[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
  PAYING WITH THEIR LIVES: THE STATUS OF COMPENSATION FOR 9/11 HEALTH 
                                EFFECTS

=======================================================================

                             JOINT HEARING

                               BEFORE THE

                      SUBCOMMITTEE ON IMMIGRATION,
                CITIZENSHIP, REFUGEES, BORDER SECURITY,
                         AND INTERNATIONAL LAW

                                AND THE

                   SUBCOMMITTEE ON THE CONSTITUTION, 
                   CIVIL RIGHTS, AND CIVIL LIBERTIES

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 1, 2008

                               __________

                           Serial No. 110-82

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov



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                       COMMITTEE ON THE JUDICIARY

                 JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California         LAMAR SMITH, Texas
RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr., 
JERROLD NADLER, New York                 Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            STEVE CHABOT, Ohio
MAXINE WATERS, California            DANIEL E. LUNGREN, California
WILLIAM D. DELAHUNT, Massachusetts   CHRIS CANNON, Utah
ROBERT WEXLER, Florida               RIC KELLER, Florida
LINDA T. SANCHEZ, California         DARRELL ISSA, California
STEVE COHEN, Tennessee               MIKE PENCE, Indiana
HANK JOHNSON, Georgia                J. RANDY FORBES, Virginia
BETTY SUTTON, Ohio                   STEVE KING, Iowa
LUIS V. GUTIERREZ, Illinois          TOM FEENEY, Florida
BRAD SHERMAN, California             TRENT FRANKS, Arizona
TAMMY BALDWIN, Wisconsin             LOUIE GOHMERT, Texas
ANTHONY D. WEINER, New York          JIM JORDAN, Ohio
ADAM B. SCHIFF, California
ARTUR DAVIS, Alabama
DEBBIE WASSERMAN SCHULTZ, Florida
KEITH ELLISON, Minnesota

            Perry Apelbaum, Staff Director and Chief Counsel
      Sean McLaughlin, Minority Chief of Staff and General Counsel
          Subcommittee on Immigration, Citizenship, Refugees, 
                 Border Security, and International Law

                  ZOE LOFGREN, California, Chairwoman
LUIS V. GUTIERREZ, Illinois          STEVE KING, Iowa
HOWARD L. BERMAN, California         ELTON GALLEGLY, California
SHEILA JACKSON LEE, Texas            BOB GOODLATTE, Virginia
MAXINE WATERS, California            DANIEL E. LUNGREN, California
WILLIAM D. DELAHUNT, Massachusetts   J. RANDY FORBES, Virginia
LINDA T. SANCHEZ, California         LOUIE GOHMERT, Texas
ARTUR DAVIS, Alabama
KEITH ELLISON, Minnesota
ANTHONY D. WEINER, New York

                    Ur Mendoza Jaddou, Chief Counsel
                    George Fishman, Minority Counsel
                                 ------                                

  Subcommittee on the Constitution, Civil Rights, and Civil Liberties

                   JERROLD NADLER, New York, Chairman

ARTUR DAVIS, Alabama                 TRENT FRANKS, Arizona
DEBBIE WASSERMAN SCHULTZ, Florida    MIKE PENCE, Indiana
KEITH ELLISON, Minnesota             DARRELL ISSA, California
JOHN CONYERS, Jr., Michigan          STEVE KING, Iowa
ROBERT C. (BOBBY) SCOTT, Virginia    JIM JORDAN, Ohio
MELVIN L. WATT, North Carolina
STEVE COHEN, Tennessee

                     David Lachmann, Chief of Staff

                    Paul B. Taylor, Minority Counsel


                            C O N T E N T S

                              ----------                              

                             APRIL 1, 2008

                                                                   Page

                           OPENING STATEMENTS

The Honorable Zoe Lofgren, a Representative in Congress from the 
  State of California, and Chairwoman, Subcommittee on 
  Immigration, Citizenship, Refugees, Border Security, and 
  International Law..............................................     2
The Honorable Steve King, a Representative in Congress from the 
  State of Iowa, and Ranking Member, Subcommittee on Immigration, 
  Citizenship, Refugees, Border Security, and International Law..     3
The Honorable Jerrold Nadler, a Representative in Congress from 
  the State of New York, and Chairman, Subcommittee on the 
  Constitution, Civil Rights, and Civil Liberties................     8
The Honorable Trent Franks, a Representative in Congress from the 
  State of Arizona, and Ranking Member, Subcommittee on the 
  Constitution, Civil Rights, and Civil Liberties................    10
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, Chairman, Committee on the 
  Judiciary, and Member, Subcommittee on the Constitution, Civil 
  Rights, and Civil Liberties....................................    11

                               WITNESSES

Mr. Kenneth R. Feinberg, former Special Master, Victim 
  Compensation Fund
  Oral Testimony.................................................    13
  Prepared Statement.............................................    15
Mr. Michael A. Cardozo, Corporation Counsel, City of New York
  Oral Testimony.................................................    19
  Prepared Statement.............................................    20
Ms. Ann-Marie Lasowski, Acting Director, Education, Workforce, 
  and Income Security Issues, Government Accountability Office
  Oral Testimony.................................................    23
  Prepared Statement.............................................    25
Mr. Michael A. Valentin, former NYPD Detective
  Oral Testimony.................................................    38
  Prepared Statement.............................................    39
Mr. Theodore H. Frank, Resident Fellow, American Enterprise 
  Institute, Director AEI Legal Center for the Public Interest
  Oral Testimony.................................................    42
  Prepared Statement.............................................    44
Mr. James Melius, Administrator, New York State Laborer's Health 
  and Safety Trust Fund
  Oral Testimony.................................................    58
  Prepared Statement.............................................    61

