Ray Suarez discusses federal compensation for victims of September 11th with Kenneth Feinberg, special master in charge of allocating those funds.
RAY SUAREZ: The terms of the compensation fund for victims' families and survivors were announced today. The special master in charge of the fund said that those eligible will receive at least $300,000 in aid. The average award would be about $1.6 million. The compensation formulas take a range of factors into account: The victims' age, salary, earning potential, and number of dependents, as well as pain and suffering. Charitable contributions will not be factored into the final total survivors are paid, but insurance and other benefits will. We get more on the terms of the fund from the special master, Kenneth Feinberg. Welcome back.
KENNETH FEINBERG: Thank you.
RAY SUAREZ: You said your watchwords were fairness, consistency, and speed. How does the program you announce today answer those requirements?
KENNETH FEINBERG: Claims can be immediately filed beginning tomorrow at 1:00 in the afternoon. They will be processed... Emergency benefits of $50,000 for the families of the dead, $25,000 for the seriously injured, will go out forthwith as soon as the claim form is filled out. After that, upon filling out a form, a complete form with your income... With the decedent's income record, et cetera, within 120 days, the claim will be processed and a check cut. And we use every effort: Hearings, the opportunity for claimants to come in and present their case and have an opportunity for a face-to-face meeting with the special master or he's designee to make sure that everybody has an individual opportunity to be heard before the checks are cut.
RAY SUAREZ: Who is eligible to ask for compensation?
KENNETH FEINBERG: Eligibility requires three things: First, physical injury-- physical injury; second, in the vicinity of the World Trade Center, the Pentagon, or Shanksville, Pennsylvania, where the plane crashed; and as a result of the September 11 attacks or its immediate aftermath. Now, physical injuries, vicinities, immediate aftermath-- these are questions, words of interpretation. But we are confident that the number of dead and injured will be encompassed within that eligibility definition.
RAY SUAREZ: But who has got the relationship to the victim-- either the seriously injured person or someone killed on September 11, to have standing in this application?
KENNETH FEINBERG: Seriously injured presents his or her own case. The decedent, the dead, we look to state law of the domicile of the descendant or the victim, and we'll be governed by state law as to who will represent the victim and who will take as beneficiary under the victim's will or the law of intestacy or no will in particular domiciles.
RAY SUAREZ: That is going to open up a can of worms for you. These people come from a lot of different jurisdictions, a lot of different countries, in fact.
KENNETH FEINBERG: Yes, it will open up a can of worms, but there are cans of worms and cans of worms. The alternative would be in the special master sitting in Washington or New York or Philadelphia, would trump local jurisdictions' laws as to how wills should be interpreted, estates should be distributed, unjust awards for physical injury, pain, death. I cannot be in a position where I have to decide local family disputes as to who should get what. I will look to local law. If the local law is... Results in litigation, I will cut the check, put it in the bank, and wait for a resolution.
RAY SUAREZ: This was a very democratic mass murder, an encompassing mass murder. Millionaires and people who lived the finest kind of life, and minimum wage and undocumented workers were killed in the same instant. How do you craft a package that answers the needs of their survivors and recognizes who they were in life?
KENNETH FEINBERG: That is a real challenge, the problem of disparity among victims. Now we do this two ways. Frankly, the statute that creates this fund tells us how to do this. First, economic loss has to be computed. Now the bondholder or the bond trader has economic loss much greater than the window washer or the dishwasher or the bellboy or what have you. And that is a reality. The economic loss determination will vary substantially from the top to the bottom. The non-economic loss-- pain and suffering, emotional distress, loss of consortium-- that we treat across the board, we treat all lives equally. There is no distinction other than the number of dependents left by the victim. So on the non-economic side, what is a life worth? The bondholder or the bond trader and the dishwasher have the same non-economic value. We put those two together. We come up with a series of presumptive awards. We discount collateral offsets like life insurance and Social Security, and cut the check.
RAY SUAREZ: So the law said that you had to discount things like life insurance and Social Security, but there was a bit of an argument about whether the tremendous outpouring of charity for these victims and their families would be recognized as being part of their compensation package. Where did you finally come down?
KENNETH FEINBERG: On charity we finally decided not to offset any charitable contributions. There were arguments on both sides. The reason we didn't offset charity was a very practical reason. When we talked to the charities about the possibility of an offset, they warned the special master that if I ever attempted to offset charity, they would simply hold back the funds, not distribute to the victims till I cut my checks under the federal program, and then they would distribute. Well, the idea of further delay in charitable distribution made such little sense to me that we finally decided to let the charities do their thing without any charitable offset in the hope they would accelerate their... The distribution of charity funds.
RAY SUAREZ: So if someone is awarded, let's say the figure that you gave as an average today, $1.6 million; if they got a $500,000 life insurance settlement, that will be counted against it? In effect, you'll only give them $1.1 million; but if they got $300 grand from a charity, that is not touched?
KENNETH FEINBERG: That is why this job required Solomon. That is right. $500,000 of life insurance would be offset from the $1.6 million, leaving you $1.1 million-- tax- free, I might add-- that would go to that victim. But the charitable contribution $500,000, $600,000, $300,000, that would be separate, that would be added to their own award.
RAY SUAREZ: Now, you said this afternoon when announcing the terms of the program that you hoped that people wouldn't initiate their own lawsuits, and then beyond that, you counseled them they might not be very successful. What led to you give that advice?
KENNETH FEINBERG: The statute. The statute makes it very, very clear nobody has to participate in this program. But if they decide not to participate and decide to litigate against the airlines, for example, the airlines' liability is capped at $1.5 billion per plane. But out of that money per plane must come payment of all personal injury or death claims, claims of all property damage, claims of business interruption loss, subrogation or the United States Department of Justice has a right to seek reimbursement out of that money for any money it pays in this program. The likelihood that anybody who litigates will ever succeed in achieving as much as is available under my program, I think, is very, very minimal. And they will have to litigate for five years, pay their lawyers 33% to 40% -- hope that they win. I mean the liability question is very, very uncertain in a case like that -- survive an appeal when the airlines or some other party decides to appeal. They could wait, like with the Lockerbie disaster, a decade and still end up with nothing. Under this program, within 120 days they would receive their funds. And most important, I think, when you litigate these cases, there is no closure. You are never free from September 11. The depositions, the cross examination, the trial -- you are constantly reliving the horror. My program, the program that Congress asked me to implement: File your claim, give us your documentation, within 120 days you get your check.
RAY SUAREZ: Special Master Kenneth Feinberg, thank you for joining us.
KENNETH FEINBERG: Thank you very much.