NU Online News Service, July 21, 4:02 p.m. EDT

Policyholders suing American International Group (AIG) overalleged excessive workers' compensation rates can continue to doso, the Supreme Court of South Carolina has ruled.

The U.S. District Court for the District of South Carolina hadasked the state Supreme Court to determine if a state rate doctrineprohibited the lawsuit against AIG filed by Temporary Services Inc.and Charleston Steel and Metal Company.

The rate doctrine states that because a state agency has theauthority to determine rates, courts cannot judge what a reasonablerate should be in a collateral lawsuit, according to courtrecords.

However, the state Supreme Court ruled the policies at issue inthe case were exempt commercial policies--part of the state'sassigned risk program--and therefore the doctrine does notapply.

The companies allege AIG fraudulently charged excessive workers'compensation premiums, according to court documents. The insurerunderreported premiums to the assigned risk pool, the suitalleges.

AIG could not be reached for comment.

The plaintiffs in the case originally filed their suit in 2008in federal court and are asking for class-action status for otherpolicyholders.

According to the federal court filing, the plaintiffs allegedthat for decades AIG may have filed incorrect financial reportsabout its workers' compensation business and misclassified thebusiness as general liability or other lines of insurance. AIGallegedly used the reports to justify increasing its lost-costmultipliers and charging more premiums, the suit states.