Press release from PR Newswire
Berkshire Hathaway subsidiaries accused of denying, delaying payments
Monday, October 07, 2013
Berkshire Hathaway subsidiaries accused of denying, delaying payments06:00 EDT Monday, October 07, 2013
Scripps News finds insiders, lawsuits allege company put its profits over victims' insurance payments
WASHINGTON, Oct. 7, 2013 /PRNewswire/ -- For 21 years, Charles Lute worked in Kansas City's BMA tower, never realizing he was inhaling asbestos fibers. After decades as a maintenance engineer, Lute and two co-workers sued the building's owners to cover medical bills and lost wages. What he didn't realize was that his suit would eventually pit him against the empire built by acclaimed investor and philanthropist Warren Buffett.
A Scripps News national investigation, Risky Business, reveals:
- Dozens of lawsuits allege the Berkshire-owned companies wrongfully delay or deny compensation to cancer victims and others to boost Berkshire's profits.
- Exclusively obtained video testimony of a former claims executive says the entire operation was driven by financial targets, not the merit of the claims.
- Multiple rulings of "bad faith" against Berkshire subsidiary Resolute Management Inc. say the company intentionally deceived policy-holders or acted unfairly.
Buffett's Berkshire Hathaway Inc. of Omaha, Neb., has become one of the most powerful forces in asbestos and pollution litigation in the world. Insurers such as American Insurance Group, CNA Financial Corp. and Lloyd's of London have paid Berkshire to assume their risk for tens of billions of dollars in future asbestos and pollution claims. That money, known as "float," has proven to be a great source of investment income for Berkshire. But instead of paying people like Charles Lute, Berkshire subsidiaries are accused in lawsuits across the country of delaying or denying payments. Rather than paying victims, the suits claim, Berkshire is holding onto the cash, the float, to keep its money invested.
"They wanted to hit the projected numbers in the books of business so they could maximize their return on investment," said one former claims executive under oath.
It's not just individual asbestos victims who allege wrongdoing. Major corporations such as Estee Lauder Inc., Celanese International Corp. and the Ford Motor Co. have sued to get claims paid and for reimbursement of fines and legal fees.
"Rarely in asbestos litigation are the injured victims and asbestos companies on the same side," New York asbestos attorney Joe Belluck told Scripps.
Berkshire Hathaway Reinsurance Division President Ajit Jain says the company has good reason to scrutinize many claims.
"There are powerful vested interests that prefer to see claims settled at inflated levels rather than defended," he said.
The Scripps News investigation Risky Business is available at http://bit.ly/GzMfTJ and on Scripps TV stations and in Scripps newspapers across the country. For a complete list of Scripps stations and newspapers, see http://www.scripps.com/brands.
About Scripps Scripps (www.scripps.com) is a leading media enterprise driven to develop and expand its digital strategies while embracing its rich history in delivering quality journalism through television stations, newspapers and the Scripps Howard News Service. Creative, talented and energetic employees are leading the way at 19 television stations and in 13 newspaper markets. The Scripps digital group is growing and gaining momentum with new product offerings, enhancements, and technology that gives customers more options than ever before to find the information and entertainment they crave.
For further information: Carolyn Micheli, The E.W. Scripps Company, 513-977-3732, firstname.lastname@example.org