Pols Move on 9/11 $1b Held 'Captive'

By Susan Edelman
New York Post
August 5, 2007

Following a Post investigation that revealed how a $1 billion insurance fund for the World Trade Center cleanup has spent tens of millions on overhead and lawyers while paying a pittance to injured 9/11 recovery workers, two powerful U.S. senators are demanding answers.

Citing "serious concerns," Patrick Leahy (D-Vt.) and Arlen Specter (R-Pa.), the chairman and ranking member, respectively, of the Senate Judiciary Committee, have threatened to hold hearings on the city-governed WTC Captive Insurance Co. unless they are satisfied with answers on how it has managed the $1 billion in federal 9/11 aid.

According to new records obtained last week, the WTC Captive has spent more than $88 million on administrative and legal bills since it began operating in 2004. That total includes more than $53 million spent on high-powered law firms.

More than 8,600 rescue and recovery workers have filed claims against the city or its contractors - most with illnesses blamed on exposure.

The Captive has paid out a total of $300,000 to six workers - all for "slip-and-fall construction accidents with alleged orthopedic injuries," new records show.

"It is our understanding that, to date, not a single worker has been compensated for exposure to harmful substances now known to have been in the air at that time," Leahy and Specter said in a letter to Christine LaSala, president and CEO of the Captive.

The letter refers to "hundreds of thousands of dollars [spent] on salaries for administrators," such as LaSala's $350,000 annual salary plus benefits first revealed by The Post.

"We are interested in learning how and when the 9/11 cleanup volunteers and workers will receive the $1 billion in taxpayer money Congress appropriated for their injuries," the senators say, adding they may call for a hearing in September.

Michael Cardozo, New York City's corporation counsel, said in a statement that the Captive "is an insurance company, not a compensation fund."

The company "is obligated to defend all claims that have a reasonable and valid defense," Cardozo said.

The city has refused to settle with ill workers, while insisting in court that it has immunity from all lawsuits because it was responding to a terror attack.

"We would strongly welcome Congress, as we have repeatedly urged, to allocate funds for compensation without the need for litigation," Cardozo said.

Lawyers for some 10,000 WTC workers, David Worby and Marc Bern, went to Washington to urge Leahy and Specter to act.

"It was clear to everyone we met that something is terribly wrong with the way the Captive is being run," Worby said.

WTC Lawyer the 'Devil's Advocate'

By Susan Edelman
New York Post
July 22, 2007

One of the high-priced lawyers who have sucked $47 million out of the $1 billion world trade center insurance fund is infamous for defending companies that manufactured Agent Orange, a pregnancy drug linked to cancer, and defective breast implants.

James Tyrrell, a partner in the law firm Patton Boggs, is hailed in legal circles as the "master of disaster" and the "devil's advocate."

Another lawyer, Thomas Jones, serves simultaneously as secretary of the WTC Captive Insurance Co., which manages the $1 billion FEMA fund, and as partner in the Chicago-based
McDermott Will & Emery, the fund's legal counsel.
James Tyrrell, 57
In a lawsuit filed in Manhattan last week, 9/11 responders blasted the Captive's mounting expenses - $75 million so far, including $47 million on law firms - and Jones' alleged "conflict of interest."

They charged the city-run WTC Captive is a cash cow for its employees, consultants and lawyers, and has "squandered" money that should go to 10,000 cops, firefighters and other workers with illnesses blamed on toxic exposure at Ground Zero. It has paid just $45,000 to a carpenter who fell off a ladder.

Patton Boggs, based in Washington, D.C., commands up to $850-an-hour - one of the highest billing rates in the country, according to a National Law Journal survey.

Tyrell, who works out of the firm's Newark office, would not discuss what he charges to lead the battle against Ground Zero responders, saying his firm's contract with the WTC Captive has a "confidentiality clause."

The city Law Department also refused to divulge the fees paid to the hired guns. Neither Tyrrell nor Patton Boggs has done work for the city before, officials said.

Documents obtained by The Post show that eight senior partners at McDermott, Will & Emery, including Thomas, can each bill the insurance fund $618 an hour. The partners first billed a "discounted" $550 an hour, but that fee was raised 6 percent in 2005, and 6 percent again last year.

Under the same agreement, junior partners in the firm can bill $389 to $484 an hour; associates $223 to $242 an hour, and paralegals $150 to $200 an hour.

In addition, the firm gets reimbursed for a wide variety of expenses, including secretarial work, computer research, travel and some meals.

