Posted on 07 Oct 2010
A federal judge has rejected TIG Insurance Co.'s recent legal bid to recover $23.1 million in Sept. 11-related claims and costs by joining ongoing litigation that spans nine years.
U.S. District Judge Alvin K. Hellerstein denied the Aug. 19 request by the insurer to join one of four facets of litigation arising from the terrorist attacks on the World Trade Center playing out in U.S. District Court's Southern District of New York.
TIG Insurance had sought to recover money it paid to insureds by joining a master case for property damage and business loss claimants. Three other master dockets segregate claims for Sept. 11 air passengers and victims, claims from those who removed debris from the World Trade Center disaster site, and those who assisted with debris removal at other sites.
TIG wrote policies for business entities with operations that had long-term leases in three separate units of the destroyed complex in lower Manhattan: One World Trade Center, Five World Trade Center and Seven World Trade Center.
Hellerstein said since the attacks, insurers have paid out $4.4 billion in loss payments to the WTC Plaintiffs, a group of companies that belongs to developer Larry Silverstein. In an Aug. 13, 2009 ruling, Hellerstein had determined that insurers had subrogation rights and could pursue claims against the "Aviation Defendants," a group that includes American Airlines and United Airlines among others such as Boeing Co. and security firms. The contention is that those within the collective defendant group failed to safeguard against a terrorist attack.
Congress took action following Sept. 11 to hold potential damages to the existing limits of the defendants' insurance policies -- coverage amounts well below the actual damage, which plaintiffs in lawsuits against the airlines had claimed was $12.3 billion (BestWire, Aug. 21, 2009).
Hellerstein's Sept. 27 ruling notes that insurers holding subrogation claims totaling $3 billion decided not to pursue recovery of that money. TIG was identified as one of those insurers, and paid out $18.2 million in claims and incurred $4.9 million in expenses.
"TIG never filed a complaint alleging a subrogation claim, apparently because its claims-handling company, RiverStone Claims Management LLC, processed the claim but never alerted TIG of the need to file a complaint," Hellerstein wrote.
Hellerstein also stated that the statute of limitations on TIG's claims expired six years ago and the insurer's request to join came after an "exceedingly long delay."
"TIG's failure, as a sophisticated insurance company, is particularly egregious, for it cannot pretend to be ignorant of the ongoing litigation and the possibility that it had a subrogation interest at stake," the judge stated.
Brad Martin, a spokesman for TIG's parent company, Fairfax Financial Holdings Ltd., said the company does not comment on litigation. Fairfax also owns RiverStone.