News & Events

Posted September 22, 2004

9/11 Fund’s Special Master Recounts Experiences

Kenneth Feinberg

Feinberg said administering the Fund was the most rewarding experience of his career.

audio Feinberg speech (audio)
  (requires Windows Media Player)

He oversaw the largest victim compensation plan ever funded by the government, fraught with the headaches mass torts entail, but what came tumbling out of Kenneth Feinberg’s memories as he spoke at a Student Legal Forum lecture Sept. 21 were stories—families recounting their grief over losing a loved one and their fears of an uncertain financial future, undocumented aliens unsure whether they should take the money offered to them, parents trying to understand what happened on September 11. Feinberg dramatized the lingering grief and fear he heard on a daily basis for the past three years as Special Master of the September 11th Victim Compensation Fund, sharing sad and bittersweet vignettes that revealed the impact the attacks had on a cross-section of society while explaining the details of how the Fund worked.

“A few weeks after 9/11, Congress passed this law, signed by the president, that set up an unprecedented victim compensation fund,” Feinberg said. Anyone who’s family member was killed in the September 11 attacks or who was injured was eligible to receive tax-free compensation, if they agreed not to sue airline companies or other possibly liable parties. “This is government—your money—this is taxpayer money,” Feinberg said, emphasizing the Fund’s unique source.

If victims or family members chose to sue, they would have to do so in federal court, and damages would be capped at $7 billion. That figure includes not only personal injury and death claims, but also property claims. “The obstacles are great if you decide to sue,” Feinberg summed up.

The Fund “achieved [its goals] beyond its wildest imagination”—97 percent of those eligible came into the Fund.

Congress created a four-part formula for calculating awards. First, the Special Master would calculate economic loss suffered as a result of death or injury to the victim. Feinberg said determining awards based on the victim’s income was a “very, very provocative” idea, but one that was based on a tort law concept. It meant “stockbrokers’ families are going to get more than firemen…accountants are going to get more than busboys,” Feinberg explained. Second, after calculating earnings over a lifetime, the Special Master was supposed to add non-economic loss such as pain and suffering and emotional distress—also a tort-based concept. “I said, in our regulations, I am not going to try and make distinctions among claimants based on how much they suffered or how much distress the survivors developed,” he said. “Everybody gets the same formula on non-economic loss.” He gave claimants $250,000 for the death of the victim, and $100,000 for each surviving spouse or dependent.

But “Congress didn’t stop there.” Feinberg then had to deduct from the gross the collateral sources of income, like 401Ks and life insurance. As a result, some victims complained that they were being punished for planning wisely.

Lastly, the law said the Special Master of the Fund “will exercise his discretion to see that justice is done.

“Well, thank you very much,” Feinberg wryly noted, accepting that this gave him flexibility but also left him more open to criticism.

Feinberg said many claims by those physically injured in the attacks “raised some great tort exam questions.” Some said they fell down the stairs when they saw the planes crash, although they were far from the actual site; another person said he breathed in “guck” on the way home that later resulted in lung problems.

The average award was just over $2 million, with death awards ranging from $500,000 to $7.1 million. The median award—half of the awards were above, half below—was $1.7 million. From these numbers, Feinberg said, you can deduce that he crammed down the top and brought up the bottom, “so that there’s a rough equal.” Awards ranged from $500 for a broken finger to $8.6 million for a survivor who has extensive third-degree burns. The total bill was $7 billion, well under what Congress thought would be $12 billion. Congress overestimated because at the time they thought more Americans had died, and the number of really serious claims—deadly burn cases—were only a dozen. “You either had time to escape or you died,” he said.

Feinberg highlighted some of the problems he faced, starting with his own role as Special Master of the Fund. He was appointed by U.S. Attorney General John Ashcroft, whom Feinberg praised for being supportive throughout. Feinberg had previously been a mediator in many mass-disaster cases. But “asking one person to calculate awards is fraught with danger, believe me.” In the courts, six or 12 people make up a jury, a “genius system,” but asking one person to calculate awards in the public eye is “very, very difficult.”

