“A Patriotic Obligation”: Kenneth Feinberg and the 9/11 Fund

Episode Notes

Transcript

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Intro: This is Workers Comp Matters, hosted by attorney Alan S. Piers, the only Legal Talk Network program that focuses entirely on the people and the law in workers’ compensation cases. Nationally recognized trial attorney, expert and author, Alans S. Pierce is a leader committed to making a difference when workers comp matters.

Alan S. Pierce: Hello, everybody. We are today observing the 20th anniversary of the attacks of September 11, 2001, a date not unlike December 7, 1941 or November 22, 1963, a once in a generation date where we all remember where we were when the planes crashed into the fields of Pennsylvania, the Pentagon and the World Trade Center in New York. This is Alan Pierce. My co-host, Judson Pierce is with me today for our first of two-part edition of Workers Compensation Matters, and we’re delighted to have as our guest, Kenneth Feinberg. 

Judson Pierce: Kenneth Feinberg is a nationally, if not internationally known attorney and mediator with a firm he founded in 1993, the Feinberg Group. He is perhaps best known, however, as the special master appointed by President George W. Bush to formulate and administer the Victim Compensation Fund or VCF, an unprecedented system of financial relief passed by congress a mere three weeks after the terrorist attacks. The story of this fund and its impact on the families of the victims and Ken himself is told most dramatically in Ken’s book ‘What Is Life Worth?’ and the recently released movie that can be seen on Netflix entitled Worth. Thank you for being with our audience today, Ken.

Kenneth Feinberg: Glad to be here, of course.

Alan S. Pierce: It’s hard to know where to begin and the profound effect it’s had on all of our lives for the past 20 years and it’s hard to imagine that 20 years have gone by certainly changed everybody’s life and I’m sure it changed yours. And before this and after this, you mediated and apportioned moneys for a wide variety of tragic accidents both before and after 9/11. How did the Victim Compensation Fund differ from your other assignments?

Kenneth Feinberg: The emotion. You see, all of the other assignments involving tragedies, there was time to reflect for a motion to dissipate a bit, at least. The 9/11 fund was so traumatic to the country as well as the families and the injured victims. There was very little time for reflection, and as a result, the emotional overhead that accompanied the creation and the administration of the 9/11 fund was unique. It’ll always be unique in my mind because the law and how we treated compensation and workers’ compensation liens and medical liens, all paled in significance to the emotional anger, frustration, uncertainty, disappointment of the victims and their families. And for that reason, more than any other, I think 9/11 stands alone.

Alan S. Pierce: You made reference to workers’ comp and of course, our program here, Workers Comp Matters focuses primarily on workers’ comp and as you undoubtedly know, workers’ comp has a very interesting history and I don’t want to stretch the comparison between VCF and workers’ comp too far because of the vast differences, but workers’ comp in its origins is a way of somehow compensating an economic wage loss with dollars. And in return, there is what we call a quid pro quo in which the employer who provides the workers’ comp gets immune from being sued civilly or in tort and there is a parallel with the VCF. And perhaps you can expand it.

Kenneth Feinberg: I’ll say there’s a parallel. As a matter of fact, when Congress enacted the law and set it up for me to design the regulations in the compensation, the first constant that we looked at was workers’ compensation, an administrable alternative to litigation, in theory, at least non adversarial. And we found tremendous structural similarities between the process and the 9/11 fund. Now, we had workers’ comp became very problematic and we quickly solved the statute laid out all of these offsets that had to be deducted from the special master of the administrator’s calculations. And we saw that in some cases involving especially World Trade Center employees, the workers’ comp liens could dwarf the amount being offered and threaten the whole viability of the program. So we had workers’ comp processes procedures, but we had to confront front and center the implications of comp liens on calculated value.

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Alan S. Pierce: And, of course, overlaying this, workers’ comp really compensates one aspect, the so-called economic loss that can be measured with a calculator or a pencil. The non-economic loss, which we can get into later is where a lot of the emotion and a lot of the frustration came in.

