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Insurance claims disputes from terrorist attacks may be funneled to one court

Moving insurance claim disputes arising from the Sept. 11, 2001, terrorist attacks on New York City and Washington, D.C., to a single federal court makes good sense, say supporters of legislation aimed at giving exclusive jurisdiction of those claims to the United States District Court for the Southern District of New York.

"If these claims are litigated in state courts, there could be a huge diversity in the outcomes."

Similar legislation making the Southern District Court the official court for all victims' claims against the airlines is already part of the airline bailout bill, signed by President George W. Bush last week. Ken Feinberg, an expert on mass-injury litigation with the Ken Feinberg Group in New York City and Washington, D.C., has drafted the proposal for Senator Charles Schumer (D-NY) who is shepherding the new legislation through Congress.

"This is advantageous for everyone involved," says Robert Hartwig, the chief economist for the Insurance Information Institute in New York. "Otherwise, [jury] awards become a crapshoot and payment is greatly delayed."

Feinberg agrees. "Consistency and fairness are very important," if the courts want to prevent claims disputes stemming from the attacks from spiraling out of control, he says. "If these claims are litigated in state courts, there could be a huge diversity in the outcomes. That's not good for the claimants or the insurers."

Compensation provision

"Forcing them to endure a long, drawn out,


legal process is

simply too much

to ask."

In the recently passed airline bailout bill, Schumer — along with Senators Tom Daschle (D-SD) and Patrick Leahy (D-VT) — inserted a provision that enables the families of the missing to file claims with the federal government to recover their loved ones' lost wages and receive compensation for the victims' pain and suffering caused by the attacks.

According to that provision, families who lost loved ones can obtain financial relief by filing a claim with the federal government, demonstrating the financial impact of the attacks on the victims. These claims will include both economic factors such as lost wages and non-economic factors like pain and suffering. Additionally, the legislation provides that:

  • The claims will be reviewed by a special master appointed by the Department of Justice who will determine the financial relief each family will receive. (The families of the victims and the injured will receive help from the Department of Justice in preparing their claims, and pro-bono legal assistance when they appear before the special master.)
  • There are no caps or limits on the total amount each family can receive in compensation.
  • Claims must be processed within 120 days and paid within another 20 days.

"The families of the victims of the attacks have suffered more than anyone could imagine already," Schumer says. "Forcing them to endure a long, drawn out, heart-wrenching legal process is simply too much to ask. This plan allows them to receive financial compensation quickly, fairly, and compassionately."

By participating in the program, however, the families of the victims must waive their right to sue in federal court. The amount of the damages awarded to the families will also be offset by whatever direct payments the claimants have received, such as life insurance or pension plans.

Schumer has emphasized that claimants are in no way required to give up that right and may sue if they prefer to do so. He cautioned, however, that there may be legal hurdles of proving liability and that potential litigants could be forced "to face the prospect of years of expensive, complicated, and emotional legal proceedings."


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