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Compensation for Victims of Terrorism.

Compensation for Victims of Terrorism Marshall S. Shapo Oceana Publications, Inc. 297pp., $99

What Is Life Worth? The Unprecedented Effort to Compensate the Victims of 9/11 Kenneth R. Feinberg Public Affairs 256pp., $24

"Right now," Luis Chimbo wrote, "this is a messed-up world. I just say, 'Oh well,' we have to live, whatever the heck life throws at us."

Chimbo was writing to Kenneth Feinberg, the special master of the September 11th Victim Compensation Fund, about his father, who died in the terrorist attack on the World Trade Center. He was right, of course. Any world in which people fly airliners loaded with passengers and fuel into skyscrapers is very messed up, indeed. As we know, thousands of others also died on September 11, 2001; more thousands were injured; buildings fell; and hundreds of businesses and thousands of jobs were interrupted or worse.

What to do to help the innocent victims, and who should do it? America's responses were quick, but they also were fragmented and imbued with politics.

Compensation for losses from terrorism is the subject of two very different but excellent recent books. The first, Compensation for Victims of Terrorism, is the work of Professor Marshall Shapo of Northwestern University School of Law. In it, he shows both where compensation for terrorist acts already fits into the overall scheme of American law and where (and why) it might fit if future governments will address it in a purposeful, coherent, and humane way.

The question of what to do when civilians suffer losses from war has not stumped every policy-maker in the past. Shapo compares the U.S. government's September 11 response with that of the British government to German air raids during World War II.

After observing the economic devastation wrought by Luftwaffe bombs in 1940 in one English city, Winston Churchill immediately exercised what he called "a privilege of power" and decreed that "all damage from the fire of the enemy must be a charge upon the state and compensation paid in full and at once."

The Exchequer was horrified, but within two weeks the government had created an insurance program to cover civilian losses. It eventually paid out some 890 million [pounds sterling], equivalent to about $43 billion in current U.S. dollars.

In comparison to that vigorous action, the U.S. government's response to September 11 losses was far more limited, and it might have been even more parsimonious had it not been for the Air Transport Association's furious--and successful--lobbying for unprecedented limits on the airlines' potential legal liability. To counter Congress's gift to the airlines, ATLA and others engaged in urgent advocacy for the victims.

Shapo demonstrates that compensation for terrorist acts has actually been a part of our law for some time. The common law of torts, several federal statutes (among them the Foreign Sovereign Immunities Act, the Alien Tort Claims Act, and the Torture Victim Protection Act), and the Warsaw Convention have all been used in response to airplane sabotage and hijackings, as well as a variety of human rights abuses and war-related atrocities on the ground. Insurance companies have even used some of these to try to recover their September 11 losses.

Although the problems of obtaining court jurisdiction and enforcing damages are obvious, some of this litigation has succeeded, and compensation has been paid to some victims, like the survivors of the passengers who died when Pan Am Flight 103 exploded over Lockerbie, Scotland, in 1988.

For obvious reasons, Shapo also examines closely the September 11th Victim Compensation Fund, which is the sole subject of Kenneth Feinberg's very different book, What Is Life Worth?

Feinberg had an enormous--and enormously difficult-job to do in determining the appropriate amount of compensation for victims like Luis Chimbo. Congress gave Feinberg essentially unlimited money, but he had to distribute it in accordance with a body of law gleaned from the fund statute and the tort and probate laws of 35 states and 59 foreign countries. To those sources, he often had to add his own sense of equity and his mediating skills to translate law and facts into dollars-and-cents action to help bereaved families.

The story Feinberg tells of how he and his team did their work makes fascinating reading. He understood from the start that he would never be able to satisfy all parties who had interests in the compensation program, and he was right.

