AIG 2013 Annual Report Download - page 311

interest as of September 3, 2013). Fitzpatrick also sought a declaratory judgment that he would be entitled to
unspecified profit interests whenever AIG sold eight buildings (one of which AIG contends it never owned and
another of which AIG has already sold). In addition, Fitzpatrick claimed punitive damages for the alleged breaches of
fiduciary duties, and he applied to the Court on August 15, 2013 for attorneys’ fees in light of discovery sanctions
that the Court ordered against AIG in May.
On November 21, 2013, the parties executed a definitive and final settlement agreement. The matter was dismissed
with prejudice effective December 5, 2013. AIG has made or accrued for payments required under the settlement
agreement.
On February 25, 2010, a complaint was filed in the United States District Court for the Southern District of California
by two individuals (Relators) seeking to assert claims on behalf of the United States against AIG and certain other
defendants, including Goldman Sachs and Deutsche Bank, under the False Claims Act. Relators filed a first
amended complaint on September 30, 2010, adding certain additional defendants, including Bank of America and
Soci ´ et ´ e G ´ en ´ erale. The first amended complaint alleged that defendants engaged in fraudulent business practices in
respect of their activities in the over-the-counter market for collateralized debt obligations, and submitted false claims
to the United States in connection with the FRBNY Credit Facility and Maiden Lane II LLC (ML II) and ML III entities
(the Maiden Lane Interests) through, among other things, misrepresenting AIG’s ability and intent to repay amounts
drawn on the FRBNY Credit Facility, and misrepresenting the value of the securities that the Maiden Lane Interests
acquired from AIG and certain of its counterparties. The first amended complaint sought unspecified damages
pursuant to the False Claims Act in the amount of three times the damages allegedly sustained by the United States
as well as interest, attorneys’ fees, costs and expenses. The complaint and the first amended complaint were initially
filed and maintained under seal while the United States considered whether to intervene in the action. On or about
April 28, 2011, after the United States declined to intervene, the District Court lifted the seal, and Relators served the
first amended complaint on AIG on July 11, 2011. On April 19, 2013, the Court granted AIG’s motion to dismiss,
dismissing the first amended complaint in its entirety, without prejudice, giving the Relators the opportunity to file a
second amended complaint. On May 24, 2013, the Relators filed a second amended complaint, which attempted to
plead the same claims as the prior complaints and did not specify an amount of alleged damages. AIG and its
co-defendants filed motions to dismiss the second amended complaint on August 9, 2013. As a result of the absence
of a statement of damages and the early stage of this litigation, we are unable to reasonably estimate the possible
loss or range of losses, if any, arising from the litigation.
Caremark. AIG and certain of its subsidiaries have been named defendants in two putative class actions in state
court in Alabama that arise out of the 1999 settlement of class and derivative litigation involving Caremark Rx, Inc.
(Caremark). The plaintiffs in the second-filed action intervened in the first-filed action, and the second-filed action was
dismissed. An excess policy issued by a subsidiary of AIG with respect to the 1999 litigation was expressly stated to
be without limit of liability. In the current actions, plaintiffs allege that the judge approving the 1999 settlement was
misled as to the extent of available insurance coverage and would not have approved the settlement had he known
of the existence and/or unlimited nature of the excess policy. They further allege that AIG, its subsidiaries, and
Caremark are liable for fraud and suppression for misrepresenting and/or concealing the nature and extent of
coverage.
The complaints filed by the plaintiffs and the intervenors request compensatory damages for the 1999 class in the
amount of $3.2 billion, plus punitive damages. AIG and its subsidiaries deny the allegations of fraud and suppression,
assert that information concerning the excess policy was publicly disclosed months prior to the approval of the
settlement, that the claims are barred by the statute of limitations, and that the statute cannot be tolled in light of the
public disclosure of the excess coverage. The plaintiffs and intervenors, in turn, have asserted that the disclosure
was insufficient to inform them of the nature of the coverage and did not start the running of the statute of limitations.
On August 15, 2012, the trial court entered an order granting plaintiffs’ motion for class certification. AIG and the
other defendants have appealed that order to the Alabama Supreme Court, and the case in the trial court will be
False Claims Act Complaint
Litigation Matters Relating to AIG’s Insurance Operations
..................................................................................................................................................................................................................................
AIG 2013 Form 10-K 293
ITEM 8 / NOTE 15. CONTINGENCIES, COMMITMENTS AND GUARANTEES
..................................................................................................................................................................................
............................................................................................................................................................................................
............................................................................................................................................................................................