The group of seven insurers filed to become intervenors in the case, since Liberty Mutual Group filed it, in order to settle. The judge granted their request.

However, Liberty Mutual remains steadfast in its assertion that the settlement comes nowhere near the true extent of AIG's underreporting.

According to court documents, Liberty Mutual says: "With the complicity of the conflicted intervenors, AIG excluded [Liberty Mutual Group] and their counsel from settlement negotiations. It did so knowing it could not hope to obtain a deal as advantageous as the proposed settlement agreement by negotiating with parties and counsel who had developed admissible evidence concerning the true extent of AIG's underreporting, and who were willing to litigate in order to assure that the class obtained fair compensation for the injuries AIG inflicted on them."

Liberty Mutual says the settlement is based on AIG's underreporting of about $2.1 billion; however, the current known extent of AIG's underreporting is more than $6 billion, alleges Liberty Mutual.

The alleged underreporting of workers' comp premiums to residual insurer National Workers' Compensation Reinsurance Pool (NWCRP) was in violation of law, defrauded the states and shifted costs to other member insurer in the pool, says insurers.

According to an e-mail statement from AIG, Liberty Mutual's attempt to stop the settlement "is the latest in a long line of desperate attempts to derail a settlement supported by the 50 state insurance departments and the other insurance companies in the litigation."

AIG previously agreed to settle allegations of underreporting with all states and the District of Columbia for close to $150 million.

Yet not all regulators thought the settlement was necessarily fair. Louisiana Insurance Commissioner Jim Donelon says he agreed to sign off on the deal to "put the matter behind us" although he "is convinced that the amount of underreporting by AIG was substantially more than the amount that it concedes in the settlement."

The case history goes back to 2007, when the National Council on Compensation Insurance (NCCI) originally filed the suit on behalf of the pool, but the case was dismissed because NCCI lacked jurisdiction. Then Liberty Mutual took up the case and filed another lawsuit similarly alleging that AIG underreported workers' comp premiums to NWCRP. AIG also filed a lawsuit, alleging the same against many within the group of insurers suing them. AIG intends to continue the lawsuit against Liberty Mutual's companies.

AIG will release its claims against the intervenors, according to court documents. Four of the seven intervenors are defendants in the AIG lawsuit and, "unlike the vast majority of the class members, benefit substantially from this very costly release," says Liberty Mutual's motion. 

Liberty Mutual was within a week away of knowing if it achieved class-action status in its case, but then the proposed settlement and "intervention" was filed.