Is it illegal, unethical or just a shady manipulation of a system in dire need of reform? NBC New York’s i-Team investigates AmTrust Financial Services.
Here is an overview:
A young woman suffers catastrophic injuries after being hit by a car. Her attorney, Paul Edelstein, sues and the insurance company agrees to a settlement of $9 million. But insurance company, AmTrust Financial Service, Inc., decides to play a corporate shell game with her claim, as well as hundreds of millions of dollars of other claims.
Through complex accounting, state wide acquisitions and sales and ultimately a California State Liquidation of two smaller insurance companies they have acquired, AmTrust has found a way to manipulate the system, boost profits and reduce the payouts they obligated to pay. In other words, the company keeps the smaller companies’ assets while asserting, due to the liquidations, they are now unable to pay claimants the money they are legally entitled to.
Now AmTrust has announced it will be acquired by its own founding family and chief executive in a $2.7 billion deal that will take it from public to private. Now they are private so it is much more difficult to track the paper trail and uncover exactly what’s going on here.
Right now, it’s David vs. Goliath, but Edelstein is hoping to get the attention of the New York State Department of Financial Services. As Edelstein says, “What AmTrust is doing may not be illegal. But it’s certainly not right.”
It’s the claimants who are left holding the bag, as well as the American taxpayer.