                                APPENDIX

Material Submitted for the Hearing Record........................   101


  PAYING WITH THEIR LIVES: THE STATUS OF COMPENSATION FOR 9/11 HEALTH 
                                EFFECTS

                              ----------                              


                         TUESDAY, APRIL 1, 2008

  House of Representatives,                        
   Subcommittee on Immigration,                    
              Citizenship, Refugees                
                   Border Security, and            
                          International Law        
              Subcommittee on the Constitution,    
                 Civil Rights, and Civil Liberties,
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 10:08 a.m., in 
Room 2141, Rayburn House Office Building, the Honorable Zoe 
Lofgren (Chairwoman of the Subcommittee on Immigration, 
Citizenship, Refugees, Border Security, and International Law) 
and the Honorable Jerrold Nadler (Chairman of the Subcommittee 
on the Constitution, Civil Rights, and Civil Liberties) 
presiding.
    Present: Representatives Conyers, Nadler, Lofgren, Scott, 
Watt, Jackson Lee, Waters, Cohen, Weiner, Davis, Wasserman 
Schultz, Ellison, Franks, Goodlatte, Issa, Pence, King, 
Gohmert, and Jordan.
    Also present: Representative Maloney.
    Staff present: Blake Chisam, Majority Counsel; Lou Debaca, 
Majority Counsel; David Lachmann, Subcommittee Chief of Staff; 
Andres Jimenez, Majority Professional Staff Member; Caroline 
Mays, Majority Professional Staff Member; Paul Taylor, Minority 
Counsel; and Jennifer Burba, Minority Staff.
    Mr. Nadler. I call to order this joint hearing of the 
Subcommittee on Immigration, Citizenship, Refugees, Border 
Security, and International Law and the Subcommittee on the 
Constitution, Civil Rights, and Civil Liberties.
    Welcome, everyone.
    Without objection, the Chair is authorized to declare a 
recess, just in case there are any votes on the floor.
    Let me note that Congresswoman Lofgren, who is the 
Chairperson of the Subcommittee on Immigration, Citizenship, 
Refugees, Border Security, and International Law, will be co-
chairing this hearing with me, as I am the Chairman of the 
Subcommittee on the Constitution, Civil Rights, and Civil 
Liberties. This is a joint hearing in which we will both be 
chairing, both to serve as co-Chairs.
    I will now recognize the co-Chair of this hearing, Ms. 
Lofgren, for an opening statement.
    Ms. Lofgren. Thank you, Mr. Chairman.
    And, although it is not in the title, the very long title, 
of our Subcommittee, the Immigration Subcommittee also has 
jurisdiction over claims made against the Federal Government, 
which is one of the reasons why I am pleased to be co-chairing 
this hearing with you.
    I will ask unanimous consent to put my full statement into 
the record, but I would just summarize by saying that when we 
created the 9/11 Victims Compensation Fund, we created a very 
successful program, very ably administered as far as it went. 
It was a bipartisan effort, and it provided the means to 
compensate in a very short period of time the survivors of the 
2,880 people killed in the attacks and the 2,680 people injured 
in the attacks or in the rescue efforts immediately following.
    The Special Master Fienberg, one of our witnesses today, 
noted in his final report that 97 percent of the families of 
deceased victims who might otherwise have pursued lawsuits for 
years received compensation through the fund. So this was a 
stunning success, and we thank the administrator for his, 
really, very able effort.
    Unfortunately, however, the specter of tort litigation is 
with us. Over 10,000 lawsuits have been filed in the City of 
New York by first responders, building and trades workers, 
volunteers--who rallied to the World Trade Center to help, who 
were not compensated by the victims' fund. They didn't know 
they were sick in time to file, and they are suffering 
tremendously.
    I think there is broad agreement that these individuals are 
sick and will continue to get sick because of their exposure to 
the World Trade Center's noxious dust. And from the city's 
testimony today, it seems clear the city agrees.
    So the question at the hearing, the beginning, is our quest 
to answer the question: What do we do?
    I want to thank Chairman Nadler for his leadership on these 
issues. The Bill 3543, the James Zadroga 9/11 Health and 
Compensation Act of 2007, authored by Chairman Nadler along 
with Representative Maloney and Representative Fossella, 
represents a good first attempt at addressing these issues.
    I believe this hearing is going to help us to begin to 
answer the question: What do we do? And I believe we will leave 
here today with a better sense of the problems that people are 
facing.
    From there I am hopeful that we can begin to structure a 
fair and just program to compensate those who continue to bear 
the deep scars from that terrible day in September almost 7 
years ago.
    And I thank Chairman Nadler for yielding to me and yield 
back.
    Mr. Nadler. Thank you.
    And before I recognize the next opening statement, let me 
simply note the presence here of a non-member of the Committee, 
Representative Maloney of New York, who has been instrumental 
in this whole area and who along with Congressman Fossella and 
myself is the co-author of the legislation, the Zadroga Act, 
which includes reopening the VCF, the Victims Compensation 
Fund, which is the subject of this hearing.
    And let me thank her for all the wonderful work she has 
done and note her presence here.
    I now recognize the gentleman from Iowa, who is the Ranking 
Minority Member on the Subcommittee on Immigration, 
Citizenship, Refugees, Border Security and International Law, 
for an opening statement.
    Mr. King. Thank you, Mr. Chairman, I appreciate you holding 
this hearing.
    Almost 7 years ago, terrorists carried out mass murder of 
