HOW SPECIAL MASTER KEN FEINBERG SHOULD - AND SHOULD NOT -
Set Up The Compensation Plan For September 11th Victims

On Thursday, December 20th, Ken Feinberg, the Special Master who was appointed to oversee the September 11^th victims' compensation fund, revealed the rough outlines of his plan. He says that the plan is flexible, and that he wants to spend the next month hearing from the families of the victims.

Feinberg employed a similar method when, almost twenty years ago, he acted as the Special Master overseeing the Agent Orange settlement crafted in federal judge Jack Weinstein's courtroom in Brooklyn. I hope that Feinberg will do now what he did then: listen to the victims and then essentially ignore them.

This is tough, even ugly advice, but it is necessary if the grand experiment first begun in the Agent Orange case, and now being continued after September 11th, is to succeed.

An Important Precedent: The Agent Orange Plan

The dilemma Judge Weinstein faced in the Agent Orange case is similar to the dilemma Congress faced after the terrorist attack on the World Trade Center and the Pentagon, so it is instructive to look back on that case, and how it was eventually resolved, with Ken Feinberg's aid.

The Agent Orange victims were tens of thousands of Vietnam veterans who had been treated very badly by their government. They had, as a group, a varied and disparate set of complaints against the military and the politicians who, in their eyes, had thrown them into an unwinnable war and then abandoned them. Furthermore, there was some evidence that Agent Orange had been used during the war without sufficient testing and certainly without much concern for the health of anyone who was touched by the defoliant, whether American or Vietnamese.

But, as Judge Weinstein noted later, there was practically no evidence that Agent Orange was the cause of the illnesses about which the plaintiffs were complaining. Indeed, today it is almost certain that Agent Orange does not cause a signature disease. Thus, the people who were suing Dow Chemical (the main defendant in the Agent Orange suit) may have been suffering from real diseases, but if so, these diseases were caused by someone or something else-not Dow.

Yet the case settled and the plaintiffs walked away with $250 million. This was because by the mid-eighties, the question of whether Agent Orange actually caused disease was beside the point. The veterans who belonged to the Agent Orange class action wanted someone to recognize their pain, and they wanted some kind of structure around which to wrap that pain. The government had ignored them. Their lawsuit against Dow, ill-conceived and ripe for dismissal, was their only avenue to some sort of closure.

Judge Jack Weinstein gave them what they wanted-sort of. His Special Master Ken Feinberg cajoled and threatened the veterans' and the industry's lawyers to agree to a quarter billion dollar fund.

That may have seemed like a lot of money at the time, but it was in fact, as the Second Circuit noted in a subsequent opinion defending the settlement, the "nuisance value" of the suit. There were many, many plaintiffs in the class, and in the end, each "victim" received between five and ten thousand dollars, depending on a complex chart based on age, severity of compliant, and other circumstances.

Two Major Criticisms of Feinberg's September 11^th Plan

Flash forward to 2002. Ken Feinberg has proposed to compensate the families of the victims of September 11^th on the basis of a complex chart depending on the victims' age, income, and other circumstances. The amounts that the heirs of the victims will receive will range between $300,000 and $3 million, with the average falling at around $1.6 million.

Already, some families of the victims and some prominent lawyers associated with plaintiffs' litigation have denounced Feinberg's proposals. The complaints fall into two categories.

First, certain families (especially those whose loved ones were high-earning professionals) have begun to complain that the awards do not really replace lost income the way it would, in theory, be replaced by a tort award.

Second, many families (regardless of their loved one's income level) have complained that Feinberg's chart presumes a standard pain and suffering award of between $250,000 to $300,000. Those numbers, they complain, are far lower than the amounts juries often award in tort suits involving airplane crashes or catastrophic fires.

Why the First Criticism Of Feinberg's Plan Is Wrong

These criticisms of Feinberg's plan are factually correct. But they are wrong both as a matter of tort theory and as a matter of moral principle.

First, notwithstanding what Congress may have said in the confused days following September 11th, it would be a grave error to think that Feinberg's fund should give to the families of those killed 100% of the income that the deceased would have earned had he or she not been killed on September 11th.

