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The expansion of the 9/11 compensation fund

Update (5 p.m.) The bill passed after lengthy arguments and maneuvering by a vote of 268-160. We'll do a post Thursday a.m.

The House of Representatives is scheduled to vote today on H.R. 847, the James Zadroga 9/11 Health and Compensation Act. The bill creates a variety of new, redundant health programs for care of people exposed to the terrorist attacks against the World Trade Center. It also makes major changes to the compensation fund established in the wake of the murderous assault.

The CRS summary of the bill reports:

Title II : September 11th Victim Compensation Fund of 2001 - (Sec. 201) Amends the Air Transportation Safety and System Stabilization Act to: (1) make individuals eligible for compensation under the September 11 Victim Compensation Fund of 2001 for harm as a result of debris removal; (2) extend the deadline for making a claim for compensation for physical harm not discovered before the deadline; (3) cap liability for claims related to debris removal based on the level of insurance available; (4) limit the total payment for compensation for claims filed on or after the regulations are updated pursuant to this Act; and (5) cap the amount that an individual may charge in connection with a claim under such Act, with exceptions.

[UPDATE: 11:05 a.m. If the House rule passes, the House will consider a substitute amendment.]

Despite the political sensitivities, the bill failed to gather the two-thirds majority necessary for House passage when leadership tried to push the bill through on the suspension calendar in July. (The vote was 255-159.) Although aggressively promoted by New York-area members of the House and local editorialists, the bill could run into further difficulties today. See WABC, "GOP amendments could derail 9/11 health bill," with compensation for illegal aliens being the issue.

The only groups to have lobbied in support of the measure this year (second quarter) are the labor unions and trial lawyers, that is, the American Association for Justice.

During the July floor debate, Rep. Joe Barton (R-TX), summarized the objections in his floor remarks:

The bill before us today... creates a brand new entitlement program that could last an additional 21 years. It creates a special compensation system for hospitals in the New York City area at 140 percent of Medicare rates, provides special protections for trial lawyers, and creates a host of special programs and special protections. It also does not require any kind of a citizenship test, Mr. Speaker, to receive a benefit. It is, in fact, apparently a $7.4 billion new entitlement program.

The minority report filed on the bill by the Republicans on the House Judiciary Committee further detailed the objections:

Through the manager's amendment, the bill will include a cap on attorneys' fees; however, the cap is poorly crafted if it is truly intended to maximize victims' recoveries by limiting attorneys to reasonable fees. What is more, the fee cap has an exception that will swallow the rule by allowing attorneys to receive fees for work that is not directly related to a victim's recovery under the VCF. A true fee cap would have given the Special Master the discretion to award less than 10 percent attorneys' fees depending on the facts of the claim and the amount of work the attorney truly put in on that particular claim. Indeed, under the first 9/11 Fund, the Special Master had a non-binding guideline of 5 percent attorneys' fees and many attorneys worked pro bono. It is truly ironic that not giving the Special Master the discretion to award less than 10 percent attorneys' fees is the one area that H.R. 847 puts limits on the Special Master's discretion. Surely, taxpayers who are providing the money for the new Fund would appreciate more meaningful limits on the Special Master's nearly unbounded discretion.

Second, the attorneys' fee cap has an exception that provides that attorneys who have worked on civil litigation for a claimant prior to January 1, 2009, arising out of the cleanup efforts at the Ground Zero, will not be bound by the manager's amendment's 10 percent attorneys' fee cap. Essentially, this means that some attorneys will be compensated for work that is not directly related to filing a claim under the new 9/11 Fund. In other words, attorneys will be, for instance, compensated with taxpayer dollars for having filed motions in federal district court that are wholly unrelated to the no-fault, administrative compensation being provided for under the Fund. Why should taxpayers be paying attorneys for work that is not directly related to a claim under the Fund? The vast majority of the money from the Fund should go to the victims, not to attorneys that they may have hired. When these attorneys took on the civil litigation the manager's amendment intends to compensate them for, they did so at the risk (as is the case with all contingent fee litigation) that they would receive nothing for their work. Why now should Congress offset that risk?

Simply put, the attorneys' fee cap in the manager's amendment to H.R. 847 is really not much of a cap at all. Attorneys representing World Trade Center cleanup-related victims should remember the sentiments of the ATLA right after the attacks and not seek fees, or anything more than minimal fees, for their representations of victims before the 9/11 Fund. And Congress should not step in with this so-called attorneys' fees cap and invite attorneys to take money from the victims for work they did in civil litigation.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.