A cloudy future: a recent New York law extending the deadline for Sept. 11-related worker's comp claim means insurers of first responders may experience liability for years to come.

New York City Police Department detective James Zadroga was inside 7 World Trade Center when it began to collapse. The 34-year-old detective was one of the first responders to the Sept. 11, 2001, attack, spending 470 hours searching for victims in the debris at Ground Zero. Despite wearing a paper mask during the clean up, Zadroga developed a chronic cough, shortness of breath, acid reflux and headaches, forcing him to take medication and supplemental oxygen to breathe. By the end of 2004, he had to take a disability leave from his position and was granted a disability pension equal to 75% of his salary. Earlier tiffs year, Zadroga died as a result of black lung disease and mercury on the brain. He's said to be the first NYPD officer to die as a direct result of exposure to Ground Zero's toxic chemical aftermath.

Joe Picurro of Toms River, NJ., volunteered to assist in the rescue efforts immediately following Sept. 11. In 2004, he discovered his nearly 30 days spent at Ground Zero caused damage to his home, and he's now unable to work and confined to his home. "The medical bills keep coming and my medications are costing about $2,000 a month," Picurro said. For several years, Picurro was denied benefits from a federal fund set up for Ground Zero volunteers--a determination that left him literally penniless. In July, the New York State Workers' Compensation Board reversed its decision and determined his health problems were caused during his volunteer efforts at Ground Zero.

The cloud of dust, noxious gases and fumes that blanketed New York City and other areas is taking a toll on thousands of individuals, including firefighters, police officers, construction workers and volunteers, who risked their lives to search for victims and clean up debris at Ground Zero.

Debilitating health problems that are now beginning to surface are forcing some individuals off the job and creating controversy about workers' compensation claims. A two-year statute of limitations caused many individuals who recently had onset of illnesses to be denied workers' comp benefits. However, a new law in New York now extends filing time limits.

A Toxic Soup

In what attorney David Worby calls "the worst toxic waste spill in the history of the U.S.," the collapse of the World Trade Center sent a cloud of debris and toxic materials into the air with everything from dust and asbestos to mercury from fluorescent light bulbs and lead from computers.

About 10,000 Fire Department of New York personnel and 30,000 other workers, clean-up crew and volunteers were exposed to environmental toxins at Ground Zero, the Fresh Kills landfill in Staten Island, and city and temporary morgues. Most worked without respiratory equipment, Worby said.

About 12,000 individuals are now sick as a result, said Worby. The bulk have respiratory problems, but other conditions such as cancers also are surfacing.

Worby represents more than 8,000 New York City firefighters, police officers and private workers who recently fried a federal lawsuit alleging that they were exposed to toxic substances at or near Ground Zero. Of those, 57 workers have died.

Industry Impact

Workers' comp claims stemming from Sept. 11 could have a big financial impact on the New York system, but no one is ready yet to quantify the effect on claims cost, said Gregory Krohm, executive director of the International Association of Industrial Accident Boards and Commissions, a not-for-profit trade association representing government agencies charged with the administration of workers' comp systems.

"Published reports estimate that about 40,000 workers were exposed to the pollutants around the World Trade Center in the immediate response and clean up," said Krohm. "The Mt. Sinai Center for Occupational and Environmental Medicine estimates that half of those workers they examined may need medical treatment. From the descriptions I have seen, many of these illnesses are pretty serious and could require expensive ongoing treatment."

New York City officials believe it will take more than 20 years to determine whether environmental exposures from Sept. 11 will lead to more health problems and increased cases of lung disease among survivors.

Dr. Jacqueline Moline, an on-staff physician at Mt. Sinai Medical Center in New York, is concerned. "Many of the cases are treatable, manageable diseases and some individuals can go back to work but may require medications. I don't know the percentage of people who will be affected and don't think it's likely that it would be as high as those suffering from respiratory effects, but the severity of what might come may be life threatening." She's concerned that even more diseases of longer latency, such as cancers and scarring lung diseases, may occur sooner than experts predict.

"If I were an insurer and were involved in insuring first responders, I would be concerned about emerging potential liability--one that's financially manageable but potentially affects pricing of workers' compensation coverage because it adds a tail," said Robert Hartwig, executive vice president and chief economist with the Insurance Information Institute. He said it may take several years for claims to emerge, and "then they'll be for some kind of permanent or partial disability, which are very expensive claims, particularly for younger workers who might be impaired for the rest of their lives."

