By David Adams

MIAMI, Nov 16 (Reuters) - A U.S. contractor jailed in Cuba after being convicted of crimes against the state sued the U.S. government and the company that hired him for $60 million on Friday, blaming them for his imprisonment and not warning him about the risks he faced in the communist-run island.

Alan Gross, 63, has been jailed in Cuba since Dec. 3, 2009, and is serving a 15-year sentence for providing Internet gear to Cubans under a U.S. program that Cuba views as subversive.

In the lawsuit filed in U.S. District Court in Washington, Gross and his wife, Judy Gross, allege that his employer, Maryland-based Development Alternatives Inc, or DAI, and the U.S. government "failed to disclose adequately to Mr. Gross, both before and after he began traveling to Cuba, the material risks that he faced due to his participation in the project."

Gross, a longtime development worker, went to Cuba five times as a subcontractor for DAI, which had a contract with the U.S. Agency for International Development.

The suit also charges that DAI and the government "failed to take adequate measures" to train and protect Gross on his trips to Cuba, and that they "ignored Mr. Gross' repeated security concerns so that DAI could continue to generate significant revenue and the Government could continue to use Mr. Gross as a pawn in its overall Cuba policy initiatives."

The suit said that after his third trip, Gross wrote a memo stating that the Cuba project was "risky business in no uncertain terms. ... Detection usually means confiscation of equipment and arrest of users."

The suit specifically states that his employers failed to warn Gross about the "the techniques used by Cuban government intelligence," and "failed to conduct counterintelligence training for Mr. Gross."

The suit also accuses USAID of failing to follow "mandatory, internal directives" governing foreign travel "in connection with such projects, particularly to hostile countries like Cuba."

In a separate lawsuit against New Jersey-based Federal Insurance Co in Maryland District Court, Gross and his wife said FIS "has wrongfully refused benefits," under what the suit cited as "a wrongful detention" clause.

The Department of Justice did not respond to the lawsuit on Friday. "The case is being reviewed," said spokesman Charles Miller.

A spokesman for DAI said it was preparing a statement to be issued later on Friday. Federal Insurance Co, part of the Chubb insurance group, could not be reached for comment.

The U.S. government has said Gross should not be jailed for providing Internet access to Jews and has repeatedly demanded his release.

The case has put a hold on U.S.-Cuba relations that warmed slightly after President Barack Obama took office in January 2009.

'UTTER DISGRACE'

Since his detention, Gross' wife said he had lost 100 pounds (45 kg), was battling chronic arthritis pain and had what could be a cancerous tumor beneath his shoulder blade. Gross' daughter and elderly mother both have cancer.

"The tragedy faced by the Gross family is horrific," said Scott Gilbert, lead counsel of Gilbert LLP.

"What is mind-boggling is that this never should have come to pass. The destruction of this family is the direct result of a project approved, overseen and administered by DAI and our government that was flawed from conception and pursued with complete disregard for Mr. Gross' safety and well-being. It is an utter disgrace."

Gross was working in Cuba for a U.S.-funded program to promote political change by increasing Internet access and the flow of communications. Cuba views such programs as part of long-standing U.S. attempts to topple the island's communist government.

USAID has said that Gross' job was "simply facilitating Internet connectivity to the Cuban people so they could communicate with the rest of the world."

Cuba says Gross tried to keep his work undercover and was aware of its political aims, according to a leaked court document.

The court said it found evidence on flash drives and a computer confiscated during his arrest that Gross knew more than he admitted and took action to avoid detection, including using American tourists to bring Internet equipment to Cuba without telling them what it was for.

The gear included three satellite Internet terminals, or BGANs, along with BlackBerry phones, iPods and other electronics.

Information is tightly controlled on the Caribbean island, Internet use is limited and visitors are not allowed to carry satellite technology.

During his trial, Gross said: "I did nothing in Cuba that is not done on a daily basis in millions of homes and offices around the world. ... I am deeply sorry for being a trusting fool. I was duped, I was used."

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