Thomas' dual role as both an executive of the Captive and its lawyer, "in no way represents a conflict," McDermott, Will & Emery said in a statement to The Post.

Tyrrell called his bills a bargain because he represents the city and about 100 of its WTC contractors. He also said the firm's lesser-paid lawyers do much of the work.

The firm has focused on a bid to dismiss all the 9/11 suits on the grounds the city should have immunity because it was responding to a terror attack. An appeals court is considering the issue.

"If that is upheld, the city would have no liability and no obligation to pay," Tyrrell told The Post. "The money should then be returned to the government."

Tyrrell, 57, began his toxic-tort career defending Monsanto Company, the Agent Orange manufacturer, against thousands of ailing Vietnam vets. The case settled for $180 million.

Later, he represented pharmaceuticals that made a drug, DES, given to prevent miscarriages, but found to cause cancer.

He successfully defended booze companies accused of causing alcoholism. He defended General Electric, a silicone maker, in a class action by women with health problems from ruptured breast implants.

Tyrrell says it's not easy.

"How would you like to come to court and be on the other side of the heroes, the firefighters and policemen who went in on 9/11?" he told Super Lawyers magazine, which highlights top-rated attorneys.

David Worby, a lawyer for the 9/11 workers, said Tyrrell "does what he pleases and eats up the taxpayer dollars intended for the sick heroes. Each one of his bills deprives a hero of a full recovery."

But Tyrrell took a swipe at lawyers for the 9/11 responders, saying they could also get rich.

"They stand to take one-third or more of whatever is paid to any of their clients who allege injuries," he said.

Paul Napoli, a lawyer for the 10,000 responders, said he won't make a dime unless his clients win.

"Nobody would take these cases because it was so hard to prove in the beginning. Nobody believed these people. We front all the costs. We've been fighting for them tooth and nail."

   Injured Ground Zero Workers Slam WTC Captive Insurance
        Co. & Mayor Bloomberg Over Misuse of FEMA Funds
 

PRNewswire
July 17, 2007

NEW YORK -- Attorneys for several severely injured heroes of the "Ground Zero" rescue, recovery and removal efforts announced today that they have filed a multi-million dollar law suitagainst the WTC Captive Insurance Company, Inc., Mayor Bloomberg, and others for the continued waste and misuse of the billion dollar fund allocated by Congress to pay for the workers' medical monitoring, medical treatment and compensation.

The law suit, entitled John R. Walcott, Frank Maisano and Mary E. Bishop v. WTC Captive Insurance Company Inc., et al., Index No.: 109775/07 was filed today in the Supreme Court of the State ofNew York, County of New York. All three Plaintiffs face life-threatening illnesses from their exposure to toxins during their work on or at "the pile" at the World Trade Center site or at the Fresh Kills landfill in the weeks after the September 11, 2001 attacks but, like thousands of others, have received no compensation or reimbursement for medical treatment or testing nor even had their claims considered by the WTC Captive, despite its federal funding and creation nearly three years ago. Instead, the Plaintiffs allege that the WTC Captive's funds have been used solely for the City's benefit by virtue of the control wielded by Mayor Bloomberg over the Captive.

The Plaintiffs allege that Mayor Bloomberg is using his control to prolong litigation and refuses to consider the merits of eachand every claim to force the federal government and plaintiffs into providing for the City and contractors' complete relief from all liability while shifting the burden of compensation back to federal agencies. "The Captive and its management have spent over $74 million dollars of the heroes' money on so-called 'loss adjustment fees,' including over $45 million in legal fees, to fight the ground zero workers' claims, but they have not paid a single dollar to a Ground Zero worker who has become ill from exposure to toxic substances at the WTC and related sites," said attorney Marc Jay Bern.

The plaintiffs, John Walcott, Frank Maisano, both former New York City Police Detectives and Mary Bishop, a former health care worker assigned to the site, are only three of some 40,000 Ground Zero workers who sacrificed their health and their families' futures when their City and their country needed them. "The Captive's and the Mayor's continued indifference to the suffering of the very people this Fund was created to help is appalling," says Bern. Their firm, WORBY GRONER & NAPOLI BERN, LLP, also serves as Plaintiffs' Co- Liaison Counsel in the pending litigation against the City of New York and its contractors for the failure to provide and enforce the use of adequate respirators and other personal protective equipment during the debris clean-up efforts at the World Trade Center site (In re: World Trade Center Disaster Site Litigation, 21-MC-100 [AKH], United States District Court for the Southern District of New York).