Feinberg said he found the idea that he should know what people would earn over their lifetime problematic. A parent of a first-year law firm associate insisted to Feinberg he would have been a partner if he had survived, for example. Even though the law said there would be no appeals to the Special Master’s decisions, Feinberg decided to develop a two-tier system where he would see anyone who wanted to meet before the award was calculated, or after the award was calculated if they thought the decision unfair.

He held 901 difficult hearings with family members. He recalled one story in which a fireman rescued 30 people from the World Trade Center buildings. The battalion chief told him not to go back because it was too dangerous, but he insisted that there were more people who needed rescuing. “He was killed by someone who jumped and hit him.” One father recounted that his son got out of the building, but thought his sister was trapped and returned to look for her. She had already escaped, but he died. “You have to be a rabbi or a priest or shrink to hear this,” he said.

One woman insisted her husband was “Mr. Mom” to the kids and was her best friend too. Feinberg later got a call from a lawyer saying that the woman didn’t know that her husband also fathered two other children by his girlfriend. He told Feinberg, “I don’t know how you’re going to do it, but good luck.” The Fund cut two separate checks and “as far as I know, no one’s the wiser.”

One serious problem in the statute created headaches for Feinberg and his staff of about six attorneys: there’s no language about who should file the claim for the family and who gets the money. He would get claims from multiple siblings of a victim, who each claimed the victim hated the other family member. He would get competing claims from fiancés and parents of victims. Same-sex partners wanted to be treated as spouses. Parents claimed the victim and his or her partner were splitting up, while a same-sex partner might claim the parents disowned the victim.

“What am I supposed to do? I don’t know who’s right….I’m supposed to become a family counselor?” Only 20 percent of the victims had wills, Feinberg noted while urging students to take Trusts and Estates. They managed to work out most competing claims, many by giving more money. Feinberg said he looked to the law of the victim’s state. New York says half goes to the spouse and half to the children, but shuts out fiancés and same-sex partners. Who gets the money is still a serious problem and some cases are being appealed in courts, he said.

Feinberg attributed the statutory deadline with herding the 97 percent to join the Fund. But 70 decided to sue, giving two reasons for following a course that would garner them less money. Some claimed they sued to make the airlines safer. Feinberg said he told them “the airlines are as safe as they possibly can be right now,” and suggested suing ports or the railroad industry instead. Others said litigation was the only way they would find out what really happened on September 11, and what government officials knew. Feinberg told them they wouldn’t find out through torts—government inquiries like the 9-11 Commission would yield more information. Feinberg predicted it was an uphill battle to win such suits. What duty do airlines have to people who died on the ground? Is causation really there if murderers took control of the planes?, he wondered.

The 70 at least made a conscious decision to sue, Feinberg said. About 30 people did nothing—no lawsuit, no application to the Fund. “I think the main reason is grief, clinical depression. They can’t get out of bed.” He visited a depressed mother and urged her to file, as she stood to receive $3 million. He offered to help her with the application. She could set up a foundation, he told her. She asked him to go away.

A few “high-end people” may have feared their tax returns would incriminate them, he added, although the Fund could not report anything to the IRS. Only 12 suspicious claims were referred to the fraud division (one request to wire the money to a Panamanian bank set off a few alarms, he said).

The Fund also received claims from 75 foreign countries—some from undocumented workers, others from families of foreign victims. Feinberg issued a ruling that all undocumented aliens would be eligible, with no sanctions. Surviving family members living in the United States would also be given green cards. Undocumented workers’ and foreign workers’ families all wanted to know “what’s the catch?” when there wasn’t one.

“Only in America would you have a program like this,” he said.

In addition to the pro bono work he and his staff put in for two and a half years, the American Association of Trial Lawyers provided free legal assistance to 1,400 claimants. Other organizations provided another 300 families with pro bono legal representation. Private lawyers charged, but only 8-10 percent. “Never in my mind has the profession done or appeared more noble than how it came to the aid of Americans in distress…I’m just in awe of my profession and how it helped these people.”

