A tentative settlement agreement in the rehabilitation of AIK Comp, a failed workers’ compensation self-insured group, was reached Monday through court-ordered mediation.
At issue had been the reorganization plan and the method used to arrive at member assessments. The failed compensation fund was taken over by state insurance commissioners last year after reporting a $58.5 million net-worth deficit from 1999 to 2003.
8, a Franklin Circuit Court judge overseeing the lawsuit for AIK Comp, had granted a summary judgment, ruling that members of the fund must pay millions of dollars in assessments to pay claims of injured workers. The deficit now is $97.3 million, according to a news release from the Kentucky Environmental and Public Protection Cabinet.
The ruling did not resolve several class-action lawsuits that accuse AIK Comp’s former management and others of fraudulent practices that led to the demise of the fund.
Some of the involved parties, including rehabilitator Glenn Jennings and attorneys from five of the law firms who represent a large number of group members, appeared in Franklin Circuit Court Monday afternoon to present the tentative plan.
Frost Brown Todd LLC is among the firms representing AIK Comp members in class-action suits filed against: Associated Industries of Kentucky, the fund’s sponsor; AIK Comp’s trustees, former officers and directors; and the accounting firm of Ernst & Young LLP.
It provided accounting and auditing services for AIK Comp. Key elements include the payment within 60 days of member assessments, an increased involvement of members in claims management, and limits placed on future assessments.