innocent Americans on our own soil. The attacks were carried 
out by radical Islamists who hate America and the freedoms we 
represent. They ripped away our security and devastated 
thousands of families.
    My heartfelt sympathies go out to those who suffered in the 
wake of the 9/11 attacks. All of America identified with New 
York, with Washington, D.C., and the Pentagon and Pennsylvania 
as never before. An attack on any one is an attack on us all.
    One of the groups that suffered in the aftermath is the 
Ground Zero workers who worked heroically day and night for 
months in rescue, recovery and cleanup efforts at the World 
Trade Center site. For the most part, these workers went in 
without contracts, insurance policies or knowledge that there 
were toxins in the air. Today, many of these of these workers 
are having health problems as a result of their work at Ground 
Zero.
    In addition to the Ground Zero workers, people who lived 
and worked in the proximity of Ground Zero have also now 
developed respiratory problems that appear to be related to 
toxins in the air. Understandably, the Ground Zero workers have 
looked to the construction companies that hired them for 
compensation for their health problems. These companies along 
with the City of New York are now being sued by some 10,000 
plaintiffs who allege they were injured from the contaminants 
in the debris. These victims are being forced to sue because 
they do not qualify for relief under the 9/11 Victims 
Compensation Fund.
    The companies and the city are being forced to vigorously 
defend against these lawsuits because they were unable to 
obtain insurance to cover injuries arising out of the Ground 
Zero cleanup efforts.
    We are here today to examine what we in Congress can do to 
help compensate those that are now experiencing respiratory 
ailments due to the air quality in or around Ground Zero.
    We are also here to ensure that whatever is done to 
compensate the victims does not financially cripple the 
construction companies--that is some of the largest in the 
world and best in New York City. They stepped up as corporate 
and good Samaritans and cleaned up the terrorist disaster at a 
moment's notice at Mayor Giuliani's plea without having 
protected themselves by obtaining contracts or insurance.
    Because they had the right equipment and construction 
experts, these companies were asked to mobilize within hours of 
the Towers falling, and they did so as volunteers. The 
companies cleared the debris for emergency personnel. They dug 
for survivors in the huge pile of rubble. They worked for 9 
months until the site was clear. They did it 24/7, and they did 
so without a profit motive.
    These companies and those executives who made the decisions 
to help on 9/11 are heroes, too. Just as the firefighters, the 
emergency responders and the workers who toiled for weeks and 
weeks at the World Trade Center site, these corporate heroes 
should not be forgotten by our government when they face the 
liability nightmare that they now do.
    If we in Congress do not address their liability exposure, 
we cannot expect to call on these and other companies in the 
future if tragedy strikes. In order to address the compensation 
owed to those facing health problems from the toxins in the air 
around Ground Zero and the liability exposure of the companies 
that came to the aid of our Nation after the Towers fell, the 
9/11 Victims Compensation Fund has been suggested as a 
blueprint. That suggestion makes a lot of sense.
    However, if we are to follow the 9/11 Fund as a blueprint, 
we must make sure that we follow it studiously. We must make 
sure that we provide adequate compensation to the victims 
without handing the keys of the U.S. Treasury to the trial 
lawyers. And we must make sure that we provide liability 
protections to New York City and the companies that came to the 
rescue of the victims.
    The bipartisan legislation establishing the original 9/11 
Fund had these types of protections. The liability of airlines 
was capped at the levels of their insurance coverage. The 
liability of other third parties such as New York City and the 
Port Authority of New York and New Jersey were also capped. 
Moreover, the legislation required 9/11 Fund claimants to waive 
their right to file a civil action or be the party to an action 
in any Federal court or State court that damages sustained as a 
result of the Federal-related aircraft crashes of September 11, 
2001.
    With these liability protections in place, the 9/11 Fund 
was successful in providing compensation to the victims or 
their families. In fact, 97 percent of the victims or their 
families chose to file under the 9/11 Fund instead of seeking 
redress in the courts.
    The 9/11 Fund model is one we should consider for victims 
that are able to come forward with proof that they were in 
general proximity of Ground Zero during the cleanup period and 
are able to medically document that they have an illness as a 
result of exposure to the air around the site. We should 
provide these victims with a better path than the inefficient 
and expensive litigation they are currently pursuing.
    But if we pursue this path, we must do so in a manner that 
limits the liability of construction companies that were 
instrumental in the efforts at Ground Zero and places a 
reasonable cap on recovery through litigation outside the fund. 
Thus, while we owe it to the victims to provide a reasonable 
means to seek compensation, we must make sure that any 
expansion of the 9/11 Fund is proportionate to the original 
terms of the legislation creating the fund.
    So I would ask the unanimous consent to enter into the 
record a statement by the five major contractors that is 
submitted on behalf of these five major contractors that 
participated in New York.
    Unanimous consent requested, Mr. Chairman.
    Mr. Nadler. Without objection, so ordered.
    [The information referred to follows:]
    