Kenneth Feinberg: But you see, it wasn’t even that simple, Alan, because what we found is that those in grief, families and physically injured victims, they didn’t want to listen or appreciate notions of economic loss that’s every day in the courtroom. I mean, it happens every day and we were going to get into the situation where everybody getting paid would have a different calibrated pain and suffering and emotional distress component. So it was challenging, I will say, but we solved the problems.

Judson Pierce: Yeah. The families among others have claimed that the allocations were neither fair or just. How did those concepts, fairness, justice, impact the nature and the amounts of the awards?

Kenneth Feinberg: They had no bearing on the amounts. I tried to convince families over and over again. Don’t even talk about fairness or justice. What’s fair or just in providing money for a lost brother or a lost son or a lost daughter or a lost husband? I mean, I learned very on in my career that when you start talking about fairness and justice, you’re entering a world where it’s going to be pretty hard to defend those concepts. I spoke about mercy, not fairness or justice. Mercy in the federal government and the taxpayer, the American people ponying up and providing the dollars, not private money that would be used to compensate.

Judson Pierce: And that’s why I felt it’s such a great choice on your part that you separated out the citizens who ponied up charities, billions of dollars in charities as not being offsetable. I thought that was a brilliant idea.

Kenneth Feinberg: Well, it was a brilliant idea forced on me, I must say. When we went and spoke to the charities Robin hood Foundation, for example, the Twin Towers Fund and when we told those charities under the law, we may have to deduct charitable contributions. They looked at me and said, “Mr. Feinberg, if you do that, we are going to hold up distributing any charitable funds till all of your money has been distributed. And if you want to be responsible for delays of three years or more in getting charitable money out the door, all you have to do is announce you’re going to deduct and we are going to hold off.” Well, we blinked in five seconds. We weren’t going to be politically responsible. And I exercised my discretion and announced that the statute was sufficiently vague. So that we would not deduct charitable giving.

Alan S. Pierce: Let’s roll back three weeks after the 9/11 tragedy, congress passed the victim compensation fund and thereafter, a search was made for a special master and you were selected. You perhaps might have thought it yourself as an unlikely candidate. And so, who were you answering to and how did you come to the decision to take on this challenge?

Kenneth Feinberg: Well, there was never any question in my mind that I would take on the challenge if asked. When I read about the new fund and its search for special master to administer it based on my prior work, as you know, Alan, working for Senator Kennedy, it was an easy call for me as sort of a patriotic obligation. I felt that there were probably thousands, maybe millions of Americans that were looking for a way to help these folks. And so, I went to Senator Kennedy, and he then went to my friend, also, Republican Senator Chuck Hagel of Nebraska. Together they approached the White House, President Bush and importantly, Attorney General John Ashcroft, who had the ultimate authority to select the special master and they urged John Ashcroft to interview me as a bipartisan apolitical person, close to Senator Kennedy, not close to the Bush administration, and the Attorney General offered me the position.

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Alan S. Pierce: Hollywood loves a David and Goliath story. I do and most of the general public does and at least in recent fiction, we’ve seen civil action. The story of the contaminated soil here in Woburn, Massachusetts, we’ve seen Erin Brockovich, these series where there are victims going against the Goliath, David versus the Goliath. Having read your book and seeing the film, your experience almost seems to be a David and Goliath story but in the reverse. Here we have Ken Feinberg and the federal government really being David and the Goliath being the families, the emotions surrounding the families. As a human being, did you feel that way? Did you feel somehow in order to convince the families to opt into this VCF system as opposed to a tort remedy? Tell us how that affected you and what that process was.

Kenneth Feinberg: Congress really laid down the ground rules. Congress decided. We want to create an alternative to the litigation system and the attorney general said, and Ken Feinberg will deliver on that promise of the federal government to make it easier, more efficient, less costly, more certain, so let’s set it up. I didn’t really feel like David versus Goliath. I felt more, almost like a proselytizer to try and convince families in grief that the devil you don’t know, this new fund, is preferable to the devil you do know, the litigation system, trials, lawyers, judges, juries and it really was an educational undertaking. Then I went around the country, numerous town halls in Boston, LA, New York, Washington and went about trying to convince very skeptical, emotional, angry people that when it came to at least financial assistance, this fund would work. And it took me a while. It took me quite a while. A 33-month program, I’ll bet you it took 25 months before people really began to rally around the program.

