October 1, 2001 Fund for Victims' Families Already Proves Sore Point By DIANA B. HENRIQUES and DAVID BARSTOW he compensation fund created by Congress 10 days ago, which could pay the families of victims in the Sept. 11 terrorist attacks more than $1 million each, has begun to generate both resentment and confusion about its ultimate fairness and effectiveness.
Senior budget analysts for House Democrats say that the fund, established as part of legislation to rescue the airline industry, could cost taxpayers as much as $15 billion to compensate the direct victims of the attacks - at least 6,000 killed or missing and another 8,700 injured.
But already, even as the Justice Department works to establish the fund, some victims of past terrorism, from the Oklahoma City bombing to the destruction of two American embassies in Africa, are upset to be excluded.
As well, charities and relief agencies, which have raised more than $675 million so far, are worried that the federal fund may go only to families of those killed or injured in the attacks, who are already the main recipients of private charity. The fund would exclude many families who have suffered mental trauma and have lost homes, jobs or businesses.
Legal scholars have raised questions about the fund's even- handedness and accountability. They cite, in particular, the extraordinary power of the fund's "special master," the person to be appointed by Attorney General John Ashcroft to make the fund's awards. Inevitably, they say, the special master, who is not subject to Senate approval and whose decisions cannot be appealed to any court, will have to balance the economic losses and emotional anguish of each family against the total burden on taxpayers.
The fund, which still has an undetermined price tag, was adopted as part of legislation to save the airline industry from bankruptcy after the hijackings. Devised to shield the industry from litigation, it is open to the families of anyone who suffered death or physical harm in the hijackings or the attacks.
Those who apply for relief waive their right to sue for damages sustained in the attacks in any federal or state court. But the applicants are promised a decision within 120 days, far less time than a lawsuit would take. They are also excused from having to prove who is to blame for their losses, as they would be required to do in court.
The amounts paid out by this fund must be reduced by the amount any family has received from its own private insurance, death benefits or government assistance. It is not clear whether awards from private charity would be subtracted from federal awards, something that has those involved in private fund-raising deeply puzzled about how best to distribute their money.
Stephan Landsman, a law professor at DePaul University who is advising the American Bar Association on the compensation fund, warned that a special master whose focus has to include the country's taxpayers could be, in fact, "an adversary to the claimants - and it does not seem fair to have an adversary also making the final decision."
The early estimates prepared by the members of Congress involved in the fund's creation are, they admit, preliminary. But they agreed that the fund was structured to compensate families roughly in line with what they might expect from a court award. In cases of death and severe injury, such awards routinely exceed $1 million. "Those kinds of numbers were clearly being contemplated," said one official involved in the negotiations.
The fund's framers said their aim was to offer families an avenue for relief that would be faster and more certain than litigation. But the concerns already raised about how it will operate and whom it will serve suggest it may need refining.
The emerging questions and unhappiness about the fund were, in effect, born in compromises made to achieve its passage, according to interviews with a half-dozen Republican and Democratic participants in the process.
The basic architecture of the fund was designed in less than 24 hours, with the final passages written at 4 a.m. on Friday, Sept. 21, just hours before the measure was passed by both chambers. Negotiators for both parties said the rush was driven by the demands of airline executives, who had bluntly warned that they would be out of business without immediate financial aid and protection from lawsuits.
Senate Majority Leader Tom Daschle and House Minority Leader Richard A. Gephardt had made it clear that there would be no deal for the airlines without compensation for victims. But a disagreement about how best to construct such a system of compensation surfaced.
A plan proposed by the White House would have had all victim claims consolidated for trial in federal court in Manhattan, with the government stepping in to pay claims only after the airlines' insurance was exhausted. If victims failed to prove who was to blame for their losses, they would get nothing.
Ultimately, though, the real wrangling over the nature of the fund took place when leaders of the Senate and House met in the offices of House Speaker J. Dennis Hastert on the night of Sept. 20.
The Democrats wanted an open- ended victims compensation fund presided over by a senior judge, subject to Senate confirmation, who would be empowered to award any amount of money to cover both economic losses, such as lost wages, and noneconomic losses, such as pain and suffering and mental anguish.
But they met fierce resistance from three Republicans: Senator Don Nickles of Oklahoma, Representative Tom DeLay of Texas and Representative Roy Blunt of Missouri. The Republicans demanded to know how much the fund would cost.
"Nobody had any idea of the liability we were assuming for the government," Mr. Blunt recalled in an interview. But to questions of cost, Mr. Daschle responded, "Can any of you value these lives right now? I can't."
Mr. Nickles had another concern: fairness to his own state's terrorism casualties, who had not been so generously compensated after the 1995 bombing of the Oklahoma City federal building, according to two participants in the meeting.