    
    
    
    
    
    Mr. King. I thank you, Mr. Chairman.
    And I would conclude my statement. Thank you for holding 
this hearing.
    I thank the witnesses in advance, and I look forward to 
your testimony.
    And I yield back.
    Mr. Nadler. Thank you.
    I will now recognize myself for an opening statement.
    This joint hearing of the Subcommittee on the Constitution, 
Civil Rights, and Civil Liberties and the Subcommittee on 
Immigration etcetera, will investigate the status of 
compensation for the tens of thousands of people who are 
suffering because of the collapse of the World Trade Center on 
9/11.
    I want to thank the distinguished Chairwoman of the 
Subcommittee on Immigration for her agreeing to hold this joint 
hearing with the Subcommittee on the Constitution. It is both 
timely and important.
    Other hearings have focused on the ongoing health crisis, 
and this Committee has previously investigated the disastrous 
response to the environmental catastrophe.
    This is the first hearing in the Congress that will examine 
the issue of providing compensation to the many first 
responders, construction workers, volunteers and other affected 
individuals. They are the true heroes of September 11, and they 
need our help, not more salutes.
    I want to welcome our witnesses and thank them for 
participating. We are fortunate to have an expert panel with us 
today to discuss the past successes, current challenges and 
proposed solutions to the ongoing struggle to provide proper 
compensation to the victims of 9/11.
    I would also like to recognize those individuals who have 
traveled to Washington today to attend this hearing and thank 
them for coming. Many are the very people who have been denied 
proper compensation thus far. And I hope that we can learn 
today about why the system has failed so many.
    Last June, Senator Clinton and I held companion hearings on 
the actions of the EPA and other Federal agencies that allowed 
workers to work in a toxic environment without proper 
protection and gave them false assurances as to their safety.
    Obviously, none of the injuries we are talking about would 
have occurred were it not for the terrorists, who are 
ultimately to blame. But many or most would have been avoided 
if the Federal Government had acted in a responsible manner. 
The Federal Government, therefore, has a moral and legal 
obligation to compensate the victims of 9/11 and to provide for 
their healthcare.
    Many hearings have examined the health issues, and we have 
heard from many who are too sick to work, and we must assume 
that many more will become sick in the future. Which brings us 
to today's hearing.
    We have with us the former special master of the Federal 
Victim Compensation Program, who was responsible for providing 
approximately $7 billion in compensation to the families of 
those who lost their lives and to those injured in the 
immediate aftermath of the attacks. He paid claims to about 
2,900 families of the deceased and to 2,500 people with 
physical injuries, including respiratory illnesses. The funds 
he distributed were tax free, and every award took into account 
the recoveries from collateral sources such as private 
insurance, pensions and workers' compensation. Claims payments 
were halted because of a statutory expiration date.
    We will also hear from Mike Valentin, a police officer and 
9/11 first responder who can no longer work and who long ago 
exhausted his prescription drug coverage and is now fighting to 
keep his family financially afloat. Unfortunately, his case is 
all too typical.
    New York City Corporation Counsel Michael Cardozo will 
discuss the World Trade Center Captive Insurance Company, which 
established with a $1 billion congressional appropriation has 
spent millions of dollars in administrative and legal costs to 
contest rather than to pay claims filed by first responders and 
other individuals whom Congress intended to assist.
    Only a handful of claims have been paid, and none of those 
have been related to the respiratory problems that so many 
suffer. I look forward to hearing from him how many claims have 
been paid out, what he sees as the challenges to compensating 
9/11 victims.
    I assume he may discuss last week's Second Circuit Court of 
Appeals decision denying New York City and its contractors 
immunity from World Trade Center-related lawsuits. Close to 
10,000 victims have filed suit claiming that they ``suffered 
respiratory injuries due to the failure of the city and the 
Port Authority to monitor those conditions and to provide them 
with adequate safety equipment and/or warn them of the 
hazards.''
    Finally, I look forward to the testimony of Dr. Jim Melius, 
who is an expert on the proposed legislative solutions to 
reopen the Victims Compensation Program and to provide for the 
long-term health needs of those affected by the attacks of 9/
11.
    I would like to note that my colleagues Congresswoman 
Carolyn Maloney and Congressman Vito Fossella and I have 
introduced the 9/11 Health and Compensation Act, which would 
provide comprehensive medical treatment to any person whose 
health was affected and would reopen the Victim Compensation 
Fund so that people can be compensated for their economic 
losses.
    The pain and suffering of the living victims of 9/11 is 
real and cannot be ignored. I think it is clear that we as a 
Nation must do more than we have.
    During the final months of the Civil War, President Lincoln 
in his Second Inaugural Address noted that the Nation had to go 
beyond mourning the dead and needed to look toward what could 
be done to help the Nation recover and reconstruct. Nearly 7 
years after 9/11, we are in the same position. We must, as 
Lincoln remarked, ``bind up the Nation's wounds and care for 
him who shall have borne the battle, and for his widow and his 
orphan.''
    I hope that as we continue to bring the truth to light 
through these hearings we can do a better job of repaying a 
debt that can never fully be repaid to the victims and heroes 
of 9/11.
    I yield back. And I now recognize the gentleman from 
Arizona, the Ranking Minority Member of the Subcommittee on the 
Constitution, Civil Rights and Civil Liberties, for an opening 
statement.
    Mr. Franks. Well, thank you Mr. Chairman.
    First, let me just say, like so many others here today, 
that my heart does go out to everyone who toiled and suffered 
in the tragedy of 9/11. Those attacks were met with the very 
noblest of responses. I still remember the reports of firemen 
running up the stairs to try to help people from the burning 
Towers.
    Today I hope we all rededicate ourselves to doing what is 
right and just for all Americans harmed by the terrible act of 
terrorism on 9/11.
    Among those heeding the call to respond to the 9/11 attacks 
were private contracting firms that were asked by the City of 
New York to immediately begin cleanup efforts after 9/11. They 
did so even though they and the City of New York were unable to 
secure liability insurance that they normally would have before 
starting a recovery project.
    Other major entities affected by the 9/11 attacks including 
the airlines, the World Trade Center and port authorities were 
protected by bipartisan Federal legislation from excessive and 
unwarranted liability exposure following the attacks. The 
cleanup firms, however, whose liability issues did not arise 
until many months after the attacks were not so protected.
    In the administrative compensation program created to help 
the immediate victims of 9/11, called the September 11th 
Compensation Fund, does not cover those exposed to subsequent 
site contaminants. That fund, administered by Mr. Kenneth 
Feinberg here, was administered within set parameters.
    As the non-partisan RAND Institute for Civil Justice 
pointed out in its 2004 report, ``pre-commitments by government 
programs reduced the ability of government and society more 
generally to allocate resources to meet those pressing needs 
after an attack.''
    And the Government Accountability Office in 2005 also 
cautioned that ``because these compensation programs may expand 
significantly beyond the initial cost estimates, policymakers 
must be careful in considering the cost and precedent-setting 
implications of establishing any new Federal compensation 
programs, particularly in light of the current Federal 
deficit.''
    And I would like to submit both of those reports,\1\ Mr. 
Chairman, for insertion into the hearing record today.
---------------------------------------------------------------------------
    \1\ The reports submitted by Mr. Franks are not reprinted in this 
hearing but can be accessed at the following links:

---------------------------------------------------------------------------
      http://www.rand.org/pubs/monographs/2004/RAND_MG264.pdf