Alan S. Pierce: I think you had a time guideline. You had to get a certain percentage of these families to sign on from reading your book. I didn’t realize, it really went down to the wire before they started to come around and you had some folks on the other end pushing them in another direction.

Kenneth Feinberg: That’s true. Now, let’s make sure that when you refer to the movie Worth, it’s a little dramatic–

Alan S. Pierce: I think so, yeah.

Kenneth Feinberg: You got to make this exciting so that people won’t leave to get some more popcorn or something. No, there was no statutory minimum number of people that would had to participate in the program, but it’s true, we were determined to try and vindicate Congress in its hope that the great majority of people would opt into the program. At the end of the day, 97% of all the families that lost a loved one in 9/11 opted into the program. Only 94 people litigated in the courtroom and they all settled their cases five years later. There was never any trial or anything about 9/11. 

Now, you’re right and you know this from the workers’ comp world. What we found in the 9/11 fund was a little bit counter-intuitive. 60%, over half of all the applications in the 9/11 fund came in in the last six months of a 33-month program. People procrastinate, they waited, they hemmed, they hawed, they didn’t say no, they didn’t say yes. They watched, they observed, they were unable to make decisions. And in the last six months, over half the claimants looking at the statutory deadline opted into the program.

Judson Pierce: And it’s remarkable in the similarities in how it mirrors the sort of establishment of the workers’ compensation schemes in this country in that people were suing, it was taking years for them to get to trial. Sometimes they’d get nothing, sometimes they die before they ever got heard in court. The states adopted these plans, if you will, to give a certainty to loss in the workplace.

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And this is what the fund did for so many people, was there was some certainty that they were going to recover something for the loss. And should this be tried again, would you think in future tragic events? What is your feeling about whether this should be adopted and tried again?

Kenneth Feinberg: Absolutely not.

Judson Pierce: Really?

Kenneth Feinberg: Oh, no. This program was a success. It worked just as Congress intended. Don’t do it again. The idea that you’re going to create a special compensation system just for a select number of people, everybody else fend for yourself. You’re on your own. Judge, jury, courtroom. But for this group, a speedy, efficient alternative to the legal system. 

Now, I must say you should’ve read some of the letters I got back in 2001. Dear Mr. Feinberg, my son died in Oklahoma City. A domestic terrorist, why aren’t I eligible for this fund? Dear Mr. Feinberg, you got to explain something to me. My daughter died in the basement of the World Trade Center in the original 1993 attacks committed by the very same type of people. Why aren’t I eligible for this fund? And it wasn’t just terrorism. Dear Mr. Feinberg, I’m in a loss to understand, last year, my wife saved three little girls from drowning in the Mississippi river and then she drowned a heroine. Where is my check? The idea that public money would be used just for 9/11 victims? Bad things happen to good people every day in this country. There’s no 9/11 fund.

Alan S. Pierce: I want to just add a coda to Jud’s question. Not only did this fund compensate these victims but it was a huge problem if there was no such fund and the World Trade Center or the airline industry were to be faced with tens of thousands of claims, what would that have done?

Kenneth Feinberg: Well Congress certainly felt that one, that that could drive the airlines into bankruptcy and threaten the entire economy if there was every day in the courtroom a repetition of all of these lawsuits and allegations and charges. So, no doubt, no doubt, this 9/11 fund was promoted and urged upon by the airline industry and the World Trade Center. Now, having said that out, I must say you could have limited lawsuits and made lawsuits extremely unattractive without providing each family’s lost loved one an average of $2 million tax free. But you’re right, there’s no question that it was an important moving force.

Alan S. Pierce: And did you find that some of the families felt that motivation eclipsed the value to them that perhaps on the early stages, this fund was established more as a way of Congress bailing out industry at the expense of the families? Did you have to overcome that hurdle?

Kenneth Feinberg: Yes, you’re right.

Judson Pierce: Ken, can you tell us was there a limit to the dollar amount or did you set that dollar amount within your broad untethered discretion?

