AIG Settles North Carolina Injury Case for $18 Million

October 29, 2008

American International Group, the insurance giant rescued by $85 billion in federal loans last month, has agreed to an $18 million settlement with the father of a disabled former Raleigh man.

AIG's decision to conclude the settlement with accident victim Mark Pellegrin's father comes after a judge ordered the company to pay $75 million when a subsidiary failed to defend the case in Wake Superior Court.

Such settlements rarely become public, but the details were discussed earlier this month in an open court session before U.S. District Judge Terrence Boyle attended by a reporter for the News & Observer of Raleigh. Lawyers for both sides asked to keep the settlement confidential, but Boyle did not take up their request.

Lawyers also said they were moving to settle quickly because of AIG's financial condition. In September, the Federal Reserve saved the imperiled company with a two-year, $85 billion credit line in return for a 79.9 percent stake in AIG.

The lawsuit settlement appears to be one of the largest in the state's history for a personal injury case, local lawyers said.

"That's huge,'' said Dan Hartzog, a Raleigh attorney who specializes in civil cases and was not involved in the case. "It would be a big jury verdict, but it's a really big settlement.''

In May, state Superior Court Judge Orlando Hudson granted the request by Pellegrin's attorneys to order the company to pay damages of $75 million. No one representing National Union Fire Insurance Co. of Pittsburgh, an AIG subsidiary, showed up for trial to defend the company that owned the pickup truck involved in the incident and the employee who drove it.

National Union then asked that the case be taken up by the federal court. The company also began settlement talks with Pellegrin's attorneys.

One of National Union's attorneys, Jim Exum, told the federal court that the insurance policy had a maximum payout of $21 million.

The lawsuit was filed last year against KCI Technologies and one of its employees, Kelly Joe McKiernan, 29, who maintained the company's cell phone towers. McKiernan said in a deposition that on New Year's Eve 2005, after drinking beer and Jagermeister, he jumped into his company-issued truck. He was ready to leave Pellegrin's apartments after some roughhousing between the two friends left McKiernan upset.

But as McKiernan put the truck in gear, Pellegrin ran in front of the vehicle to try to get him to stop. The truck hit Pellegrin, who suffered severe brain injuries that left him with limited movement and speech.

Pellegrin, 29, is being cared for at his father's home near Houma, La.

Pellegrin's father, Jerry, said he was satisfied with the settlement, which pays $6 million immediately, invests another $6 million for future costs, and pays $6 million to Pellegrin's attorneys, who took the case on a contingency basis.

Boyle accepted the settlement but postponed judgment on the attorneys fees.