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AIG hid evidence to avoid settlement, judge rules

A Middlesex Superior Court judge has ordered insurer AIG to pay at least $7 million to a seriously injured Wellesley lawyer, according to a scathing decision that blasts the company for hiding evidence and manipulating witnesses in an attempt to avoid a costly settlement.

Associate Justice Brian A. Davis issued a 39-page decision Tuesday that decries “unfair claims settlement practices” used by companies and processors owned by American International Group, Inc. after a bus slammed into Odin Anderson on an early afternoon in 1998 as he crossed Staniford Street in downtown Boston.

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Lawyers for the company made up facts and persuaded the bus driver who struck Anderson to change his account of what happened, Davis wrote.

“This is an egregious case,” Davis wrote. “They were deliberate or callously indifferent acts designed to conceal the truth, improperly skew the legal system, and deprive the Andersons of fair compensation for their injuries.”

AIG argued that Anderson was drunk at the time and ran out between two cars and into the path of the bus, according to the ruling. No one disputed that he had been drinking, but it is unclear from the ruling how much he had consumed.

But Davis said Anderson’s drinking was not a factor in the accident and that the picture painted by AIG that he had run out on the street between the cars was based on a “a wholly made-up fact.”

Lawyers for the company settled on that defense during a 2003 trial about Anderson’s personal injury claim. The jury awarded Anderson and his family $3.1 million, but reduced it to $2.2 million in part because they believed that Anderson was somewhat to blame for what happened.

‘They were deliberate or callously indifferent acts designed to . . . deprive the Andersons of fair compensation for their injuries.’

Brian Davis, associate justice 
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Though the verdict was seen as favorable by some of the defense attorneys, the company appealed it, Davis noted. But in 2008, the state Appeals Court affirmed the jury award, and the company paid the Andersons $3.6 million.

The Andersons’ lawyers said they pursued a complaint alleging bad faith practices after they learned of questionable defense tactics during the 2003 trial.

Davis’s decision followed a two-week trial in September 2013 on whether AIG had engaged in bad-faith insurance practices in the years after the accident.

For the family of Anderson, who suffered a skull fracture and a host of medical problems but still practices law, Davis’s ruling felt like vindication.

“The accident occurred when I was only 12,” said Anderson’s daughter Katarina, who is now 27. “It’s hard to describe what it’s like to go through that as a teenager and to see what I saw: my father, a father who was always adored, have his character attacked and his injuries made light of in front of the world, in court.”

A sharp trial lawyer before the accident, the crash almost devastated the career of Anderson, now 69, said his lawyer, Leonard Kesten.

“He was one of the best, and he remembers that,” Katarina said. “It changed everything about his life. He had to have speech therapy. He had to learn how to drive again and how to find his balance to walk normally.”

A spokesman for AIG declined to comment.

Anthony Zelle, a Boston lawyer who represented AIG in the subsequent bad faith claim, did not respond to messages left at his office.

AIG can ask for a new trial or appeal the decision.

Kesten, said Davis’s decision sends a powerful message.

“Even when a multibillion-dollar company decides to use its resources to try and crush a plaintiff, we have a system that allows full vindication, and it happened,” he said.

The judge’s award, which calls for the maximum sanction, falls on top of the $3.6 million that the Andersons have already received, Kesten said. Kesten said the award could rise to $12 million, with attorney’s fees included, and because state statute defines the maximum sanction as three times the original amount.

This week’s ruling culminates a case that began on a sunny, clear day in September 1998. Anderson had just left a lunch meeting and was crossing Staniford Street when a shuttle bus owned by Partners HealthCare struck Anderson. The bus and its driver, Norman Rice, were insured by National Union Fire Insurance Co., whose claims and policies were handled by AIG Claims Services and AIG Technical Services.

A group of doctors who were on the bus rushed to help Anderson, who had stopped breathing and had severe head injuries. They administered CPR and revived him, but the accident left him with a skull fracture and a multitude of long-term injuries including severe headaches, memory loss, sleep disorders, and depression.

Rice, the bus driver, initially told an AIG investigator that he was making a left turn onto Staniford Street, according to the ruling. He looked right to check for oncoming traffic. but as he turned, he failed to see Anderson, who was about to step onto the traffic island in the middle of Staniford Street.

A company lawyer determined that Rice and Partners were much more likely to be found at fault than Anderson. But AIG officials then learned that Anderson had hired an experienced personal injury lawyer, Richard E. Brody, and decided to switch strategies.

“The decision was made . . . to aggressively fight Mr. Anderson’s claim instead of pursuing a prompt settlement,” the ruling stated.

Davis said defense attorneys, with the endorsement of the insurer, suppressed Rice’s initial statements to the investigator, concocted an alternative accident scenario in which Anderson was not almost through the intersection, but rather darted out between parked cars, and lastly, manipulated Rice into changing his initial story.

Davis cited videotapes that showed Rice being prepped by AIG attorneys, H. Charles Hambelton and Michael Mahoney, weeks before he was deposed in 2002.

They “inappropriately coached Mr. Rice to modify or completely change his testimony in material ways,” Davis wrote.

He described how at one point, Mahoney asked Rice if his headlights were on. “No,” Rice replied, without hesitation.

The camera was then stopped for about 30 minutes. Mahoney then asked the same question again. “Yes,” Rice replied.

Hambelton and Mahoney, who are based in Boston, could not be reached for comment. Their lawyer, Edward Cheng, said neither man was asked to testify about the tapes in the 2013 trial.

“Mr. Hambelton and Mr. Mahoney didn’t have an opportunity to defend themselves or present the full set of circumstances,” he said. “They’re confident they acted properly in their role in the underlying litigation.”

Rice, who retired from Partners in 2002, declined to comment. A spokesman for Partners also declined to comment.

John Patton, a Chicago attorney who was brought in as lead trial lawyer for AIG on the eve of trial, said he had no knowledge of how depositions were taken or how evidence was handled in the months before he became involved.

“If there is attorney misconduct during the discovery process, there is a vehicle for that,” he said.

“The trial that I put on was heavily focused on the fact that there was an intoxicated plaintiff that placed himself in the path of a very large, conspicuous, slow-moving bus in broad daylight.”

Kesten said that he hopes the Massachusetts Board of Bar Overseers will scrutinize the behavior by AIG’s defense team.

“I’ve never seen worse conduct by lawyers,” Kesten said.

The board is not obligated to look at cases that are more than six years old, but there is no statute of limitations, said chief bar counsel Constance Vecchione, who declined to comment specifically on the Anderson case.

“We are authorized by rule to investigate misconduct that comes to our attention through any source,” she said.

Maria Cramer can be reached at mcramer@globe.com. Follow her on Twitter @GlobeMCramer.
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