      http://www.oig.dol.gov/public/feca/reports/
      GAO%20PERSPECTIVES%20ON%20FOUR%20PROGRAMS%202005.pdf
    Mr. Nadler. Without objection, so ordered.
    Mr. Franks. Private contracting firms should not be driven 
out of business by these lawsuits or deterred from responding 
to future crises for fear of unlimited and potentially 
bankrupting liability. The model Congress created on bipartisan 
basis after 9/11 worked well as it was intended to do. Under 
that model, if a person chose not to obtain relief through the 
compensation fund but decided, rather, to sue the court, the 
liability the airlines, the World Trade Center and the 
airports, who were also victims of the 9/11 attacks, would be 
limited to the extent of their insurance coverage at the time 
of the attacks.
    The Aviation Security Act conference report put reasonable 
limits on the otherwise potentially infinite liability innocent 
Americans would have faced as a result of litigation 
surrounding the attacks. Consequently, the vast majority of 
victims opted to seek compensation through the September 11th 
Victim Compensation Fund, and Americans were spared decades of 
costly and wasteful litigation regarding damages that the 
terrorists themselves would be responsible for.
    As the non-partisan RAND Corporation concluded, it is 
difficult to imagine that the Victims Compensation Fund did not 
resolve claims much faster and more efficiently than the tort 
system would have given the size of the losses, the parties 
primarily responsible for the attacks, and the complicated 
liability issues surrounding the events of 9/11.
    As we move forward today, I want to make sure that whatever 
compensation fund might be created to cover new claims treats 
current victims in the same responsible manner as those who 
were injured in the immediate aftermath of the 9/11 attacks.
    That is something that justice demands, Mr. Chairman, and I 
will do all that I can to see that the victims of 9/11, whoever 
they are, receive a fair and just result. And I look forward to 
hearing from all of our witnesses today. Thank you, sir.
    Mr. Nadler. Thank you.
    And I will now recognize the distinguished Chairman of the 
full Committee, the gentleman from Michigan, for an opening 
statement.
    Mr. Conyers. Thank you, Chairman Nadler and Co-Chairwoman 
Zoe Lofgren, the two distinguished Ranking Members of the 
Subcommittees that are holding a joint hearing, Steve King and 
Trent Franks.
    Please note how democratically this Committee operates. We 
finally get down to the Chairman of the Committee after a half 
a dozen people have already articulated their opening 
statements.
    I am going to just make a couple comments that will let all 
of these distinguished witnesses know, all six of you, we are 
proud that you are here. We think this is an important element 
of understanding how we react to attacks of terror in our 
country.
    Now, in the wake of the World Trade Center attacks, then-
Governor Pataki and then-Mayor Giuliani, let us face it, took a 
do-it-yourself attitude toward the victims of this 
unprecedented disaster. Instead of respirators and professional 
cleanup, first responders, construction workers, volunteers, 
were sent into this disaster without protection. And the public 
got instructions, believe it or not, to just wipe their 
apartments and offices down with a wet rag. And now cancer and 
lung disease are ravaging these survivors.
    Now, the current mayor has worked hard to fix this mess and 
has taken--but the city is really in an adversarial stance. And 
I leave it to all of our New York people here--Mrs. Maloney, 
Mr. Weiner, Jerry Nadler and others here. But they have taken 
an adversarial stance against the victims of the environmental 
tragedy.
    Now, in my opening statement, let me give you the bottom 
line here. We need to sit down and start settlement 
negotiations that will get these victims the help they deserve. 
And the way we do it is get beyond--you know how many people 
have received relief under this World Trade Center Captive 
Insurance Company? Five. Five victims--8,600 claims pending. 
And we have got something like a billion dollars to account for 
what is going on. What has really turned out to be the case is 
that the lawyers are suing the victims against allowing them to 
get recovery. That is where the money is going.
    So this unique hearing with two Subcommittees--and we have 
got another Ranking Member of Crime, Bobby Scott, here. We have 
got the former Chairman of the Congressional Black Caucus, Mel 
Watt, here. We need to, after we hear from the witnesses, let 
us do something here. And we have got all the players here, and 
this is the right time to do it.
    And I will put the rest of my statement in the record, Mr. 
Chairman. And thank you both.
    Mr. Nadler. I thank the gentleman.
    We have a distinguished panel of witnesses today. Ken 
Feinberg served as the special master of the Federal September 
11th Victim Compensation Fund of 2001. He is currently the 
managing partner and founder of the Feinberg Group, LLP, and 
has had a distinguished teaching career at the Georgetown 
University Law Center, University of Pennsylvania Law School, 
NYU School of Law, University of Virginia Law School and 
Columbia. Why did you ever leave Columbia and NYU? He has been 
listed by the National Journal as one of the 100 most 
influential lawyers in America, and was named lawyer of the 
year by the National Law Journal in 2004. Mr. Feinberg received 
his J.D. from New York University School of Law.
    Michael Cardozo has served as the corporation counsel and 
chief legal officer of New York City since January 2002. He 
serves as legal counsel for the mayor of New York, elected 
officials, the city and its agencies, and also heads the 
Election Modernization Task Force. Prior to becoming 
corporation counsel, Mr. Cardozo was a partner at Proskauer 
Rose where he served as co-chair of the firm's 150-person 
litigation department. He is a graduate of Columbia Law School 
and served as a law clerk to the late Judge Edward McLean in 
the United States District Court for the Southern District of 
New York.
    Ann-Marie Lasowski joined the U.S. Government 
Accountability Office in 1988. She currently serves as acting 
director in GAO's Education Workforce and Income Security 
Issues Team where she leads work and worker protection issues. 
In recent years, she led a body of work on defense trade issues 
covering topics such as the U.S. export control system, foreign 
military sales and militarily critical technologies. Ms. 
Lasowski began her career as an analyst in GAO's Philadelphia 
field office, performing evaluations and orders on topics 
including transportation safety, housing programs, 
environmental contracts, and defense contract management and 
financing issues.
    Detective Michael Valentin was a detective with the New 
York City Police Department and is now retired on medical 
disability as a result of his exposure to toxic dust and 
particulate matter while working at the World Trade Center site 
for 3 months.
    Ted Frank is the resident fellow and director of the 
American Enterprise Institute Legal Center for the Public 
Interest where he manages the institute's research and studies 
liability reform. His research areas include product liability, 
class actions and civil procedure, corporate regulation, 
antitrust and patent litigation, lifestyle litigation, medical 
malpractice, and judicial selection--a rather wide field. 
Previously, Mr. Frank was a litigator in private practice. His 
litigation experience includes defending the 2003 California 
gubernatorial recall election against an ACLU constitutional 
challenge; Vioxx and automobile products liability cases; class 
action defense; and antitrust and patent cases.
    Dr. James Melius is an occupational physician and 
epidemiologist. For the past 10 years, he has worked with the 
Laborers International Union of North America and currently is 
administrator of the New York State Laborer's Health and Safety 
Trust Fund and director of research for the Laborers Health and 
Safety Fund of North America. He currently Chairs the steering 
committee for the World Trade Center Medical Monitoring and 
Steering Committee which oversees this program for World Trade 
Center responders. He received his M.D. from the University of 
Illinois in 1974 and his Dr.P.H. in Epidemiology from the 
University of Illinois School of Public Health in 1984.
    Before we begin, I want to formally acknowledge all of the 
people who have come down from New York in buses who are now 
here. They have come down to show their support for all those 
who are still suffering after 9/11.
    I want to acknowledge those in the overflow room as well. 
Thank you for your service. We welcome you all.
    Without objection, the written statements of the witnesses 
will be made part of the record in their entirety. We would ask 
each of the witnesses to summarize his or her testimony in 5 
minutes or less. To help you keep time, there is a timing light 
at your table. When 1 minute remains, the light will switch 
from green to yellow and then to red when the 5 minutes are up.
    Before we begin, it is customary for the Committee to swear 
in its witnesses. If you could please stand and raise your 
right hand to take the oath.
    Do you swear or affirm under penalty of perjury that the 
testimony you are about to give is true and correct to the best 
of your knowledge, information and belief?
    Thank you.
    Let the record reflect that the witnesses answered in the 
affirmative.
    We will now recognize our witnesses in order. First, I 
recognize for 5 minutes for statement, Mr. Feinberg.

