$125M added to plaintiffs' compensation in WTC site operations

Jun 11 2010

The WTC Captive Insurance Company (the "WTC Captive"), the City of New York, the contractors the City hired, their subcontractors, and attorneys for over 10,000 plaintiffs alleging injuries from the rescue, recovery and debris removal operations at the World Trade Center site operations after 9/11 today announced amendments to a March 11, 2010 settlement of those claims.  The revisions total approximately $125 million added directly to plaintiffs' compensation by:

• Reducing plaintiffs' attorneys' fees by over $50 million;
• Paying up to an additional $50 to $55 million cash from the WTC Captive Insurance Company; and
• Waiving workers' compensation liens against the settlement recovery of certain plaintiffs and ensuring that their benefits continue in the future without interruption or reduction.

Plaintiffs who allege the most serious injuries will receive the majority of the increased payments.

Judge Alvin K. Hellerstein of the U.S. Federal District Court for the Southern District of New York will make an announcement in court on Thursday, June 10, 2010, about the amended settlement and will issue an order to hold a public hearing on June 23rd to hear from parties to the settlement.  Judge Hellerstein has been informed of the progress of the negotiations and has indicated that he believes the amended settlement to be fair and reasonable.

"This settlement gives the plaintiffs immediate, fair and reasonable compensation, certainty and closure after years of protracted and costly litigation that will continue without this agreement," said Christine LaSala, President and CEO of the WTC Captive, a not-for-profit insurance company enabled by Congress to defend and indemnify the City of New York and the contractors it hired for the rescue, recovery and debris removal operations after the terrorist attacks of 9/11.  "This settlement establishes objective criteria, based upon accepted medical standards, to assess the type and severity of each illness alleged in order to achieve a fair value for each claim."        

An important amendment to the agreement involves the workers' compensation benefits that some plaintiffs have received and will continue to receive for their claims.  The law allows payments from workers' compensation awards to be repaid from the tort settlement proceeds by exercising what is called a "lien" on the settlement money.  Here, the City of New York, through its Corporation Counsel Michael A. Cardozo and Comptroller John C. Liu, and its WTC workers' compensation insurer, which hold some of those liens, have agreed to waive them.  For many of the plaintiffs, this waiver means their settlement payments will be free and clear of liens and their workers' compensation benefits will continue in the future with no deductions.

"This settlement ensures guaranteed, immediate and just compensation to the heroic men and women who performed their duties without consideration of the health implications," said Marc J. Bern, a senior partner with the law firm Worby, Groner, Edelman & Napoli, Bern, LLP, which is representing over 9,000 litigants.  "Our commitment to our clients has never wavered in the seven years since we took on this litigation and we have done everything within our power, including reducing the fees we agreed to with each of our clients, to achieve the best possible outcome.  We believe we have finally been successful and we are especially gratified that our joint efforts over the past three months have resulted in approximately $125 million in additional net compensation that will be available to our clients."

"I think we speak on behalf of all parties in the litigation by thanking Judge Hellerstein for his tireless efforts in bringing about this historic result," said Nicholas Papain, a member of Sullivan Papain Block McGrath & Cannavo P.C., representing 640 firefighters in the lawsuits.

  Under this settlement, those claiming debilitating respiratory illnesses such as severe asthma, contracted by a non-smoker within seven months of exposure at the World Trade Center site and surrounding areas, could receive between $800,000 and $1,050,000, and approximately $1.5 million could go to compensate claims of death determined to be caused by the post  9/11 operations.  Plaintiffs who have no qualifying injury, but have a legal claim for fear of becoming sick, will receive $3,250.  All qualifying plaintiffs will be enrolled in a special insurance policy through MetLife to provide coverage for certain blood and respiratory cancers diagnosed during the coverage period, paying a benefit of up to $100,000.

To ensure transparency and independence in determining compensation for each plaintiff, an Allocation Neutral, a neutral third party, will oversee the valuation of each claim, assisted by a panel of independent physicians.  The Garretson Firm Resolution Group, Inc., an experienced claims administration company, will serve as the Allocation Neutral.  The firm and the physician panel will review the proof that each plaintiff is required to submit under the settlement, showing that he or she was present and participated in 9/11-related rescue, recovery and debris removal operations, as well as specific medical documentation.  All of this information must be submitted by plaintiffs under oath and will be subject to audit.  Plaintiffs can ask for the Allocation Neutral to reconsider its initial decision and, after that review, appeal to the Claims Appeal Neutral.