In the face of inquiries by New York's then-Insurance Commissioner Howard Mills, Senators Schumer and Clinton, and by Representatives Carolyn Maloney and Jerrold Nadler, Captive President and CEO Christine LaSala has steadfastly maintained that FEMA allocated the billion dollar fund solely to provide for the defense of the City of New York and its Contractors, as if the Captive is nothing more than a legal defense fund. This is not the case, according to the very people who fought for the money for the Captive's creation. In a July 31, 2006, letter from Senator Charles Schumer to LaSala, Senator Schumer wrote: "[w]hen I worked with the City and the contractors, my intent, along with that of my colleagues in Congress, was to use this federal money to pay appropriate claims, not to fight claims."

Indeed, the entire New York Congressional delegation fought for the federal funding, according other correspondence directed to FEMA and cited in the pleadings, to "ensure that sufficient resources will be available to satisfy legitimate claims by individuals affected by the recovery operations while safeguarding the fiscal health of the City and the contractors." Thus far, because of the Captive's refusal to consider a single claim for illness caused by toxic exposures at the WTC and related sites, that fight has proven to be in vain, leaving the Plaintiffs with no
recourse but to file suit so that the funds can be freed for their intended purpose.

Among other things, the suit alleges that the Captive has violated the Freedom of Information Law and New York's Open Meetings Law, by refusing to release or provide access to demanded documents and holding closed-door meetings, all of which would reveal the misuse of public funds. The suit claims that the Captive and its management have violated section 2824.1 of the Public Authorities Accountability Act of 2005, because the Captive and its officers, directors and managers were obligated - and failed -- to ensure that board members acted effectively, ethically and independently.

Instead, because Mayor Bloomberg annually appoints the entire WTC Captive board, most of whom are City employees, the Captive merely does the Mayor's bidding, even when the result is that there has been no provision of funds for needed medical testing, treatment or compensation to the heroes of 9/11.

The suit also alleges that the Captive has violated its fiduciary duties to protect and distribute the funds for the benefit of the injured Ground Zero workers; that the defendants have converted the funds intended for the Ground Zero workers to their own benefit; and seeks a return of the funds that were improperly paid out.

In addition to suing the Captive, LaSala and the Captive's Board of Directors, the litigation seeks return of the millions of dollars paid to GAB Robbins, the Captive's Third-Party Claims Administrator and Marsh Management Services, Inc., the Captive's Administrator, all of whom have been paid millions of dollar to administer claims without any appreciable claim activity.

Sick 9/11 Workers Sue WTC Insurance Fund

Ground Zero Workers Demand That $1B Trade Center Insurance Fund Pay For Their Health Care

CBS News
July 17, 2007

(AP) Ailing ground zero workers went to court Tuesday to demand that the company overseeing a $1 billion Sept. 11 insurance fund spend the money to pay for their health care.

The workers have already filed a class-action lawsuit claiming the toxic dust from the World Trade Center site gave them serious, sometimes fatal diseases. On Tuesday, they sought compensation from the WTC Captive Insurance Co., the company in charge of money appropriated by Congress to deal with Sept. 11 health-related claims.

"The WTC Captive has consistently refused to pay any of the ground zero workers who have become ill on the work site, including any compensation" for lost salaries, pain and suffering, medical treatment, medical monitoring or burial expenses, said the lawsuit, filed in Manhattan's state Supreme Court.

It was filed by attorneys representing thousands who became ill after working to clean up the site while breathing toxic trade center dust, including more than 100 who have died.

"She hasn't paid a penny to one of my 10,000 people," David Worby, an attorney representing the workers, said of the company's CEO, Christine LaSala. "It was their mandate."

Mayor Michael Bloomberg, who was named in the suit along with LaSala and board members, said Tuesday that attorneys are wrong about the company's structure.

"They just don't know the facts. The truth of the matter is, Congress didn't set up a victims' compensation fund," the mayor said. "We'd like them to do that, we've asked for that, they set up a captive insurance company. And the insurance company can only pay out monies if somebody sues us in court and wins a judgment against us."

Congress directed the Federal Emergency Management Agency to set up the fund, appropriating up to $1 billion "to establish a captive insurance company or other appropriate insurance mechanism for claims arising from debris removal, which may include claims made by city employees," according to the 2003 resolution.

The lawsuit, relying on testimony from federal officials over the years about the fund's purpose, said officials meant for the money to be used to compensate ailing workers. Federal and state governments never said "that a captive insurance company be established solely to defend the city of New York and its contractors from all rescue, recovery and debris removal related claims, at all costs," the lawsuit said.