TESTIMONY OF KENNETH R. FEINBERG, FORMER SPECIAL MASTER, VICTIM 
                       COMPENSATION FUND

    Mr. Feinberg. Thank you very much, Mr. Chairman.
    This is the first time since the 9/11 Fund expired almost 5 
years ago that I have had a chance to come here and personally 
thank this Committee, the House of Representatives, the 
Congress, the Administration, for their absolute, unstinting 
support for the 9/11 Fund. It was truly bipartisan. I had the 
complete support of the Administration, Attorney General 
Ashcroft, and the Congress, Members from both parties. And it 
would have never worked without that bipartisan support, and I 
am very grateful.
    I also particularly thank the Chairman of the full 
Committee, Chairman Conyers, who I first worked with in 1975 
when I was a Member of the Senate Judiciary Committee staff. 
And it is good to see him.
    The statistics concerning the 9/11 Fund speak for 
themselves if statistics are any indication of success. Over $7 
billion in taxpayer funds was paid to 5,560 eligible claimants. 
Families of 2,880 victims received almost $6 billion in 
compensation. In addition, 2,680 physical injury victims were 
paid over $1 billion by the 9/11 Fund. As the Chairman pointed 
out, and others, some 97 percent of all eligible families who 
lost a loved one on September 11 voluntarily agreed to enter 
the 9/11 Fund rather than litigate.
    The real irony here that brings me here today to testify is 
that there are almost 11,000 current litigants who, had they 
manifested an injury, a physical injury, before the fund 
expired by statute on December 22, 2003, they would have been 
paid. The only reason they weren't paid under the 9/11 Fund is 
that they didn't manifest any injury from their exposure at the 
World Trade Center site until after the fund was dissolved.
    So we are asked here today to consider: What do we do? Not 
only about the 11,000 individuals who have already brought 
suit, but it is estimated that there may be over the next 5, 10 
years an additional 25,000 or 30,000 people who now have latent 
in-residence illness that may manifest a physical injury in the 
next decade. And again, the only reason they weren't paid by 
the fund is they weren't ``sick'' at the time the fund expired 
by statute.
    Now, in my testimony I have proposed for your consideration 
two alternate ways to move forward in this matter.
    Option one is to simply reenact the September 11 Victim 
Compensation Fund. But there are two major challenges if you 
decide to reenact that fund.
    First, if it is reenacted, I would recommend that it be 
reenacted with a one-line extension. There are some well-
intentioned amendments to that fund that have been circulating. 
I have been asked to comment upon them. I suggest for your 
consideration it would be a mistake in reenacting the fund to 
change the rules and regulations of that fund.
    If you want to reopen the fund to cover 11,000 people or 
more, that is an option. But I suggest that amendments designed 
to change the way the fund worked would be a mistake and would 
probably be the political death knell of any attempt to simply 
reauthorize the fund to deal with these current claims.
    The second challenge with reauthorizing the fund is a 
philosophic dilemma which I raised in my testimony: Why 
reauthorize the 9/11 Fund? There was no 9/11 Fund for Oklahoma 
City. There was no 9/11 Fund for the victims of Katrina. There 
was no 9/11 Fund for the African Embassy bombings. There was 
not even a 9/11 Fund for the first World Trade Center attack in 
1993. Those people aren't eligible under the fund.
    So if you reopen the fund--and there is a strong, basic 
fairness argument for reopening the fund to deal with people 
who are legitimately ill but who weren't around legitimately 
ill at the time that the fund expired--understand that there 
are real philosophic questions as to the wisdom of the Congress 
again singling out for special public compensation certain 
victims of life's misfortune while failing to do so for others.
    I leave that philosophic conundrum to the Committee. But I 
just want everybody to understand that that is a problem that I 
heard repeatedly in administering this fund. ``Mr. Feinberg, my 
son died in Oklahoma City. Where is my check?'' ``My son died 
in the basement of the World Trade Center in 1993. Why aren't I 
eligible?'' That is a serious dilemma.
    I also say, finally, in my testimony that if this Congress 
decides not to extend the 9/11 Fund, I urge all parties 
currently involved, directly and indirectly, in the litigation 
currently pending in Manhattan to come together and settle and 
resolve all of the litigation. There is a captive insurer with 
substantial resources, there are other defendant companies with 
extended insurance that might or might not be available to add 
to that captive amount. But it is certainly an option that I 
lay out in my testimony is vastly preferable than continuing 
this ongoing litigation with all of its uncertainty, with all 
of the roll of the dice that goes with litigation, the time and 
money it will take, without anybody knowing in advance what the 
result will be.
    So if the 9/11 Fund is not to be extended, I urge this 
Committee to do what it can to encourage the private parties to 
sit down and resolve that litigation. It should not be that 
difficult.
    Finally, I want to just thank not only this Committee for 
inviting me to testify. Michael Cardozo is here from the City 
of New York. The City of New York, when I administered the 9/11 
Fund, the City of New York and the Department of Defense 
discussed with me practically every day--Michael Cardozo was on 
the phone with me at least three, four times a week--how can we 
best administer the program to help eligible claimants?
    So I just want to publicly thank the city and the mayor, 
and the Defense Department and the secretary, for all they did 
as well in helping make this 9/11 Fund work.
    And, finally, I just point out, Mr. Chairman, Deputy 
Special Master Camille Biros is here today, who worked so 
closely with me and others in helping to administer the 9/11 
Fund, and I thank her for her service as well.
    Thank you very much.
    [The prepared statement of Mr. Feinberg follows:]
               Prepared Statement of Kenneth R. Feinberg
    Mr. Chairman,
    My name is Kenneth R. Feinberg, and I served as the Special Master 
of the Federal September 11th Victim Compensation Fund of 2001. 
Appointed by the Attorney General of the United States, I was 
responsible for the design, implementation and administration of the 9/
11 Fund. I served in that capacity for 33 months, until the Fund 
expired by statute on December 22, 2003.
    If statistics are any barometer of success, the 9/11 Fund served 
its purposes in providing an efficient and effective administrative no-
fault alternative to tort litigation against alleged domestic 
tortfeasors. Over $7 billion in public taxpayer funds was paid to 5,560 
eligible claimants. Families of 2,880 victims received 
$5,996,261,002.08 in compensation; in addition, 2,680 physical injury 
victims were paid $1,053,154,534.56 by the 9/11 Fund. Some 97% of all 
eligible families who lost a loved one on September 11 voluntarily 
agreed to enter the 9/11 Fund rather than litigate. The average award 
for a death claim was $1,267,880.49; the average award for a physical 
injury claim was $392,968.11. And all of this was accomplished with 9/
11 Fund administrative and overhead costs of less than 3%. I point with 
pride to the fact that this was one of the most efficient, streamlined 
and cost effective government programs in American history.
    It was also totally bipartisan. During the thirty-three months that 
I served as Special Master, I had the complete cooperation of the 
Department of Justice, Office of Management and Budget, the 
Administration, and the Congress. I also received unqualified support 
