NU Online News Service, Aug. 22, 1:54 p.m. EST

Court motions filed by Liberty Mutual to stop a $450 million settlement American International Group Inc. (AIG) reached with other companies over alleged underreported workers' compensation premiums have been denied.

According to court documents in the U.S. Court of Appeals, Seventh Circuit, Liberty Mutual's appeal of the certifying the class involved in the settlement was denied, and the settlement process is cleared to continue in district court.

“We are pleased that the federal appeals court rejected Liberty Mutual latest attempt to block this settlement supported by many of AIG's largest competitors and the lead insurance regulators in every state,” says and email statement from AIG. “AIG is optimistic that the trial court will grant final approval of the settlement after it takes up that question at a November hearing.”

A spokesman for Liberty Mutual says, “Although we are disappointed, the denial of this discretionary appeal was not unexpected at this stage of the proceeding. Liberty Mutual Group is determined to pursue this matter through to its conclusion.”

In late July, U.S. District Court Judge Robert W. Gettleman granted preliminary approval of the settlement between AIG and a group of companies—ACE, Auto Owners, Companion, FirstComp, Hartford, Technology and Travelers.

The lawsuit was filed on behalf of the group by Liberty Mutual's Ohio Casualty and Safeco subsidiaries in April 2009. The insurers allege AIG underreported workers' compensation premiums over at least a 20-year period to residual insurer National Workers' Compensation Reinsurance Pool.

AIG allegedly unreported to purposefully reduce its market share in the workers' compensation market, thereby skewing tax obligations of other members of the pool, the insurers claimed.

Liberty Mutual has worked to stop it since it was announced at the start of the year. The Boston-based insurer says the settlement amount comes nowhere near the true extent of AIG's underreporting and that the settlement was made because AIG also agrees to release the companies from a lawsuit it filed against them.

Story updated with comment from Liberty Mutual.

Second paragraph corrected to show that Liberty Mutual appealed the certification of the class, not the settlement. Last paragraph corrected by eliminating a sentence stating that Liberty Mutual was not part of the settlement. According to a spokesman, the company is part of the settlement.

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Liberty Mutual&rsquo;s Attempt to Stop $450M Workers&rsquo; Comp Settlement is Rejected

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Liberty Mutual’s Attempt to Stop $450M Workers’ Comp Settlement is Rejected