Judge Rejects $575M Settlement Offer for Sept. 11 ‘Heroes’

March 22, 2010

A federal judge rejected a multimillion dollar settlement for people sickened by ash and dust from the World Trade Center, saying the deal to compensate 10,000 police officers, firefighters and other laborers didn’t contain enough money.

U.S. District Judge Alvin Hellerstein on Friday rejected a legal settlement that would have given at least $575 million to the victims, saying the deal shortchanged ground zero workers whom he called heroes.

“In my judgment, this settlement is not enough,” said U.S. District Judge Alvin Hellerstein, who delivered his pronouncement to a stunned gallery at a federal courthouse in Manhattan.

Rising from his chair, the 76-year-old jurist said he feared police officers, firefighters and other laborers who cleared rubble after the 9/11 terror attacks were being pushed into signing a deal few of them understood.

Under the terms of the settlement, workers had been given just 90 days to say yes or no to a deal that would have assigned them payments based on a point system that Hellerstein said was complicated enough to make a Talmudic scholar’s head spin.

“I will not preside over a settlement that is based on fear or ignorance,” he said.

Of the proposed settlement of $575 million to $657 million, workers stood to get amounts ranging from a few thousand dollars to more than $1 million.

Hellerstein said the deal should be richer. Too much of it would be eaten up by legal fees, he said.

A third or more of the money set aside for the workers was expected to go to their lawyers. Some plaintiffs had agreed at the start of the case to give as much as 40 percent of any judgment to cover fees and expenses. That might have meant $200 million or more going to attorneys.

Hellerstein, who presides over all federal court litigation related to the terror attacks, ripped into the agreement after hearing several ground zero responders speak tearfully of their illnesses and after receiving letters and phone calls from others expressing confusion about the deal.

He said he was speaking “from the heart” out of great compassion for the thousands of men and women who spent time at ground zero.

It wasn’t immediately clear whether the judge’s actions would kill the settlement entirely.

The deal had taken years to negotiate and was announced March 11, with about two months to go until the first trials.

A spokeswoman for the law partnership that negotiated the settlement on behalf of the workers said she had no comment on the judge’s remarks.

Christine LaSala, president of the WTC Captive Insurance Co., a special insurance entity created by Congress to represent the city in the lawsuit, said the judge “has now made it more difficult, if not impossible, for the people bringing these claims to obtain compensation and a settlement.”

She said the lawyers would confer with city officials and “try to find a way forward.”

New York City’s chief lawyer, Michael Cardozo, said, “We have great respect for Judge Hellerstein and will consider his comments, but his reaction to the settlement will make it extremely difficult to resolve these cases.”

Hellerstein laid out a number of proposed fixes for what he saw as deficiencies in the settlement and told the two sides to resume negotiations.

He rejected the idea that a third or more of the money should go to the plaintiffs’ lawyers and said the legal fees should be paid by the WTC Captive, not the workers.

Hellerstein said workers should have ample opportunities to ask questions and get answers about the settlement, and he offered to go on a mini-speaking tour to get information to the plaintiffs.

“I will make myself available in union halls, fire department houses, police precincts and schools,” Hellerstein said.

He said more money should be set aside for people who later develop cancer that may be linked to ground zero toxins. He said he wanted to retain ultimate control over which workers were entitled to have claims paid.

Hellerstein acknowledged that he felt a personal connection to the case, calling it “the greatest burden in my life,” but insisted that his unusual intervention was legally and morally necessary, given the importance of 9/11 to the country.

“This is no ego trip for me. This is work,” he said.

Hellerstein spoke after several ground zero recovery workers had risen in court to describe a litany of health problems they believe are linked to inhaling the ash and dust left by the collapse of the World Trade Center.

The settlement rejected by the judge would have created a pool of at least $575 million for sick workers. That amount could rise to as much as $657 million if enough people accept the deal. Injured workers would get a payment in exchange for dropping their suits against New York City and the dozens of construction contractors it hired to handle the cleanup.

Money for the settlement would be funded with nearly $1 billion in federal taxpayer money that has already been appropriated.

The deal covers a broad list of ailments suspected of being linked to trade center dust, including asthma, chronic coughing and interstitial lung disease, which involves scarring of lung tissue. Some types of cancer are also covered.

For the plaintiffs with relatively minor ailments, payments would have ranged from $3,250 to $9,760. William Groner, an attorney on the team that negotiated the settlement, estimated that 40 percent to 60 percent of the workers would fall into that category.

The rest were to have divided the remaining millions in the pot, with a handful of the sickest getting $1 million or more. The amount they got would have been based on a complicated scoring system that ranks each illness by severity.

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