In this case, the term "captive" refers to an entity created specifically to cover 9/11-related claims for the New York City government.

Since it began operating in 2004, the company has spent more than $73 million of the insurance money in legal fees and other expenses, the lawsuit says.

Worby and other attorneys plan to go to Washington later this week to lobby congressional leaders to urge the company to make the $1 billion available immediately for sick workers.

The largest study conducted of about 20,000 ground zero workers reported last year that 70 percent of patients suffer respiratory disease years after the cleanup. The city earlier this year added to its Sept. 11 death toll a woman who died in 2002 of lung disease, five months after being caught in the dust cloud of the collapsing twin towers.

Bloomberg and other city officials have estimated the cost of caring for the workers who are sick or who could become sick at $393 million a year and urged the federal government to pay for their treatment and monitoring.

World Trade Center Rescue Workers Sue WTC Captive Insurance Company for Long-overdue Compensation

Schumer Blasts Taxpayer-Financed Insurance Company For Stonewalling Ground Zero Recovery Workers

Senator, Who Secured $1 Billion in Federal Funding, Calls on Captive Insurance Fund to Stop Fighting Every Claim Tooth and Nail Schumer: Five Years after 9-11, This Isn’t What Fund Was Intended For – Need To Set Criteria and Start Making Payments to Workers Injured at Ground Zero

FOR IMMEDIATE RELEASE: July 31, 2006

Today, U.S. Senator Charles E. Schumer blasted the WTC Captive Insurance Company for failing to pay the claims of those who are injured or ill as a result of their work at Ground Zero and called on its C EO, Christine LaSala, to immediately establish new protocols and objective criteria so that this money can be distributed as quickly as possible. Schumer, who fought to secure the $1 billion federal funding in the months after 9/11, said the Company appeared to be more concerned with technical legal arguments, than paying those who are injured, including the fire fighters, police officers , EMT’s, building trades workers and other workers who cleared debris at the World Trade Center site.

“After 9/11, these heroes led the charge to bring New York City and America back and now they are being left behind,” Schumer said. “These workers were injured serving our nation in its time of greatest need, and we must not turn our backs on them now. No one involved with the establishment of this fund expected it to behave like a stingy, bottom-line obsessed corporation. Rather, it was created out of recognition that neither the City nor the contractors were responsible for the attacks and that those who were injured while working at Ground Zero deserved full and swift compensation.”

Because no private insurer would take on the risks associated with the site and address the unforeseen health risks associated with working at Ground Zero, Schumer fought to ensure the federal government would fill the gap. Schumer, working with the City, contractors and the Administration, secured $1 billion in federal funds to ensure that those injured at the site or who became sick from working on the top of the pile of toxic debris would be compensated.

To ensure coverage for the nearly 40,000 workers who toiled at the Ground Zero site, Schumer said the federal funds were to act as a premium payment to a captive insurance company controlled by the City and established under New York law. Schumer personally lobbied then Office of Management and Budget Administrator Mitch Daniels to include the $1 billion as part of New York City’s $20 billion recovery package.

Unfortunately, it has been widely reported that the WTC Captive Insurance Company has instead spent significant portions of its limited resources litigating a technical legal question rather than moving forward with paying claims of those who were injured at the site. The company has spent more than $31.6 million since 2004 on overhead and expenses - including $22 million on legal fees.

In his letter, Schumer wrote, “My intent, along with that of my colleagues in Congress, was to use this federal money to pay appropriate claims, not to fight claims… I urge the captive insurance company to immediately stop litigating this technical, legal question and begin the process of reviewing and paying appropriate claims of those who are sick or injured.” Schumer added that, “The cases of those that have already died – Firefighter Stephen Johnson, Police Officer James Godbee, Detective James Zadroga and Emergency Medical Service paramedic Debbie Reeve – should receive particular attention.”

After the September 11 attacks, thousands of first responders and construction workers rushed to the site to assist with search and rescue operations, and recovery and debris removal. As a result, many have potentially suffered debilitating, even life-threatening, injuries, resulting for inhaling toxic fumes and residue while working at the Ground Zero site.

www.comptroller.nyc.gov/bureaus/bud/04reports/9-11-3years-later-securing-federal-pledge.pdf

                        NY to Widen Scope for Captives

Insurance Journal
March 24, 2003

New York Governor George E. Pataki and New York City Mayor Michael R. Bloomberg jointly announced new legislation that will allow a wider range of businesses "the opportunity to utilize captive insurance companies to retain, fund, and better manage some of their risk."