hearing. He bench pressed 310 pounds in the gym when healthy, he said. "Now, I can't lift anything."
AIG said "I was a liar, and I was never hurt, and so on," Purcella said, "even though they had the evidence."
He said that he won a court order directing the company to send him more than $100,000 in unpaid compensation, plus $1,854 every two weeks, but the checks routinely arrive late.
Attorney Barton said that AIG has failed to pay tens of thousands of dollars of Purcella's medical bills, including treatment for Post-Traumatic Stress Disorder.
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