Feinberg left the audience with three questions to mull over. Was the program a good idea? Feinburg said he thought it was a “phenomenal, unique undertaking,” but the answer was not necessarily so easy. He received letters from families of Oklahoma bombing victims asking why they weren’t eligible, as well as letters from families affected by the U.S.S. Cole bombing, the attacks on the Kenyan embassies, and the first World Trade Center attack in 1993. “How does one justify carving out for very special, generous treatment in an egalitarian, free society like ours a very small group of eligible people? Yes, they are the victims of life’s misfortunes, but I’ve got to tell you, everybody, sooner or later, gets thrown a curveball. How do you justify giving these people two million dollars each and telling the mother of an Oklahoma City victim you’re ineligible?”

Feinberg also wondered whether it was smart to base the formula on the victim’s income. He recalled getting a letter from Gov. Frank Keating of Oklahoma saying it was un-American to give people different amounts of money when it came to Seotember 11. Feinberg pointed out that juries in tort cases do it all the time. “It’s probably un-American to give everybody the same,” he wrote back. Keating responded that he still thought everyone should get the same amount, but that he wouldn’t call it un-American anymore. “The program was a surrogate for the tort system,” Feinberg said.

The last question he posed was whether Congress should set up such a Fund again if another attack occurs. People frequently ask him why this model isn’t used for all torts. Feinberg said it could end torts as we know it—just give everyone $2 million. “Don’t look to this program as a model for other areas,” he said. People praise the structure of the program, but Feinberg said it was nothing new. Worker’s compensation operates under a similar system, as does the government’s Black Lung program for miners and similar funds.

In a question-and-answer session, Feinberg said he was not under pressure from Congress to get the final 70 holdouts into the Fund, and noted than many waited until the last minute to file, as he suspected they would. The operation ended in June and he will submit his final report to the attorney general, including recommendations, by Oct. 15.

Asked whether he was under pressure to keep costs low, Feinberg noted the attorney general told him to “spend whatever it takes to do the right thing.” Congress didn’t appropriate any funds or set limits. He noted that the head of a Fund compensating Washington, D.C., residents who lost property to the British during the War of 1812 cut too many checks and angered Congress, so he kept that in mind. But his primary concern was what the public thought, and they were almost 100 percent behind the program. “I have a theory that the American public wanted to stick it to the terrorists and this is one way to stick it to the terrorists.”

In response to a question about how he reduced top earners’ awards, Feinberg explained that the formulas would have garnered some families huge amounts, even after life insurance. One woman stood to get $17 million from the settlement but only had $150,000 in life insurance awards. Her settlement might be reduced to $6 million, for example. He heard complaints from affluent families that they would have to sell their summer home, and that the children would have to go to public school instead of Exeter or Andover. He told them the government can’t subsidize that style of living, but that explanation can be hollow to people on the receiving end, he added. The district court in New York and the Second Circuit Court of Appeals have so far upheld his discretion, but most affluent families were not eligible for such huge awards because they had substantial life insurance policies.

The government could theoretically sue the airlines or other liable parties to recover their $7 billion that was paid to victims, but “I am extremely dubious that they’ll even make the attempt to get the money back,” Feinberg said.

Asked how he would make his role more accountable, Feinberg suggested that those taking such a role be confirmed by the Senate, and that a committee may work better than one person. Congress will hold hearings on his final report, which creates another layer of accountability.

When asked what he will do next, Feinberg, who has taught the short course Mass Torts at the Law School, said he would love to come back to teach as an adjunct. He also is mediating a diocese sexual abuse case, and will write a book on his experiences as Special Master. He urged students to “do what you want to do” in work—after they re-pay their loans. “I’ll never go back to just doing the same type of commercial mediations that I did before 9/11. Nine-eleven changed me that way.”
• Reported by M. Wood

printer-friendly version

Law Grounds News Index