Kenneth Feinberg: The latter. Congress authorized that whatever I felt was necessary to incentivize victims and their families to opt voluntarily into the program, I had that authority and I had delegated to me the calculation. There were no caps. I exercised my discretion very wisely I thought after Senator Kennedy whispered in my ear, “Ken, this is public money. Make sure that 10% of the victims don’t get 90% of the tax payers’ dollars.” 

And what I did was in my discretion, I brought down the high-end Cantor Fitzgerald multi-million-dollar claims, brought up the low-end waiters, bus boys, firemen, soldiers, cops and it resulted in $7.1 billion paid out in the aggregate. The average award for a death claim was $2 million tax-free. The average award for a physical injury claim was $400,000 tax-free and that’s how I tried to minimize the perceived inequity of high-end versus low-end wage earners.

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Judson Pierce: One of the things that really came out in both the film and the book was the differences in how the families reacted to your best guestimate, as it were. Can you explain a little bit about the differences in terms of the groups that you were speaking with if people were appreciative or very, very much not appreciative of these results?

Kenneth Feinberg: The latter. No one was appreciative. No one was grateful. Nobody thanked you. You don’t expect that. You saw people weeks, months after the attack. Nobody, their husband turned to dust at the World Trade Center. No, what saved the program and made it so successful was the empathy and the sensitivity we showed by meeting privately in confidence with thousands of families. I met with 950 myself and listening and being empathetic to the tales of woe that we heard made all the difference to the fund.

Judson Pierce: Why were those conversations transcribed? Why was there a steno or a recording need?

Kenneth Feinberg: Because we wanted to make a record. Most of the families wanted a copy of that transcript to put in a safe deposit box for future generations. But beyond that, we wanted a record in case there was some family or some physically injured victim trying to make a case for additional compensation. We wanted to make sure we had that on the record to go back and have the accountants look at it, et cetera, to see if we should and could adjust the amounts. Leo Boyle and the trial lawyers represented 1,500 of these families pro bono around the country without compensation and they were solidly behind our efforts to help these folks.

Alan S. Pierce: And I’m glad you mentioned Leo Boyle. This is, as I mentioned, at the introduction, this is one of a two-part episode of Workers Comp Matters. And we will be interviewing Leo Boyle, who was then the newly appointed or elected president of the American Travelers Association and little did he know that shortly after being sworn in as president, this would happen. And you mentioned that he and his colleagues, by the way, Jud and myself included, because we handled some of these workers’ comp claims pro bono here in Massachusetts, but you also and your staff worked pro bono and tell us the appropriate reasons the decision that you made that a condition of accepting this role as special master.

Kenneth Feinberg: Patriotic duty. That’s the highroad. I felt it was a patriotic duty. But I must say, the idea in confronting very angry and understandably emotional people, the idea that I would have to explain to them why I’m getting paid to provide compensation for the loss of a loved one, I thought that would be political suicide. It made absolutely no sense that I’m making money of an injured or a dead victim. I just didn’t think that was strategic or wise, so for those reasons.

Alan S. Pierce: I can only imagine that these 900 plus interviews you had and the other probably 1,000 interviews your staff had had a cathartic effect on the families, that this was I think, I saw the word somewhere, an exorcism of sorts of this devil that was in their souls.

Kenneth Feinberg: Well, now you’re an armchair psychiatrist. I’m not sure about that. I don’t think there was much we could do other than give them an opportunity to be heard privately. That would have much effect or exorcism on the horror or the uncertainty of what they confronted, I don’t know.

Alan S. Pierce: Okay, well, you did describe your own role as requiring the wisdom of solemn and the skill of H&R Block, kudos, H&R Block for that. And the inside of a mystic with a crystal ball. I mean, there was sort of all of that rolled into one and overlaying all of that was raw emotion, anger, grief and you got to experience families and how the financial impact of the loss of a loved one or a bread winner or what effect that had on families and you saw people at their best and at their worst.

Kenneth Feinberg: I think that’s right and the reaction of families that I met with or physically injured victims was as diverse as human nature itself. You think you can expect what you’re going to hear, believe me. When families came in or injured victims came in, one man came in with third degree burns, over 85% of his body with the artificial skin on his limbs, just horrific.