from various state and local governments, including, particularly, the 
City of New York and the Department of Defense. All government entities 
worked at my side to make sure that the 9/11 Fund was a success and 
that prompt payments were made to all eligible claimants.
    I also worked closely with Federal Judge Alvin Hellerstein, who 
continues to preside over all the federal 9/11 related cases in 
Manhattan. Judge Hellerstein worked tirelessly with me in coordinating 
the litigation and the 9/11 Fund claims in an effort to maximize the 
number of individuals who elected to enter the Fund rather than 
litigate. I am in his debt for his extraordinary work, then and now, in 
coming to the aid of families and victims in distress.
    When the Program expired, in December of 2003, only 94 lawsuits 
were filed by families of deceased victims who decided to litigate 
rather than enter the 9/11 Fund. It is my understanding that almost all 
of these wrongful death lawsuits have since been settled and that there 
are currently only a handful of cases still being litigated in federal 
court in Manhattan.
    The same cannot be said for the 9/11 physical injury victims, 
particularly the responders working after September 11 during rescue 
and clean-up operations at the World Trade Center. As already 
indicated, the 9/11 Fund paid over $1 billion to 2,680 eligible 
physical injury claimants. The vast majority of these physical injury 
victims were responders suffering various respiratory ailments at the 
World Trade Center site in the days, weeks and months following the 
September 11 attacks. Almost all of these responders were compensated 
by the Fund for respiratory ailments rather than traumatic physical 
injuries. The 9/11 Fund eligibility criteria recognized that these 
respiratory ailments were often latent, that physical manifestations of 
injury often did not occur until months or years after first exposure 
to hazardous substances at the World Trade Center. That is why the 9/11 
Fund modified its eligibility criteria to permit the valid filing of 
claims years after the terrorists attacks, when these physical 
manifestations first appeared and became apparent.
    However, as already indicated, the 9/11 Fund expired by statute on 
December 22, 2003, before thousands of responders, and possibly other 
individuals exposed to the toxic air at the World Trade Center site, 
manifested any physical injury. This large group of individuals could 
not be paid from the 9/11 Fund since there was no longer any Fund to 
process and pay their claims. Accordingly, they have exercised the 
alternative option of litigating before Judge Hellerstein. It is 
estimated that 11,000 responders will file suit by the end of this 
year, and that as many as an additional 29,000 individuals may yet 
manifest physical injuries in the next few years. It is anticipated 
that these affected individuals might file suit as well.
    I take no position on the merit of these lawsuits, which involve 
complex issues of liability, legal immunity of governmental entities, 
medical causation, and valuation of individual damage claims. But I do 
believe that these lawsuits should be resolved, that protracted and 
uncertain litigation is in nobody's interest. That is why the 9/11 
Victim Compensation Fund was established by Congress in the first 
place, a recognition that a prompt and efficient alternative to tort 
litigation constituted a better way.
    It is ironic that these very individuals who have filed lawsuits 
seeking compensation are the same type of individuals who received 
payments from the 9/11 Fund; had these thousands of individuals 
manifested a physical injury before the 9/11 Fund expired, they, too, 
would have received compensation without litigating. It is perfectly 
understandable, therefore, why they seek to be treated the same way and 
in the same manner as their brethren. It is my understanding that their 
decision to litigate is directly related to the fact that there is no 
longer a 9/11 Fund to process their physical injury claims.
    What should be done to resolve this problem, and the costly and 
uncertain litigation, and provide prompt compensation to eligible 
claimants physically injured in the aftermath of the September 11 
attacks? I offer two proposals for your consideration, both of them 
controversial and challenging and neither easy to achieve. But I 
believe that either of my proposals are preferable to the existing 
uncertainty and expense associated with the ongoing litigation.
i. renew and extend the federal september 11th victim compensation fund
    One option would be simply to reenact the law establishing the 
Federal September 11th Victim Compensation Fund for an additional 
period of years in order to provide the same public compensation to 
eligible physical injury claimants. This could be justified on grounds 
of basic fairness; Congress would simply declare that the same 
eligibility criteria and compensation should be made available to those 
currently suffering respiratory injuries who were not paid by the 
earlier 9/11 Fund solely because they did not manifest a physical 
injury until after the earlier Fund had expired. Congress could simply 
reopen the 9/11 Fund to encompass all such claims during a ``window'' 
of five years during which time all September 11 related respiratory 
physical injuries could be evaluated and processed. (medical evidence 
would need to be considered by Congress in deciding how long this 
``window'' would be open, permitting the filing of such physical injury 
claims).
    But one should not underestimate the philosophical, political, and 
practical problems associated with reenactment and extension of the 9/
11 Fund.
    First, any attempt to reenact and extend the 9/11 Fund should be 
initiated with the understanding that there would be no changes in the 
rules and regulations governing the original Fund, that the new law 
would simply be a ``one line'' reaffirmation of the law which 
established the original 9/11 Fund. This will not be easy. Various 
interested parties, while championing the reenactment of the 9/11 Fund, 
have called for statutory modifications and additions, e.g., indemnity 
protection for contractors at the World Trade Center site; compensation 
for claimants suffering mental trauma without accompanying physical 
injury; elimination of the collateral offsets rule which was an 
integral part of the original Fund; and subsequent Fund payments for 
eligible claimants who received compensation from the earlier Fund, but 
whose physical condition has subsequently worsened resulting in a 
demand for additional compensation. These and other well intentioned 
requests have all been asserted in connection with any attempt to 
reenact and extend the original 9/11 Fund. But I suggest that any 
attempt to modify the statutory provisions and accompanying regulations 
of the original Fund will lead to the type of controversy and 
disagreement that will undercut political consensus and prevent 
reenactment of the Fund.
    Second, even a ``one line'' extension of the original 9/11 Fund 
poses fundamental philosophical and political questions of fairness. 
Why should Congress be reenacting the 9/11 Fund, providing millions in 
additional public compensation to the physical injury victims of the 
September 11 attacks, while no such Fund exists at all for the victims 
of the Oklahoma City bombing, the victims of the African Embassy 
bombing, the victims of the first World Trade Center attack in 1993 or, 
for that matter, the victims of the unprecedented disaster associated 
with Hurricane Katrina? Why should Congress, which has already enacted 
legislation authorizing over $7 billion in public compensation to the 
families of those who died on September 11, or who were physically 
injured as a result of the attacks, now authorize additional millions 
or even billions in compensation for the remaining September 11 
victims, while failing to do anything similar to the other victims of 
