9/11 workers get revised settlement
The WTC Captive Insurance Company, 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 have 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.
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.
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.
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.
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."
