Gallatin Health Care, Inc. and Louden & Co., Inc.,
on behalf of themselves and all others similarly situated
vs.
Associated Industries of Kentucky, Inc., et al
Gallatin County Circuit Court
Case No. 04-CI-00184
Parry Deering Futscher & Sparks, P.S.C., has
filed a class action complaint against Associated Industries of
Kentucky, Inc. ("AIK"), the trustees of AIK Comp, and AIK's accounting firm arising
out of the assessments levied by AIK Comp. AIK is Kentucky's
largest industrial trade association. AIK currently represents
approximately 3,000 member companies across the state of Kentucky.
AIK Comp is a self-insured workers compensation program established
and controlled by AIK.
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Investigation |
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The audited financial statements for AIK Comp
for the years, 1998 through 2002, each indicated that there was a
surplus in the Fund Balance and each was accompanied by an
"unqualified opinion" from Ernst & Young. Nevertheless, in
December of 2003, an actuarial analysis of AIK Comp’s loss reserves
revealed that there existed a need to make substantial upward
adjustments in the reserves for prior policy years and AIK Comp was,
by applicable law and regulation, required to submit a plan of
remediation. The December, 2003, actuarial analysis disclosed that AIK
Comp’s audited financial statements for the years 1998 through 2002
were incorrect in that they substantially understated the necessary
reserves for claims.
The Complaint alleges that AIK and the Trustees
of AIK Comp breached their duties and contractual obligations.
The Complaint also alleges that all defendants violated the Kentucky
Insurance Code by preparing and disseminating false, deceptive, unfair
and misleading financial statements which concealed the true financial
condition of AIK Comp and the fact that it had been unprofitable since
1998 as the result of the substantial premium reductions that had been
put in place by AIK and AIK Comp. Finally, the Complaint alleges
that Ernst & Young, LLP, was negligent in auditing the financial
statements of AIK Comp.
The Court has not yet decided whether this case will proceed as a
class action. We expect that a motion to certify the class will be
filed in the near future.
Current Status: Class Action Complaint Pending (Filed:
November 9, 2004).
If you want further information or details about this case, please
contact us.
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