He was criticized for making awards that some considered too generous, and he left some survivors seriously--sometimes vocally--dissatisfied. Much of the anger was prompted by four aspects of the program:

* Congress's exclusion of U.S. victims of earlier terrorist actions--even others carried out by al Qaeda--from the fund

* the method Congress dictated for compensating for economic loss, which required the fund to give victims with already-substantial wealth more money than it could give those victims who had modest incomes

* Feinberg's bold decision to compensate noneconomic losses (mostly for pain and suffering and grief) at a flat rate of $250,000 for every death and $100,000 to each surviving spouse and dependent

* Congress's requirement that he deduct the value of most collateral benefits from awards. This provision turned some claims that would have warranted seven-figure court judgments into fund awards at the minimum $250,000 level.

Despite its imperfections, the victim compensation fund was a model of economy of operation and transparency. Feinberg and his staff haunted the State Department to track down every eligible foreign claimant. They persuaded the Immigration and Naturalization Service not to prosecute any illegal residents who came forward to file claims. And they prodded victims along in negotiations that solved many intra-family disputes (some involving attempted claims by fiances, others involving same-sex partners rejected by decedents' families).

Ultimately they persuaded 97 percent of the eligible claimants to give up their right to sue and enter the compensation program. The fund paid out just over $7 billion in compensation--nearly $6 billion of it for the 2,880 death claims, the rest for 2,680 physical injury claims--and its total expenses were just 1.2 percent of the money it was created to disburse. Feinberg himself worked on the fund full time for free for nearly three years, and his law firm donated over $7 million in unbilled time.

Is future terrorism compensation politically and economically feasible, or even desirable? If the answer is yes, how closely should it resemble the September 11 fund? Shapo and Feinberg have different views on this.

Shapo allows for the possibility of effective court-based compensation, but he considers future programs like the September 11 fund, or even a permanent fund, a feasible alternative. He considers the fund not an aberration of American injury jurisprudence but an addition to it, and an important one at that.

There is evidence that he is right. Despite protests that the fund should create no precedents, it has left a number of footprints on the legal landscape. It has fixed in many minds the figure $250,000 as minimum compensation for death. It has influenced military death benefits and the levels of term life insurance available to service members. It has also led inevitably to calls for government compensation programs for other disasters, such as Hurricane Katrina.

For his part, Feinberg insists that the fund should be viewed solely as a response to a unique situation, and that the creation of either a permanent fund or multiple funds to respond to specific future disasters would be unwise. He adamantly opposes altering our strong civil justice system, which he believes should continue as our principal mechanism for responding to losses caused by others.

Feinberg believes, however, that if Congress does create another fund in response to a future attack, it should not use the award formulas against which many victims railed. He argues for uniform compensation awards with no deductions for collateral sources, to the end that "the family of the stockbroker and that of the dishwasher should receive the same check from the U.S. Treasury."

Trial Lawyers Care

As impressive as Feinberg's account is, What Is Life Worth? suffers from a serious omission: He makes no mention of Trial Lawyers Care (TLC), the ATLA-created program that provided free legal counsel to every fund claimant who requested it. TLC's work for the September 11 survivors was by all accounts the largest pro bono legal aid project in history, with more than 1,100 volunteer lawyers representing over 1,700 families and providing more than $200 million worth of legal services without charge.

Feinberg's omission is especially puzzling considering that he professed to hold TLC in high esteem when he accepted ATLA's Lifetime Achievement Award on July 3, 2004, saying, "Without the support of ATLA and Trial Lawyers Care, there never would have been a victim compensation fund.... I've never, ever been prouder of my profession than [for] what ATLA and Trial Lawyers Care did to make this program a success."

If there are more attacks, will victims be compensated at all, and if so, how? We don't know. We only know that, as Luis Chimbo put it so eloquently, it's a messed-up world, in which "we have to live, whatever the heck life throws at US."

We can hope that life will never again throw at us anything like the terror of September 11--but we always have hopes like that, don't we?

JAMES E. ROOKS JR. is senior counsel for policy research in ATLA's State Affairs Department.
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Author:Rooks, James E., Jr.
Date:Mar 1, 2006
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