Kenneth R. Feinberg, former Special Master for the U.S. Government's September 11th Victim Compensation Fund, will serve as the Claims Appeal Neutral.  He will serve pro bono.  Mr. Feinberg will determine appeals requested by plaintiffs seeking review of the Garretson Firm's decisions. His determinations will be binding and may be used to adjust a plaintiff's final compensation.      

"I am prepared to help ensure that these workers, volunteers, and fire and police personnel receive a fair evaluation of their claims under this settlement," said Mr. Feinberg.   "This settlement enables these individuals to avoid the uncertainty, time and expense of litigation while providing a transparent, objective process for allocating the compensation available under the settlement according to the legal strength of the claim and the severity of injury."

"We are grateful to Mr. Feinberg for serving as the Claims Appeal Neutral," said Ms. LaSala.  "We feel the system we have set up is fair, independent and transparent.  Mr. Feinberg's experience and fairness are well known.  He will ensure that plaintiffs' claims are fully and properly considered."

"This is a fair settlement of a difficult and complex case that will allow first responders and workers to be fairly compensated for injuries suffered following their work at Ground Zero," said Mayor Michael R. Bloomberg.  "In addition to the settlement payments, we will continue our commitment to treatment and monitoring of those who were present at Ground Zero, and we will work with the New York congressional delegation and responder and other groups to seek passage of the James Zadroga 9/11 Health and Compensation Act. We are grateful to Kenneth Feinberg for agreeing to serve pro bono as the Claims Appeal Neutral. This settlement honors those who were there when we needed them in the aftermath of the September 11th, 2001 terrorist attacks."  

The WTC Captive was created with a $1 billion grant from the Federal Emergency Management Agency to insure the City of New York and its debris removal contractors because, in the aftermath of 9/11, the City of New York was unable to procure an adequate amount of liability insurance coverage in the commercial insurance market for the World Trade Center site rescue, recovery and debris removal work.

The settlement will cost the taxpayer-funded WTC Captive $625 million in cash at the required 95% plaintiff participation, with an additional $87.5 million paid if certain conditions are met.  Plaintiffs' attorneys are capping their fees at 25% of the settlement amount, resulting in savings to plaintiffs of over $50 million.  Those savings, together with the additional funding of up to $50 to $55 million by the WTC Captive, the waiver of the workers' compensation liens and credits, and the assumption by the WTC Captive of additional costs of allocating the settlement proceeds among the plaintiffs, increase the value to plaintiffs of this amended settlement by  approximately $125 million as compared to the settlement first announced in March, making the total value of the revised settlement $712.5 million.

Importantly, the settlement also provides a pathway for other defendants and insurers involved in these cases, such as the Port Authority of New York and the City's marine insurers, to settle, providing significantly more compensation to some of these plaintiffs.  These parties could be encouraged to follow the same settlement process created jointly by lead plaintiffs' counsel, the WTC Captive, the City and the contractors as part of this settlement so that additional compensation is awarded fairly and consistently to plaintiffs who elect to settle.

"Since March 11, 2010, the parties have been determined to keep the settlement process intact, with each making good faith efforts to that end," Ms. LaSala said. "This settlement provides fair and just compensation, closure and certainty for the over 10,000 people who have filed lawsuits, while remaining faithful to our mandate to protect the City and its contractors from liability in connection with their heroic efforts in the rescue, recovery and debris removal work that followed the terrorist attack on the World Trade Center on 9/11."

All plaintiffs will receive a court-approved letter explaining the settlement and informing them of the approximate amount of compensation to which they are entitled before they are required to make a decision about whether or not to participate.    

"We applaud the involvement of Mr. Feinberg in the settlement program," said Mr. Papain. "These brave and selfless first responders are owed the integrity and transparency that both he and the Garretson Firm will bring to individual claim evaluations.  In keeping with those principles, we will be inviting all of our clients to presentations detailing the amended settlement and its terms."

Plaintiffs will have until September 30, 2010 to review the settlement with their attorneys in order to make a fully informed decision and decide whether to participate in the settlement by accepting its terms.  For the settlement to proceed, 95% of the plaintiffs will have to agree to "opt-in."