Posts Tagged ‘Victim Compensation Fund’

Reflections on Victim Compensation Ten Years After 9/11

September 15th, 2011 No comments

The tenth anniversary of September 11 has been covered from an astonishing array of angles. There are mainstream pieces inviting us to reconsider our response to terrorist threats, dissections of the mindsets of conspiracy theorists, explorations of how to talk to children about tragedies, a photographic tribute to the World Trade Towers, and, perhaps most oddly, a look at the market for Ground Zero memorabilia.

But one scans the web in vain for an exploration of this question, which 9/11 chillingly raises:

What do we owe the victims of misfortune?

Perhaps this occasion for (mostly) solemn reflection can trigger a discussion of the choices we make in compensating those afflicted by all kinds of personal and collective disasters – because the machine we created to compensate the victims of September 11 bears little resemblance to the way we usually assist those in need.

Shortly after 9/11, Congress rushed into law the Victim Compensation Fund. Born of a combination of generosity and a desire to protect the airlines from lawsuits for their negligent security procedures, the Fund expended more than $7 billion in tax dollars, and payouts to individuals were as high as $8.6 million Why such hefty pay-outs? Because the Fund is largely based on a tort model of full compensation for those injured by wrongful conduct.

This is almost unprecedented, and it isn’t even over. Last December, Congress breathed life back into the Fund, making payments available to those able to prove injuries from their exposure to the toxins present around Ground Zero in the months following that tragic day. While the newly available $4.3 billion will mostly compensate first responders, others who can prove injury that occurred at the broadly defined “crash site” can also file a claim under the Fund.

Criticisms of the Fund mostly come from those claiming it’s not doing enough. Jon Stewart famously let slip his comic mask on behalf of first responders,  railing against Congressional dawdling on reopening the Fund to compensate them. He’s even been credited with having helped embarrass and jolt lawmakers into ponying up the $4.3 billion. And just a few days ago, he and Daily Show guest Sanjay Gupta commiserated on the decision not to treat cancer as a compensable, 9/11-related injury – even though the science isn’t yet there to substantiate causation.

Stewart’s reaction is hard to criticize only if we look at the Fund in isolation. But it’s not unassailable if we take a broader focus. What if we had a serious discussion of the larger questions that the Fund raises: Whom do we choose to compensate for disasters, and for how much? And how do we define “disaster”?

I discussed these matters with a law school classmate, Harry Waizer. He was head of the tax department at Cantor Fitzgerald on that clear September day, and was in an elevator heading for his 104th floor office when the plane struck. Badly burned and given just a five-percent chance of survival, Harry is now flourishing despite the emotional and physical scars of that day. He’s back at Cantor (part-time), and has a happy marriage and three great kids.

Harry realized what he called a “substantial” payout from the Victim Compensation Fund. Although he understandably won’t share the precise amount, the payment included a big chunk for lost income, and another hefty recovery for his pain and suffering.

Is this fair? Harry doesn’t think so.  “I don’t find the argument for having this Fund particularly compelling,” he told me. “I’m a very grateful beneficiary, but if you ask me in an objective way whether this kind of compensation system for victims of this kind of event is appropriate, I’d have to say ‘no’.”

He’s right. Since the source of the Fund is general taxpayer revenue, some of the taxes paid by a low-income worker – for example, a manual laborer with no health benefits – went to pay Harry and the thousands of others who received compensation.

The Fund stands almost alone as an exercise in taxpayer-funded largesse. And its one close precedent only invites further, disturbing questions about our national response to disaster. In response to the 1976 collapse of the Teton Dam in Idaho, which resulted in eleven deaths and thousands of cases of homelessness, the federal government created a compensation program that paid out some $200 million to victims.

It’s true that the government itself had been responsible for that disaster. But government ineptitude (in the design and construction of the levee system) also played a crucial role in the vast human suffering from Hurricane Katrina – and there’s no similar compensation fund for those victims. They’ve had to make do with much less generous federal disaster relief funds.

The Teton Dam case is enough to show that the difference in our national responses to Katrina and 9/11 reflects a distinction between natural disasters and terrorism. If further evidence of our national inconsistency were needed, consider the victims of the 1995 Oklahoma City bombing. After the Victim Compensation Fund was established, legislation to compensate them was introduced in Congress – but died there.