With pressure building from the airlines, the Republican negotiators ultimately agreed to much of what Mr. Daschle and Mr. Gephardt proposed, but not without extracting two important concessions.
First, they insisted that the federal fund had to reduce any award it made to a family by the amount of other compensation the family received, such as life insurance or death benefits. Second, they wanted Attorney General John Ashcroft to pick who would run the fund.
The Democrats say they agreed in part out of a "leap of faith" born of bipartisan spirit and in part because they saw the commitment to pay for noneconomic losses such as pain and suffering as a boon to the families of victims who earned little or had spotty employment histories. In cases involving similarly horrific deaths, awards for pain and suffering can be very large. In recent cases involving three American students killed in suicide bombings in Israel, their families received a total of $54 million in compensatory damages.
"It is expensive," Senator Hillary Rodham Clinton said. "But how do you put a price tag on a life?"
Whatever its virtues, the final agreement on the fund, signed by President Bush on Sept. 22, struck some victims of previous terrorist attacks as far from inclusive enough. No equivalent fund was established to compensate those victims or their families.
"To me, you have to equalize the playing field or it's just not fair," said Kathleen R. Flynn, the mother of John Patrick Flynn, a college student who was killed in the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland. Suzanne Breedlove, director of victims services for the Oklahoma District Attorneys Council, which administers the state's compensation plan for crime victims, said that some in Oklahoma City resent the notion of "making millionaires out of people." It is an equity issue, she added. "Are we going to raise half a billion dollars for every terrorist attack in America?"
Edith Bartley's father and brother were among the 224 people killed in the 1998 bombings of two American embassies in Africa. Ms. Bartley, like other victims of past terrorist attacks, said she felt enormous sadness for the newly traumatized families, but also a growing anger at the vast sums of public relief and private charity now being directed toward those families.
Ms. Bartley and the families of 10 other Americans killed in the Nairobi attack have been quietly asking Congress to provide $1.5 million to each family to compensate them for their anguish. They picked the figure because that was the amount the United States government paid to the families of those killed in the accidental bombing of the Chinese embassy in Serbia in 1999.
Ms. Bartley said their pleas had been greeted with sympathy - notably from Representative Blunt, whose daughter went to law school with Ms. Bartley - but no action. Now, seeing the details of this new victims' compensation fund, these families find themselves feeling forgotten and heartbroken all over.
"They weren't thinking about us, and it's because it happened in their backyards, not thousands of miles away," Ms. Bartley said. "And yet all of these victims are victims of the same terrorist group."
Told of Ms. Bartley's comments, Mr. Blunt said, "Well, a lot of things in life are not fair, and this may turn out to be one of them. Some unlucky victims are more unlucky than others."
The creation of the fund, and the ambiguity in some of the language defining its mission and obligations, have also posed problems for the scores of charitable and philanthropic groups trying to help the current victims.
A key unanswered question for charities is whether the money a family has received or will receive from philanthropic sources, such as the Twin Towers Fund for uniformed personnel or the Windows of Hope fund for food industry workers, will be deducted from the federal fund's awards.
If so, the new government fund could help even out the flow of aid to those who have not benefited from specialized fund-raising efforts. But that would also oblige charities, as a matter of full disclosure, to begin advising families of the effect their aid may have on future federal awards, several lawyers said.
The fund also would make it more important for private philanthropy to steer more of its aid to the thousands of affected families excluded from the federal fund, several lawyers and charity executives agreed. Yet many donors have specified that their gifts are to be used only for direct victims - the same people who will benefit from the new fund.
"It doesn't feel that it has been coordinated with the other relief work very well," said Kathy Bushkin, president of the AOL Time Warner Foundation.
The fund's effect on private charity was "clearly something they never thought about," said Robert A. Clifford, the chairman of the A.B.A. Task Force on Terrorism and the Law. "The attorney general should immediately speak to that question, so that the giving does not come to a halt." Several authors of the legislation acknowledged that this was a question that was overlooked in their haste to create the fund.
While many lawyers praise the fund, they note that its shape is a sharp departure from previous federal efforts to compensate victims of widespread disasters.
The fund, for instance, differs from past practice in the amount of power vested in its special master. Special masters who oversee other federal funds are typically subject to court review. In this case, there is no appeal from the special master's decisions.
The tension between providing compensation to families and limiting the government's financial exposure is already surfacing. Mr. Blunt said the special master would have "a unique responsibility to arrive at a fair settlement from all perspectives."
Still, lawyers seem to agree that the fund, if its flaws can be mended, will serve the affected families far better than lawsuits.
Mr. Clifford, a specialist in aviation lawsuits, called the bill a "necessary piece of legislation." He added, "We need to try to turn what would otherwise be a quagmire of litigation into something that melds together and helps victims."