Some insurers are preparing for future disasters by helping their policyholders develop mitigation programs, said Keith Bateman, vice president of workers' compensation for the Property Casualty Insurers Association of America. "Mitigation tools, along with hazards, are relatively straightforward. The difficult thing is doing the preplanning and having management systems and coordination in place."

Coverage Concerns

The Workers' Compensation Terrorism Reinsurance Pool Feasibility Study, conducted by the Tillinghast and Reinsurance businesses of Towers Perrin, estimated that total workers' compensation losses total between $2 billion and $4 billion.

By mid-2004, the state Workers' Compensation Board said it received more than 10,000 claims related to the attack and recovery. In mid-June, the numbers rose to 10,743 claims--the majority of which include lost-time claims and medical-only claims--and 2,123 death benefits, of which 97% have been resolved. The Board said of the 8,620 injury/exposure claims it has received, 92% have been fully resolved to date.

In the aftermath of Sept. 11, Congress appropriated $175 million for the Workers' Compensation Board to assist with the resulting workers' comp claims filed by workers, volunteers or survivors who were injured, became ill or died as a result of the attacks and recovery efforts. Specifically, Congress provided federal funds to the U.S. Department of Labor for the Board in three earmarked portions: $125 million for processing of claims, and $25 million each to reimburse the state Uninsured Employers Fund for benefits paid for workers associated with uninsured employers and for volunteers.

After the attacks, the Board created a system to deal with the influx of claims. "We realized a lot of the claims were going to be similar in nature, so we created an adjudication team that at least for the first year or so were handling these cases as a team. It also enabled us to use some resources from across the state. We had judges assigned to teams that would periodically come to Manhattan from other areas to hear cases," said Jon Sullivan, a spokesperson with the Board. "Over time, we've been able to discontinue that process as we manage to resolve the majority of claims."

Many of the first responders and rescue and recovery workers at Ground Zero were city workers and fall under the city's self-insurance program. For instance, a police officer who's injured or becomes ill in the line of duty and is unable to work is generally retired and receives a nontaxable pension equivalent to three-quarters of his or her salary.

The city's workers' compensation system has fared better than expected, said John Sweeney, chief of the New York City Law Department Worker's Compensation Division. Since Sept. 11, the division, which excludes firefighters and uniformed police officers, received about 1,200 claims relating to Sept. 11. "In perspective, we get about 18,000 claims a year, so that doesn't represent a very large percentage of our claims at this point," said Sweeney. He said about three-quarters of the 1,200 individuals who fried initial claims did not pursue them, and therefore, the City did not make any payments on these cases for wage replacement or medical treatment. "As of this time, the vast majority of people have elected not to seek workers' comp benefits," he said. The division paid slightly more than $4 million in Sept. 11 claims thus far, $3 million for wage replacement and $1 million for medical treatment. Four death benefits claims to surviving spouses or children have been paid, he said.

"To the extent that cities may be self-insuring or for private insurers that provide workers' compensation protection for first responders, they're going to want to make sure that the loss is in fact connected to an occupational event and nothing else," said the III"s Hartwig. "This is along the lines of lessons we learned from asbestos. Without careful monitoring and objective medical opinions being rendered, you wind up with abuses in the system--not necessarily by those filing claims, but sometimes by providers rendering treatments in excess of the numbers that should be rendered and abuses by attorneys that get involved in the issue," he said.

"While everyone is focused on the billion dollars or so in World Trade Center costs that were directly a result of Sept. 11, in some cases hundreds of millions of dollars of additional costs could come years later," said Hartwig. "I think this was something that wasn't expected to the extent that is now emerging." He also said it doesn't appear that many individuals are eligible for compensation through the federal Victims Compensation Fund.

Many volunteers that assisted in the rescue and recovery at Ground Zero were also affected. The Workers' Compensation Board administers a benefits program for first responders who voluntarily assisted in Ground Zero and/or the Staten Island landfill in the weeks and months following Sept. 11. Funding for the benefits is derived from a federal grant provided to the State of New York for volunteer benefits. In 2005, the Board reported receiving 691 cases, and more than $3.3 million was paid out that year.

Reactions in Action

A two-year statute of limitations barred individuals from filing claims after Sept. 11, 2003. "As a result, hundreds of worker claims were barred, despite the fact that many didn't know they were injured until after that date," said Krohm.

