Compensation lags for workers injured in Sept. 11 aftermath
But investigation finds FEMA-funded World Trade Center insurance company is operating as required by law.
The insurance company established by Congress to help New York City and its contractors handle claims arising from cleanup after the Sept. 11, 2001, terrorist attacks is operating as designed, auditors stated in a report released on Tuesday.
The World Trade Center Captive Insurance Co., funded for $1 billion by the Federal Emergency Management Agency in 2003, has settled just six claims out of nearly 9,400 filed by workers who say they are suffering health problems as a result of their jobs.
That paltry record prompted Rep. Jerrold Nadler, D-N.Y., to ask Homeland Security Inspector General Richard Skinner in July 2006 to investigate the insurance company. Nadler's district includes lower Manhattan.
"Certainly, a firefighter, police officer or laborer who removed debris from the [World Trade Center] site, and who now suffers adverse health effects, such as respiratory impairment or cancer, deserves to be compensated for lost wages and other related expenses," Nadler wrote. "It is outrageous that millions of dollars in federal funds are being used to automatically dispute every single claim."
The IG report indicated that the insurance company essentially is operating as the law requires, although the IG did make several recommendations for FEMA to strengthen oversight of the independent corporate entity.
Captive's creation was the result of the unique circumstances surrounding the Sept. 11 attacks. The scale of the disaster-the collapse of the 110-story Twin Towers-meant rescue-and-recovery workers confronted more than a million tons of debris, fires that smoldered for nearly three months, and layers of asbestos-laden dust, pulverized concrete, glass fibers and other hazardous materials.
City agencies and contractors responded immediately "without waiting to negotiate and sign contracts, search for adequate insurance coverage, or obtain indemnity for the work they would perform," the IG reported. While insurance coverage is normally a prerequisite for debris removal and a reimbursable expense under FEMA's public assistance program, the city and its contractors were not able to find a commercial insurance carrier willing to provide adequate coverage for work at the site.
The city initially sought, but did not receive, federal immunity from potential liabilities. Eventually, the Bush administration and Congress agreed to fund the insurance gap.
As of last March, 9,397 individuals had filed suits against the city. Only six claims, totaling $320,936, had been settled for plaintiffs with broken bones and cuts. Claims stemming from respiratory problems, gastrointestinal illness or cancer have not been settled because those cases are in litigation, the IG found.
"Medical researchers and practitioners working on Sept. 11, 2001, health issues agree that the full scope of the health effects of the disaster will not be known for decades, particularly regarding certain kinds of cancer," the IG found.
Defense attorneys hired by Captive to represent the city and its contractors sought broad immunity from liability for work conducted at the World Trade Center site, but in October 2006 a judge in the U.S. District Court for the Southern District of New York ruled that each case must be decided on an individual basis through a process of discovery and possibly trial. On appeal, the Second Circuit Court of Appeals last March ruled that under New York state law, defendants were not entitled to immunity from the suit, but that they might be entitled to immunity from liability.
"Significant fact-finding remains to resolve the complex questions of whether the federal government was acting within the scope of its immunity for discretionary functions, the levels of control and direction federal agencies exercised over the New York defendants' activities, and whether the defendants violated state statutes," the IG reported.
As of March, Captive had spent nearly $104 million in legal fees to defend the city and its contractors, which was appropriate under the agreements established between the company and FEMA, New York state and the city with the support of Congress, the IG found. Those agreements also permitted the insurer to invest the federal funds to offset operational costs, which it had done. Captive's assets totaled about $1 billion at the time.
While the courts sort out the issue of liability, injured workers are left in limbo. Nadler and other New York lawmakers are urging Congress to pass H.R. 6594, the James Zadroga 9/11 Health and Compensation Act, which would provide medical monitoring, treatment and compensation to individuals injured by the toxic fallout from the attacks in New York.