As Feinberg has pointed out, the expectation of full compensation for lost future earnings capacity is something that a plaintiff can only demand after he or she has won his or her tort trial. In contrast, in the case of the victim compensation plan created by the federal government, the families of the victims are receiving money regardless of whether they can show that the airlines (or the owners of the World Trade Center) caused their loved one's deaths from a legal point of view.

That is a good thing, for it is doubtful that the plaintiffs could carry this burden of proof at trial. All they can prove, and all that we really know right now, is that a group of murderers used the airlines' airplanes and the World Trade Center's towers as tools to kill those whose families are now asking for compensation. This does not amount to a showing of negligence on the part of the airlines or the World Trade Center owners.

Assuming that - as is likely the case - negligence could not be proven at trial, then the Feinberg plan is simply a government sponsored no-fault insurance plan. What makes this insurance plan slightly unusual is that the plan was purchased for the victims' families by the American taxpayer after the accident it was designed to cover actually occurred.

No-fault insurance plans, furthermore, never promise to replace 100% of lost future income-especially when benefits are designated for survivors, not the insured. We have excellent data as to how much people value the preservation of their earnings capacity after their deaths - via the huge life insurance industry, which is dedicated to catering to people's preferences. People love their families, but it turns out that almost no one voluntarily chooses to insure that if they die prematurely, their families will receive 100% of the earnings that would have accrued over their remaining "natural" lives.

That leads to an important question: Why should a no-fault insurance scheme bought by the government after the fact for the 3000 victims of a terrorist act be more generous than the plans the victims themselves would have bought? Feinberg apparently believes that it should not. Thus, he has concluded, quite reasonably, that the September 11th compensation plan, like no-fault insurance, should not provide 100% of lost earnings to victims' families.

Why the Second Criticism of Feinberg's Plan Is Wrong

Second, the outrage-sincere no doubt-over the "puny" amounts for pain and suffering awarded by Feinberg is based on a peculiar misconception in America about the role of noneconomic damages in suits brought on behalf of dead people. It is not clear to me why, even in a case of proven fault, Americans think it is just to compensate the estate of the dead victim - meaning, in essence, the victim's family or other heirs - for the victim's pain and suffering before death.

When the estate of a victim sues for the pain and suffering of the deceased, it is a fiction to say that the family is receiving a benefit that they "deserve" in either a moral or a legal sense. The law does not generally allow survivors who did not witness their loved one's death to sue for their own grief and loss. Accordingly, the pain and suffering money is supposed to measure the physical pain suffered by the dead person before he or she died, not the emotional pain suffered by the family after the death. Thus, why should the estate be able to pursue the deceased's claim for pain and suffering?

One reason some have offered for giving the estate that right is that we do not want wrongdoers to "get away with murder" when they kill, as opposed to severely injure, their victims. And I am willing to grant that, in the interest of deterrence and some sort of equity among plaintiffs, claims by survivors for the deceased's pain and suffering suffered should be allowed on behalf of victims in bona fide negligence cases. But the September 11th plan does not address such a case; rather, the Feinberg plan presupposes a no-fault situation.

In Europe, where the tort system is more tightly integrated into the larger social insurance schemes supported by the welfare state, pain and suffering damages are much lower on average than in America. If they are awarded in cases of negligence and no-fault, the sums are token. The only time pain and suffering awards ever rival the relative levels that are now commonplace in America is when the case involves an act of intentional or criminal wrongdoing by the defendant.

That makes sense: The Europeans recognize that, unless unusual circumstances present themselves, the tort system cannot afford to allow compensate for pain and suffering-especially in cases where the person who suffered the pain and suffering is deceased, and thus cannot benefit from the damages award.

Compensating A Loss That Is National, As Well As Personal

Like the schedule he developed in the Agent Orange case, the schedule Ken Feinberg developed for the September 11^th victims' families comes out of an unusual moment in American politics. Like Vietnam veterans, the families of the victims of September 11th feel that they have suffered a great loss on behalf of the nation as a whole. Like the veterans, they are probably feeling a lot of anger that will never be resolved, since the truly culpable parties will never be brought before them.

For these reasons, the path adopted by Congress and implemented by Ken Feinberg is one that I support, and one that should be encouraged to succeed. But its limits are not accidental. They are part of the very fabric of the political judgments that made such an act of national generosity possible. According, Feinberg's plan is the best that one can hope from a no-fault system - and Feinberg should stick with it, despite the victim's families' criticisms.