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Families sue September 11 compensation fund administrator
From Phil Hirschkorn
NEW YORK (CNN) -- Some families of September 11 terrorist attack victims are suing the federally appointed administrator of a taxpayer fund designed to compensate them and to preclude lawsuits against airlines. The seven named plaintiffs filed the suit last weekend in Manhattan federal court. They are relatives of some of the 658 victims who worked at Cantor Fitzgerald, the bond trading firm that occupied top floors of the trade center's north tower. The seven plaintiffs intend a class action against Kenneth Feinberg, head of the Victim Compensation Fund. Attorney General John Ashcroft is another defendant, along with the Justice Department, for their responsibility for enforcing the nation's laws. The families accuse Feinberg of using illegal formulas to compute the monetary awards and of alienating the "very constituency he was appointed to serve." The suit demands changes to the rules governing the administration of the fund. No damages are sought. Feinberg and the government have 60 days to respond to the complaint. In a prepared statement, the head of the September 11th fund defended how awards to victims' relatives have been calculated "We believe that the program fully complies with the statute and the regulations and provides compensation to victims in a manner that is both reasonable and fair to all families," Feinberg said. Feinberg was appointed to administer the Victims Compensation Fund created in legislation passed by Congress just 11 days after the attacks. The fund, projected to cost up to $5 billion, sought to shield American and United airlines from expensive civil lawsuits. Two planes from each airline were hijacked. One from each crashed into the World Trade Center in Lower Manhattan, while the other American plane hit the Pentagon in northern Virginia, and the other United plane crashed in a rural field in Pennsylvania after passengers counterattacked the hijackers. The attacks killed nearly 3,000 people. Their families or descendants are eligible for compensation as long as they renounce their intent to sue the airlines. Out of 956 applications to date, Feinberg has offered 154 tax-free awards averaging $1.56 million apiece, according to the fund's Web site. Lawsuit challenges payout system
The suit states Feinberg is violating New York law by calculating wrongful death awards based on after-tax projections of lost income, rather than pre-tax earnings. In an example cited by the suit, the family of a victim who made $225,000 a year would receive $4.48 million under New York law, but only $3.35 million under Feinberg's rules. The suit accuses Feinberg of playing a "cat-and-mouse" game with families at the high end of the income spectrum. The annual salaries of victims related to the plaintiffs ranged from $50,000 to $1 million, according to the suit. The suit also states Feinberg's proposed cap on awards -- stated as around $5 million to $6 million -- is illegal, because the airline bailout legislation's authors had specified in congressional debate there would be no cap. The suit alleges that Feinberg is discriminating against unmarried victims with an "arbitrary" formula. According to the suit, Feinberg calculates that a single person spent 60 percent of income, while a married person spent only one-third of that to pay the bills and saved more. Finally, the suit says Feinberg is wrong to compute victims' income by averaging their earnings from 1998 to 2000 while ignoring projected full earnings in 2001: "Many September 11 victims, particularly those who were young and died during the first few years of their professional career, had begun to see significant salary increases in the year 2001." "Our clients are seeking what they are entitled to under the law," said John Cambria, the plaintiffs' attorney. "There are some situations where these regulations, if enforced, literally result in people getting a fraction of their true entitlement and true loss, and that just isn't right," Cambria said. Replacing Feinberg is not a goal of the suit, Cambria said. "My clients believe in the fund. We believe that the fund can and should work. We believe the fund is the best way for them to get their losses addressed," the attorney said. Feinberg said he believes the fund's tax-free awards, without deductions for attorney fees, "compare very favorably" to the money families might receive by suing the airlines and the years it would take to collect. The deadline to apply to the victims' compensation fund is December 21, 2003. -- CNN's Jamie Colby contributed to this report
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My clients believe in the fund. We believe that the fund can and should work. We believe the fund is the best way for them to get their losses addressed.