A May New York Times article reported that 290 people filed claims after the deadline, and as further illnesses arise, the number is expected to increase.

"Many of those diagnosed post-two years after Sept. 11 had no remedy through the workers' compensation system," said Troy Rosasco, an attorney with the law firm Turley, Redmond and Rosasco who has been involved in World Trade Center-related workers' compensation litigation. However, he said new legislation is about to change that.

The so-called "9/11 Bill" allows workers who later become ill with conditions such as asthma, chronic obstructive lung disease, asbestosis (a respiratory disease caused by inhaling asbestos fibers), mesothelioma (a form of cancer usually caused by previous exposure to asbestos), or cancer to file claims as "occupational diseases." The bill extends workers' time to file a claim to two years from the "date of disablement," rather than two years from the date of exposure that resulted in the denial of many claims. Claimants who had Sept. 11 disease cases disallowed for late claim filing problems can re-open the denials. In mid-August, New York Governor George Pataki signed the bill.

"Many people now out of work because of their Sept. 11-related disabilities, who no longer have health insurance through their employers and couldn't seek treatment, now will be assured that they'll get any and all treatment they need for the rest of their lives if they file a claim," said Rosasco. "But it's all dependent upon them knowing they now have these rights.

Key Points

* Thousands of rescue, recovery and clean-up workers at Ground Zero are now experiencing health problems.

* A two-year statute of limitations barred many individuals from filing workers' compensation claims.

* The overall financial impact on the workers' compensation system is yet to be seen, but some industry experts believe the effects could be significant.

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National Health Registry

Soon after Sept. 11, 2001, the New York City Department of Health and Mental Hygiene proposed the development of a registry of individuals exposed to the World Trade Center disaster to trace the health impact that resulted. In 2002, the Agency for Toxic Substances and Disease Registry received funding from the Federal Emergency Management Agency to collaborate with the city department in the creation of the World Trade Center Health Registry.

The registry, designed to track the physical and mental health status of a large group of highly exposed persons for up to 20 years through regular health surveys, studies and matching with cancer registries and vital records, found that the majority of survivors of collapsed or damaged buildings have had one or more new or worsening respiratory symptoms following Sept. 11. These include symptoms of sinus problems, nose irritation and postnasal irritation; shortness of breath; wheezing; throat irritation and persistent cough.

About 2% of those surveyed reported newly diagnosed asthma, while two cases of new or worsening nonrespiratory symptoms, including heartburn, indigestion or reflux and severe headaches, were reported having a prevalence that exceeded 20%. Hypertension was the most frequently reported new diagnosis followed by cancer or malignancy of any kind and diabetes.

More than 5,300 people reported experiencing new onset of depression, anxiety or emotional problems after Sept. 11, according to a self-reported assessment of mental health. Nearly 11% were determined to have probable serious psychological distress at the time of the interview.

First responders fared the worst. Firefighters and police officers who arrived before the first building collapsed or soon afterward had the most serious health problems. The registry reported that 8% of firefighters who arrived at the scene became ill with the "WTC cough"--a debilitating, persistent cough that forced many individuals to take at least four weeks of medical leave. About 2% of firefighters who arrived later reported having "WTC cough." Also, a higher percentage of police officers who arrived before the first building collapsed had an abnormal spirometry examination, which measures lung health, compared with those who arrived during the time between the two collapses or in following days.

The Impact on Health Insurance

Post-Sept. 11 health problems' effects on the health insurance industry are difficult to gauge. "There's no means to determine whether a member may have an illness related to Sept. 11, although we haven't seen anything that would suggest a trend in respiratory or other conditions in our region since then," said Maria Gordon-Shydlo, a spokeswoman for Oxford Health Plans, a subsidiary of UnitedHealthcare.

While Group Health Inc., doesn't specifically track Sept. 11 claims, it's seen some patterns that may suggest a rise in such claims. Ilene Margolin, a spokeswoman for the company, said that in 2005 the company saw a 77% rise in cough-related claims, compared with a 11% rise in 2002 over 2001. In addition, the increase in upper respiratory claims grew from 2% in 2002 to 21% in 2005, reflux claims rose from 19% to 131%, asthma rose from 6% to 62%, and mental depression claims rose from 4% to 28%. "There are increases that were substantial that aren't explained by normal changes," she said.