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Alan S. Pierce: There were some other unexpected or perhaps unanticipated complications here. First of all, you had to determine who might be a valid recipient among family members and perhaps family members who were not getting along before the injury or death, but you also had people from other countries and the loss of those other countries. You had undocumented workers at the World Trade Center and elsewhere. What policy decisions did you make regarding, for example, the undocumented?

Kenneth Feinberg: We’d follow the law of the domicile, the victim. If that law precluded same sex partners or others from getting compensation, we worked out. I put on my mediation hat and worked out settlements between competing family members or friends. We followed the will, the executor of the will of the victim and we managed in almost all cases, not all, you saw the movie. There was an example where we could, but we were able to negotiate a resolution were family members were at odds.

Judson Pierce: What strikes me about that time in our lives, I was not too far out of law school and to see all the lawyers, as Alan mentioned, put a moratorium on lawsuits, folks getting into the military because they want to help, and they think that’s the only way and the best way for them to show some unity. There is a sense of unity that is not common among our populace now. How, Ken, do we get that hack without having to go through a trauma like this?

Kenneth Feinberg: That is the $64 question of the entire podcast. What I like about the movie is for younger people to see that just 20 years ago, not a century ago, 20 years ago, the country rallied behind the victims. One community, no red state, blue state, no liberal conservative, no Democrat/Republican, apolitical, bipartisan, everybody behind it. And people should see the movie “Worth” and recognize that it isn’t such a leap of faith to think that we should be able to do that again and not in times of tragedy. We should be able to work out differences now. That’s the great lesson I think and value of the movie and what we did.

Judson Pierce: And you worked with Senator Kennedy, and you talked about his relationship with Senator Hatch, and their relationship bipartisan, finding ways to — I mean, the Congress passed this bill, this act so quickly. I mean, much to your chagrin. I’m sure you wish you probably had a little bit more substance in there.

Kenneth Feinberg: It wasn’t the substance that the trouble as I said earlier, the trouble with enacting a law so quickly after the event is the raw emotion. There’s no time. Countless family after family would say to me, you’re giving me $3 million. They haven’t even recovered my wife’s body. All we got was her left arm. I mean, horrible stuff. But I think if Congress had waited much longer, they probably wouldn’t have done this at all. 

Alan S. Pierce: And I don’t want to draw an unfair comparison, but we recently had Congress act within a number of weeks and established the PPP fund for businesses and individuals and a lot of criticism there that there wasn’t a whole lot of thought and process, and it was just dumping money into the system and let it percolate down. That happened quickly and it happened out of emotion. Do you see some parallels here with what we’ve gone through?

Kenneth Feinberg: That’s right. And you see the 9/11 fund, the Congress based basically bucked everything to me. It was a unique statute. We don’t know how much money is going to be needed. We don’t know what the rules should be exactly. We’re not sure about the details, but we got somebody who will decide that. No committees, no appeals, no access to the courts. We’ll just trust this guy. It worked, but I don’t view it as much of a precedent on political science ground, so I’ll tell you that.

Judson Pierce: I just really wanted to thank you. I saw you on a webinar last week with Michael Keaton, who plays you, doesn’t handle your accent quite as well as you do, Ken, I must say.

Kenneth Feinberg: You did. You’ll be able to —

Judson Pierce: But it’s a terrific movie. You wrote an amazing story. And in an article today in The New York Times, it was stated that “the great crises in US history have often inspired the country to great accomplishments.” And I think that you are a great accomplishment not only to Brockton, the City of Champions, where you’re from, we can add you to Rocky Marciano and Marvelous Marvin Hagler now on their welcome sign, but to the country. So thank you very much for sharing some time with us today.

Kenneth Feinberg: And thank you very, very much and honored to be here. 

Alan S. Pierce: Again, thank you on behalf of Workers Comp Matters, our audience here at Legal Talk Network, tune in to our next show with Leo Boyle and go out and make it a day that matters. Thank you and goodbye.

Outro: Thanks for listening to Workers Comp Matters today on the Legal Talk Network hosted by Attorney Alan S. Pierce where we try to make a difference in workers’ comp legal cases for people injured work. Be sure to listen to other Workers Comp Matter shows on the Legal Talk Network, your only choice for legal talk.

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Podcast transcription by Tech-Synergy.com

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