CRM said in a statement it was denying "each and every one of the charges" that has been made against it.

Brian Keegan, a board spokesman, said in the event CRM were to reach a settlement with the AG's office, it would not end the action filed by the board in Albany Supreme Court, a county level tribunal.

The board is suing on behalf of six self-insured workers' comp insurance providers that it says CRM left underfunded through fraud.

Last year in June, the board and CRM reached a settlement in which Compensation Risk Managers LLC agreed to surrender its license to do business as a third-party administrator. CRM admitted no wrongdoing as part of that settlement.

CRM followed the settlement last October by filing what it said was a proactive lawsuit against the board seeking a ruling that it had not mismanaged the trusts. The suit was dismissed several months ago.

CRM's failed lawsuit came after the board's counsel notified CRM's liability insurer Indian Harbor Insurance Company notifying it that CRM faced accusations of breach of contract, breach of fiduciary duty, negligence and deceptive business practices in connection with CRM's management of the eight self-insured trusts. The board's lawsuit last week was in fact only filed on behalf of six trusts.

Several months ago, the CRM suit was dismissed in Poughkeepsie Supreme Court.

The board suit, which names, various CRM officers, attorneys and actuaries connected with the company, alleges it failed to not maintain adequate reserve levels for the trusts "because, in doing so, CRM would have been required to raise member contribution rates, making the trusts a less financially attractive workers' compensation coverage option to current and potential trust members, thereby decreasing CRM's revenues."

The complaint charged that "CRM exerted control over actuarial analyses of the trusts and manipulated actuarial estimates prepared on behalf of the trusts."

Mr. Cohen's letter said, "The uncorrected funding shortfalls attributable to CRM's conduct have exposed the New York State workers compensation system to hundreds of millions of dollars of unfunded liabilities, and have subjected the members of CRM's trust as well as other participants in the New York State workers' compensation system to assessments to cover those shortfalls."

The AG's letter said company principals involved in misdeeds included Daniel G. Hickey, Jr. (former co-CEO), Martin D. Rakoff (former co-CEO), Louis 1. Viglotti (secretary and general counsel), Daniel G. Hickey, Sr. (director), Joseph F. Taylor (chief financial officer), James 1. Scardino (CEO), Thomas 1. Spendley (senior vice president of underwriting), Chester 1. Walczyk (chief operating officer) and Learle Kilmer (former vice president of claims).

It said they engaged in underreserving individual claims and used improper actuarial and accounting methods to minimize projected claims liability.

Helping in the scheme by producing misleading reports for the trusts, it was alleged, were actuary Charles Gruber, of SGRisk, LLC and accountant Donald Neubecker of UHY LLP.