Sept. 11 Victims Fund Is Declared an Overall Success

The administrator of the federal fund that paid more than $7 billion to the Sept. 11 victims and survivors said Wednesday that the program was a great success, but acknowledged doubts about its fairness and efficiency.

The Victim Compensation Fund, approved by Congress after the terrorist attacks, might have been less controversial had it paid out the same amount to all victims, Special Master Kenneth R. Feinberg said in submitting his final report.

Instead, the compensation formula weighed an individual’s age, potential lost income and private insurance coverage. The result was “a program that raised a lot of questions” among some families -- especially those of emergency responders -- who asked why they weren’t entitled to more than the relatives of office employees who died in the attacks, Feinberg said.

The fund paid an average of $2 million to eligible families, but there were significant disparities in individual payouts, ranging from $250,000 to $7.1 million.

“The fireman’s widow would complain: ‘Why am I receiving less money than the stockbroker’s widow? My husband died a hero. Why are you demeaning the value of his life?’ ” Feinberg wrote in the final section of his report.

He said that the idea of awarding one flat payment to all recipients “has much to recommend it, especially when one considers the alternatives.”

Part of the anger, Feinberg said, came from the provision that any award be reduced by the amount of a victim’s life insurance benefits.

“Let me make sure I understand this,” Feinberg wrote, summarizing a typical family member’s frustration. “Because my wife and I planned our financial future by buying life insurance, you are deducting these life insurance payments from my award. So I am receiving less than my neighbor, who never bought life insurance but spent the money on vacations and new automobiles.”

Under guidelines mandated by Congress, the fund made payments to relatives of 2,880 people who died when airplanes crashed into the World Trade Center, the Pentagon and a field in Shanksville, Pa. The fund also paid an average of $400,000 each to 2,680 people injured in the attacks.

“For all the concerns expressed, I believe this fund exemplified the best of the American character, compassion and generosity,” said Feinberg, an attorney who worked under the auspices of the Department of Justice. “Whenever I travel around the world, people in foreign countries can’t believe that the government actually put this program together and paid victims such amounts. They’re in awe we were able to do this.”

Those who received compensation agreed not to pursue litigation, a provision intended to ward off lawsuits against the airlines and other potential defendants.

More than 97% of those eligible for compensation applied for it, which Feinberg said showed that “the program was a roaring success.”

There were 80 families who opted to file individual lawsuits, the report said. In addition, there were 13 families who did nothing, declining to apply for federally funded compensation.

“I went into their homes and said: ‘I understand your grief, but let me help you fill out the form, because this could mean $2 million for your family,’ ” Feinberg said.

“But it didn’t matter. They told me to leave the application form on the table and go, because they couldn’t cope with the overwhelming tragedy of what happened.” Feinberg declined to identify these family members, citing confidentiality provisions of the compensation fund legislation.

A study released last week by the Rand Institute for Civil Justice found that programs administered by the U.S. government, insurance companies, charities and other institutions had paid more than $38 billion to Sept. 11 family members. That is 30 times more than a previous payout for victims of a terrorist attack -- a 1993 London bombing -- according to the report.

Many victims of the attacks received free legal assistance from Trial Lawyers Care, an organization formed by the Assn. of Trial Lawyers of America. About 1,092 attorneys volunteered to help victims apply to the compensation fund and private insurance companies, providing an estimated $225 million in free legal aid, according to a report issued Wednesday by the trial lawyers association.