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Hundreds of families of victims of the terrorist attacks on the World Trade Center and the Pentagon are delaying filing claims with the Sept. 11 Victim Compensation Fund while waiting for decisions on recoveries from test cases submitted to the fund’s special master, Kenneth Feinberg. And despite the intent of the fund to limit litigation, lawyers for the families contend that restrictions on recoveries for the highest-paid and best-insured claimants may end in the launching of innumerable lawsuits. “The major firms with a lot of cases are holding back,” reports James F. Kreindler of New York’s Kreindler & Kreindler, whose firm represents about 300 clients. “We’re waiting to see what the fund will award and how Feinberg will exercise his discretion.” The families and their attorneys fear that recoveries will be severely limited because the law establishing the fund requires offsets for income from collateral sources, such as insurance and pension benefits, and because the fund’s policy in assessing the income of a decedent does not include compensation above $231,000 per year. As a result, some claimants may receive nothing or next to nothing from the fund, asserts Gerald Baker of Hoboken, N.J.’s Baker, Garber, Duffy & Pedersen. “With offsets, the recovery could be zero.” The impact will be particularly pronounced with employees for such companies as Aon Corp. or Cantor Fitzgerald, which provided substantial life insurance, pension benefits and high salaries, including bonuses. “If all the Aon people end up with nothing from the fund, you’re going to have 600 lawsuits,” Baker predicts. “We’re waiting to see if people earning more money will be treated fairly,” adds Kenneth P. Nolan of New York’s aviation plaintiffs firm Speiser Krause. “A lot of families are very skeptical about how fairly they’ll be treated. Our advice has been to wait and see. Gather the economic information, see what awards are given and see if it’s the best for you. But keep your options open.” “No one who goes into the program will get nothing,” counters Feinberg. “They will receive a minimum of $250,000 at my discretion.” The law establishing the fund bars claimants from filing a claim if they sue anyone other than the terrorists responsible for the attack, or the terrorists’ allies or financiers. But this hasn’t stopped all litigation. Dozens of families have already waived their rights to file claims with the fund by filing lawsuits. The Los Angeles firm of Baum, Hedlund, Aristei, Guilford & Schiavo, for example, represents 37 families of people who died in the hijacked jets. None of the firm’s clients have filed with the fund; instead they’re suing the airlines and the companies that handled airport security. “Virtually all of our clients want to make sure that this kind of thing doesn’t happen again,” says Paul Hedlund. “It’s not just a matter of money.” But, he adds, many of these plaintiffs “have collateral sources that would wipe out any recovery.” Last week, other families took advantage of a decision by U.S. District Judge Alvin K. Hellerstein of the Southern District of New York to sue the Port Authority of New York and New Jersey. Attorneys for the families had requested that Hellerstein extend the one-year statute of limitations on lawsuits against the port authority. Hellerstein rejected the request, but decided he would allow the plaintiffs to hold any lawsuits in abeyance while the plaintiffs consider their options. As a result, literally hundreds of families filed lawsuits against the Port Authority on Sept. 10, the final deadline. The Victim Compensation Fund was established by Congress to avert wrongful-death and personal injury litigation against the airlines and other companies or agencies that plaintiffs might consider responsible for the hijacking of the jets and the collapse of the twin towers. Thus far, 696 claims have been submitted to the fund and 52 awards have been determined. Many of these claims were filed pro bono by Trial Lawyers Care, founded by the Association of Trial Lawyers of America. The first awards were announced in August. So far, 25 of the 52 claimants have accepted the awards, another five have requested a hearing and the rest have not yet responded. In this first set of decisions, the average award for claims relating to deceased victims, after offsets, is $1.34 million. The range of awards, after offsets, is $250,000 to $3.7 million. The fund has paid out nearly $7 million, according to Charles Miller, spokesman for the Civil Division of the U.S. Justice Department. The first cases decided involved relatively simple claims, says E. Drew Britcher of Glen Rock, N.J.’s Britcher, Leone & Roth, who is representing several claimants who have filed with the fund. Britcher compared these already-determined cases with the short form used by many taxpayers in filing with the Internal Revenue Service. The so-called test cases include claims that are “more factually challenging,” he notes. Britcher represents the husband of Lucille King, a 59-year-old secretary at Aon, who died in the destruction of Tower 2. “She did not have a high income or a long work life expectancy,” which would limit recovery, Britcher says. But her husband, who is retired, was greatly dependent on her and sustained severe “emotional and psychiatric trauma.” Britcher submitted an economist’s analysis of the cost of replacement services for work in the home done by King and submitted figures on the cost of counseling. He is awaiting a decision. Other test cases include substantial collateral sources. Baker is awaiting decisions on these cases to determine what advice to give his own clients, including the family of an Aon executive who worked on the 105th floor of 2 World Trade Center. Mark Hemschoot, 45, a senior vice president, was earning a six-figure salary. Hemschoot left a wife and two teen-age sons. The family has not filed. “He has lots of set-offs,” Baker says. Aon provides substantial life insurance and pension benefits for its executives. All this money would be subtracted from anything the fund administrators determined the Hemschoot family should receive. Given these set-offs, he says, “It might be better for them to file a lawsuit.” Under the provisions of the law establishing the fund, Feinberg “doesn’t have a lot of wiggle room,” Miller says. According to the law, Feinberg is required to offset compensation from collateral sources; the law specifically includes insurance as one of these sources. When the final rules were determined in March, Feinberg indicated he had some discretion in the definition of collateral sources.

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