There’s no principled way to reconcile any of this. Yet there’s a lesson to be extracted from our inconsistent responses to disasters. I turn again to Harry Waizer.

“My brother-in-law was jogging by the side of the road when he was hit by an uninsured drive. He has suffered terribly, no less severely injured than I. And there’s no fund for him.”

But Harry’s brother-in-law, and so many others, deserve more than our sympathy. Where’s the justice in compensating some generously, while ignoring others? Crime victims, those displaced by natural disasters, and even those who lack health care are no less deserving of a helping hand than the victims of September 11. Recovery shouldn’t be made to depend on whether a given tragedy sparks our national imagination, as that tragic day did to an unprecedented extent.

In a society with limited resources, we have to think hard about the choices we make, and it’s too much to expect a perfectly consistent approach. But we should see the consequences of misfortune and tragedy as more important than their origin, and design compensation systems that provide a basic floor for all victims – medical care, basic housing, and help in rebuilding their jobs and communities would be a good start. That’s basically the model that the Federal Emergency Management Agency follows, and would be a good place to start.

As recent natural disasters – and Eric Cantor’s tone-deaf posturing about whether to help their victims – have reminded us, the time to discuss these issues is always ripe. Let’s use the tenth anniversary of that terrible September day to reinvigorate that important discussion.

9/11, Katrina, and the BP Oil Spill: The Inconsistency of Compensation

May 29th, 2010 2 comments

The by-now predictable, tedious, and irresponsible Republican bulwark against raising or eliminating the criminally low liability cap that would leave claimant against BP out in the cold really has me frosted. And it’s gotten me thinking about how we compensate people for loss in front-page cases: September 11; Katrina; and this BP oil “spill.”

Let’s talk about who was responsible for these tragedies, and how the victims have (or haven’t been) compensated for their losses.

September 11 was, of course, a terrorist act, but under established principles of tort law, other actors could be liable: airport security, airlines, and — further down the chain — the federal government, for missing the warning signs. But the government, to bail out the struggling airline industry, and in an effort to pile sandbags full of money at the border, created the Victim Compensation Fund. At taxpayer expense, the Fund (not really a “fund” at all) paid out more than seven billion dollars, mostly to surviving family members of those killed when the Towers fell. Some received millions, because payment was largely based on a tort model. I’ve criticized this approach, noting that government should not be compensating people as though they’re tort victims, and that doing so reflects a confusion between the principles of corrective justice (righting an imbalance between two parties caused by one party’s negligence) and distributive justice (deciding how best to allocate the resources across society).

To call what happened in New Orleans “Katrina” is really a misnomer, because the hurricane isn’t what caused the widespread and continuing destruction of large sections of the city: the government did so, through the negligence of the Army Corps of Engineers in connection with the building and maintenance of the levee system, and of untold bureaucrats in designing the Mississippi River-Gulf Outlet (“MR-GO”). The government is immune from suit for the levee failure (but not for MR-GO related negligence), so those injured, financially wrecked, or rendered homeless in the wake of Katrina had to content themselves with the meager assistance afforded by the Federal Emergency Management Agency. (Criticisms of FEMA’s response are legion and some, like this one from Kevin Drum in Mother Jones, are devastating; but they miss the more central issue.) I’ve criticized this approach in several places, including the documentary film “America Betrayed,” and this article.

Now comes the BP disaster, which threatens to swamp the rest. Yet because of an ill-considered federal law that I discussed here, BP will be liable for clean-up, but for only a relative pittance ($75 million) for liability to those economically or otherwise ruined. Unless this cap is lifted — and the legal change is made to apply retroactively — or unless there’s a government “fund” created, many of those destroyed by BP’s probable criminal acts will be entitled to…nothing.

How can our different responses to these tragedies be explained? Only by thinking about politics and power, not by looking at justice. But there might be a limit: Expect the law to change, and for BP to be held accountable. (Please!) If not, President Obama has suggested that the taxpayers will be on the hook. If we are (and I wouldn’t object), let’s spend more time thinking about a better model of compensation when we’re all left holding the bag.

