Attorney General Laxalt Announces $300,000 Settlement with the Insurance Company of the State of Pennsylvania, a Subsidiary of AIG

October 11, 2016

Carson City, NV -   Today,   Nevada Attorney General Adam Paul Laxalt announced that his Office reached a settlement with the Insurance Company of the State of Pennsylvania (ICSOP), a subsidiary of AIG. AIG is an insurance company that serves commercial, institutional and individual customers in more than 100 countries and jurisdictions. The settlement was unanimously approved by Nevada's Board of Examiners.

In 2013, the City and County of San Francisco filed a class action lawsuit alleging that individuals discharged from the Rawson-Neal Psychiatric Hospital received transportation subsidies enabling them to travel to cities in California, including San Francisco. Nevada denied all claims in that lawsuit, but eventually settled the matter after determining that-even if Nevada succeeded on all counts-simply defending the lawsuit would cost more than settling. The State submitted this claim to ICSOP, who disclaimed coverage for the reasons expressed in the coverage letter.

Nevada's July 2016 lawsuit against AIG sought to recoup settlement costs and attorneys' fees spent by the State above and beyond the insurance policy's $2.0 million deductible, which AG Laxalt alleged were owed to the State consistent with the terms of Nevada's insurance policy. This settlement promptly resolves that dispute. Under the terms of the settlement, AIG admits no wrongdoing, but will pay the State $300,000.

"The AG's Office reached a thoughtful and mutually favorable resolution of this matter through an amicable settlement with AIG without being embroiled in costly and time-consuming litigation," said Laxalt. "From my first day in office until now, I am incredibly impressed by how my team of in-house lawyers, including my Solicitor General's Office and Complex Litigation Department, handled the San Francisco matter and this related insurance dispute," said Laxalt. 

In the 13 months of litigation preceding AG Laxalt's term, Nevada incurred approximately $2.08 million in outside legal fees litigating against the City of San Francisco. In the 10 months after taking office, AG Laxalt proactively controlled spending on special counsel in that case -- authorizing only five percent of the total spending that had been approved before he took office (approximately $110,000). Once sworn-in, the Attorney General's Office implemented AG Laxalt's new litigation strategy, which included building a 40-state amicus coalition to support Nevada's arguments in a petition for certiorari at the United States Supreme Court on a question of sovereign immunity. The Supreme Court later granted review of the same issue in a similar case, Hyatt v. Franchise Tax Board , No. 1401175.  San Francisco then returned to the negotiation table. Through extensive negotiations, the Office was able to reach a favorable settlement in the amount of $400,000, inclusive of San Francisco's attorneys' fees. 

Steven Shevorski, Head of Complex Litigation, and Deputy Attorney General Donald Bordelove represented Nevada in this matter.

To view the filed complaint, click here .