Newsletter Sign-up

By JOSHUA CLIFTON, a Chicago-based writer who covers workers' comp and disability issues

After more than seven years of legal wrangling, attorneys representing workers who fell ill or suffered injuries as a result of the rescue and recovery efforts at the World Trade Center following the Sept. 11, 2001, terrorist attacks have finally struck a settlement with city of New York. Under the terms of the deal, the city and its WTC Captive Insurance Co. agreed to give workers, many of whom are suffering from debilitating lung conditions and cancers, as much as $712.5 million in compensation.

Lawyers for the approximately 10,000 plaintiffs originally thought they had reached a final settlement in March, which would have provided workers with as much as $657 million. However, a federal judge overseeing the case nixed the proposal, citing confusing terms of the deal, too little money for the plaintiffs and high fees for attorneys. The amended plan capped those fees at 25 percent, which had previously been set at 33 percent, thereby increasing the amount of money available to workers by more than $50 million. The settlement also kicked in an additional $50 to $55 million from the tax-payer funded WTC Captive Insurance Co., which was created in 2004 with a $1 billion grant from the Federal Emergency Management Agency.

"We're gratified that we've passed another significant hurdle to moving this case toward completion," said William Groner, senior partner with the law firm Worby, Groner, Edelman & Napoli Bern LLP, which is representing more than 9,000 of the litigants.

COMP IMPLICATION

One of the most significant amendments to the new settlement was a provision concerning workers' compensation benefits that some of the plaintiffs have received and continue to receive. The law allows payments from comp awards to be repaid from the tort settlement proceeds by exercising a lien on the settlement money.

"One of the most significant impediments for clients in considering accepting the deal is the fact that many of them have workers' comp benefits that would be detrimentally affected should they accept the settlement," Groner said. "It's implausible that a person, who might get $150,000 from the settlement but have a total disability, would want to lose those benefits."

Groner said the city of New York, Liberty Mutual, and the WTC Captive Insurance Co., which hold some of those liens, have agreed to waive them. This means that for many of the plaintiffs their workers' comp benefits will continue in the future with no deductions. The judge has now asked that all comp carriers do the same.

"We are in the process of contacting the 50 to 100 or more carriers and asking them if they will also waive lien repayment and future credit," Groner said. "The reaction thus far has been positive."

95 PERCENT NEEDED

Despite reaching an agreement, Groner said, a significant amount of work lies ahead. In order for the settlement to take effect, 95 percent of the plaintiffs must agree to participate by September 30. That would result in a minimum award of $625 million. If all of the workers accept the terms of the deal, the payout could hit $712.5 million.

"We have much work to do in educating our clients about the terms of the settlement so that they can make an intelligent cost-benefit analysis, and we can achieve the 95 percent threshold," he said.

A public hearing scheduled for June 23 will allow the plaintiffs to air their concerns and ask questions about the plan. Groner said that, once workers have a chance to look over the details, most will see that it is the best available option.

"Practically speaking, it is almost impossible to conceive that you would get to trial in 10,000 cases," he said. "In more than seven years, we only had 12 cases set for trial. Those cases would cost millions in attorney fees and expert witnesses. There are enormous inefficiencies in the process, with such a high cost to a resolution."

Individuals claiming the most severe illnesses, such as asthma, terminal cancer or other respiratory disorders, could receive between $800,000 to more than $1 million, with $1.5 million being awarded for death benefits. Individuals who have no qualifying injury, but have a legal claim for fear of becoming sick, will receive $3,250. All qualifying individuals 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.

FRAUD PROVISIONS

Despite concerns that have been raised about the potential for fraud, officials said numerous provisions have been put in place so that only credible, authentic claims can be pursued.

"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," said Christine LaSala, president and CEO of the WTC Captive Insurance Co. "We feel the system we have set up is fair, independent and transparent."

Kenneth Feinberg, former special master for the U.S. government's September 11th Victim Compensation Fund, will serve as the claims appeal neutral and will determine appeals requested by plaintiffs seeking review of the claims administration by the Garretson Firm Resolution Group Inc.

LaSala said Feinberg's experience and fairness is well known.

"He will ensure that plaintiffs' claims are fully and properly considered," she said.

Groner noted that Garretson will also be auditing claims for accuracy and that there are provisions in place to strongly penalize individuals who falsify information on claims.

If the 95 percent threshold is met, the initial payments could go out as early as this fall.

"We do think that it's a fabulous result, but there are significant pitfalls in all litigation," Groner said. "However, we are cautiously optimistic about reaching the 95 percent threshold. And if we do, a timetable has been set up so that we can get payments out as quickly as possible for our clients, some of whom had waited for more than seven years for that moment."

Read more at the WORKERSCOMP Forum^TM homepage.

June 21, 2010

Copyright 2010© LRP Publications