And we must demand more comprehensive regulation: As Rachel Maddow pointed out this week (with her outrage well-justified by the facts), a similar spill went on for months about thirty years ago, and the same useless efforts were made then, as now, to stop it. She concludes, correctly, that Big Oil has gotten much better about drilling deeper and deeper (200 feet v. 5,000 feet), with correspondingly higher risks, but not any better at all about stopping it once it happens. Enough.

U.S. Government: Compensate Katrina Victims

November 21st, 2009 1 comment

The recent news that a federal judge has ruled the U.S. Army Corps of Engineers, and by extension, the U.S. Government, liable for at least some of the preventable disasters associated with Hurricane Katrina should lead the government to do what it should have done long ago: Provide generous, long-tail assistance to help the residents of New Orleans get back on their feet.

To see why, just take a moment to compare what “we’ve” done for victims of another disaster: September 11. In that case, the Victim Compensation Fund was created to pay not even the survivors of that horrific event, but their families — in some cases, to the tune of millions of dollars. In all, the Fund spent just under seven billion dollars in taxpayer money for an event that the government was not responsible for.

With respect for the victims of that tragedy, I argued against such lavish compensation here and here. Part of the motivation was to avoid potentially crushing liability against  the airlines for their dismal security procedures,1 but that would have better been done through a direct bailout of those industries. Wait! We’d never bail out a failing company.

By contrast, the government awarded only the minimal payments available under federal disaster relief to Katrina’s victims, despite documented negligence (or worse) on the part of state, local, and federal government. And  the federal government, rather than defend the suits against them on the merits, has raised every possible procedural argument. First, they argued that they couldn’t be responsible for the flood-induced breaches of levees that the Corps had built or maintained, because of the Flood Control Act of 1928. That Act does clearly provide governmental immunity in connection with flood control projects, so the court held that the statute barred some of the claims.

Other claims, though, were based on acts of shocking negligence in connection with the maintenance of the White Elephant known as the Mississippi  River-Gulf Outlet (MR-GO), a navigation short-cut from New Orleans to the Gulf of Mexico. Here is a good summary of the allegations of negligence,  which were accepted by the court after a long trial:

The claimants alleged the government failed to properly design, construct, operate and maintain the MRGO, a 76-mile man-made ship navigation channel that connects the Gulf of Mexico to the Port of New Orleans Inner Harbor Navigation Canal. The claimants further alleged that the design of the MRGO (with the surface width being wider than the bottom width), along with the inevitable widening that would occur from waves in the channel, allowed the MRGO to act as a “funnel” for the Hurricane Katrina storm surge. Additionally, the salt water that was allowed to enter the MRGO from the Gulf allegedly killed off the storm-slowing plants and vegetation, further contributing to the “funnel” effect for the storm surge.

Since MR-GO isn’t a flood control project, the immunity probably doesn’t apply. But because of where MR-GO is situated relative to the damaged and destroyed neighborhoods, only residents in the Lower Ninth Ward and St. Bernard Parish were able to recover. Others are out of luck.

The government is considering an appeal. If one is filed, the brief would likely argue that the more general immunity under the Federal Tort Claims Act protects them. Interpreting and applying that immunity is challenging (for reasons that would numb any and all non-lawyers, and many lawyers as well), but my guess is that the judge’s opinion on that issue would stand.

The Government is likely afraid of the many millions of dollars it might have to pay out once others join the suit. But anyone who hasn’t already filed is barred by the statute of limitations. So the total payout that would be required isn’t clear; and in any event almost surely wouldn’t approach the amount paid out for 9/11.

Here’s a radical idea, government lawyers (Obama Administration): Settle the case! Offer structured payments. Set up enterprise zones and incentives for loans to start-up businesses. Build homes for people.  Rebuild the private medical and public health infrastructure. Such initiatives are long overdue. I have mixed feelings about tort liability against the government in any case, but surely some kind of considered, carefully designed compensation has by now become a national imperative. It won’t erase this national disgrace from our history — nothing can, or should — but it would be a compelling show of compassion.

  1. So now we have to divide our personal hygiene products into small bottles in order to board a plane.