New York: Judge raises objections with 9/11 settlement

A federal judge put the brakes on a $657 million settlement between the more than 10,000 police, firefighters and construction workers who suffered injuries during rescue and recovery efforts at the World Trade Center and the City of New York and its contractors, citing confusing terms of the deal and high attorney's fees.

The settlement, reached in early March, was to be drawn from a federally financed insurance fund -- the World Trade Center Captive Insurance Co. -- that was created in 2004 with a $1 billion grant from the Federal Emergency Management Agency that lawmakers appropriated in 2003. The appropriation was specifically earmarked to handle claims arising against the city by workers who were injured or permanently disabled as a result of the 9/11 terrorist attacks. It will be distributed by a neutral third party who will be chosen by attorneys for the plaintiffs and lawyers for the captive.

Officials said the amounts of recovery were to be determined based on a comprehensive analysis of the severity of each individual's illness. Estimated recovery amounts range from thousands of dollars to some in excess of a million dollars for the most serious injuries. In addition, individuals who develop cancer in the future will be covered by an insurance policy designated for that purpose.

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Under the terms of the agreement, plaintiffs were given 90 days to review the settlement and opt in, which includes a release of any future claims against the city and its contractors involved in the 9/11 rescue, recovery, and debris removal operations.

District Judge Alvin K. Hellerstein ordered the parties to go back to the negotiating table. He said he was concerned about the complex rules of the settlement to assess the nature and severity of each individual's injuries. In addition, he questioned the agreement's decision to set aside 33 percent of the funds for attorney's fees. Attorneys for Worby Groner Edelman & Napoli Bern, a joint venture created by two law firms to litigate 9/11 claims, have been working on the litigation for six years without compensation.

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May 6, 2010

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