life's misfortunes? It is a fundamental question posed to our elected 
officials in a free democratic society. Why some victims but not 
others? On what basis should such distinctions be made? Are some 
victims more ``worthy'' than others?
    I have maintained that the original 9/11 Fund was the correct 
response by the American people to the unprecedented terrorist attacks 
on September 11, 2001. It was sound public policy, reflecting national 
solidarity towards the victims and expressing a national sense of 
compassion not only to the victims, but to the rest of the world. The 
September 11 statute was an expression of the best in the American 
character. It could be justified, not from the perspective of the 
victims, but, rather, from the perspective of the Nation. But whether 
or not it should be reenacted instead of being considered a unique 
singular response to an unprecedented national tragedy is a fundamental 
question better left to the consideration of Congress.
  ii. settlement of the current and future physical injury litigation
    Even if Congress decides not to extend and reenact the 9/11 Fund, 
this does not mean that the current litigation should continue. 
Fortunately, there is a path open for the comprehensive resolution of 
the litigation, while protecting all defendants against the likelihood 
of similar future litigation.
    As I understand it, Congress created a September 11 related captive 
insurance company for the City of New York and its contractors in an 
amount approximating $1 billion. This money is readily available at the 
present time to resolve the physical injury claims currently pending in 
federal court against the City of New York, the contractors, and other 
defendant entities. Two problems have been raised, however, about the 
availability of these funds and the challenges posed in securing a 
comprehensive settlement of the litigation.
    First, is the obvious question as to whether or not the $1 billion 
is sufficient to resolve all of the pending claims? After all, it is 
noted, the 9/11 Fund paid over $1 billion in resolving just 2,680 
physical injury claims; how can $1 billion be sufficient to resolve 
some 11,000 current similar claims? A fair question. But there are 
answers. Nobody knows how many of the 11,000 pending claims are 
eligible for compensation, what the eligibility criteria might be, or 
what the compensation levels should be for valid physical injuries. In 
addition, how many of the existing plaintiffs are already receiving 
health related reimbursement? What role will collateral offsets play in 
any settlement negotiation? Most importantly, it is not clear to me 
that the $1 billion is the sole source of compensation in the event 
that a comprehensive settlement is sought. What about financial 
contributions over and above the $1 billion from other defendants and 
their insurers? If settlement negotiations do commence, to what extent 
is it possible and likely that all defendants, not just the City of New 
York and the captive insurer, will contribute settlement proceeds in an 
effort to secure ``total peace'' through a comprehensive resolution of 
the dispute? These are important questions that can only be answered in 
the context of meaningful settlement negotiations.
    Second, creative settlement terms and conditions can be negotiated 
which might provide additional financial security to eligible claimants 
over and above immediate compensation. For example, plaintiff attorneys 
involved in the litigation have been meeting with officials of the 
insurance industry to determine whether some type of individual 
insurance policy might be made available to each eligible plaintiff. 
Premiums would be paid from the captive insurance fund; in return, each 
eligible plaintiff would receive an insurance policy to be paid by the 
insurer if and when the individual plaintiff develops a future cancer 
or some other related illness. This approach, and other similar 
creative ideas, might be advanced during settlement negotiations to 
maximize financial protection for plaintiffs while taking advantage of 
relatively limited settlement dollars.
    Third, is the perplexing and legitimate problem of future physical 
manifestations resulting in additional litigation. I agree with the 
City of New York and other defendants that it makes little sense to 
settle all 11,000 current cases only to find that additional lawsuits 
are filed by future plaintiffs who do not manifest a physical injury 
until years after a current settlement. But, again, there are answers 
to this vexing problem which should help ameliorate defendant concerns. 
For example, it might be possible to set aside a portion of all 
available settlement proceeds, to be used if and when additional 
individual physical injury claims are presented for payment. 
Alternatively, it might be possible for all current eligible plaintiffs 
to be paid in installments, with additional funds due and owing 
depending upon the filing rate of future claims; this is exactly what 
Federal Judge Jack B. Weinstein did in reorganizing the Manville Trust 
involving individual asbestos claims. A down payment was made, with 
future payments depending upon the filing rate of subsequent individual 
asbestos claims. Another idea is to provide some type of claims 
registry; an eligible individual exposed to toxic fumes at the World 
Trade Center, but not yet manifesting any physical injury on the date 
of the settlement, might receive a modest payment immediately and 
``register'' for participation in the settlement. This potential future 
plaintiff would immediately receive the available insurance policy in 
addition to the modest down payment; in return, the individual would 
surrender all future rights to litigate.
    These are just some personal concepts which may be supplemented by 
other similar creative settlement terms and conditions. Some may work, 
others may not. What is important is that all interested parties come 
to the negotiation table with the flexibility, creativity, and 
determination to secure a comprehensive settlement. This approach is 
vastly preferable to the ongoing costly and uncertain litigation 
lottery.
                               __________
    Mr. Chairman, I believe that either of the approaches which are the 
focus of my testimony today, are better alternatives than the existing 
litigation currently proceeding in federal court in New York City. 
Whether Congress decides to reenact the Federal September 11th Victim 
Compensation Fund, or whether it encourages all interested parties to 
commence intense negotiations designed to resolve all current and 
future September 11 related physical injury litigation, I am convinced 
that the courtroom is not the best place to resolve these disputes. I 
am prepared to assist the Congress and the parties in any manner 
requested, and to do so pro bono. What is important is that the 
litigation be brought to an end and that eligible claimants receive the 
compensation necessary to move on with their lives as best they can. We 
do not have the power to change history and prevent the September 11 
terrorist attacks. But it is the responsibility of the Congress and the 
American people to try and bring some degree of financial security to 
the victims of September 11. I hope I have offered a blueprint and some 
food for thought to all interested parties.
    I thank you for the opportunity to testify here today.

    Mr. Nadler. Thank you, Mr. Feinberg. And we join with you 
in thanking the deputy special master and the corporation 
counsel.
    We will now recognize the corporation counsel for a 
statement. Mr. Cardozo?

               TESTIMONY OF MICHAEL A. CARDOZO, 
             CORPORATION COUNSEL, CITY OF NEW YORK

    Mr. Cardozo. Thank you, Mr. Chairman, Members of the 
Committee.
    I particularly want to thank the members of the New York 
delegation and their staffs who have long made the question of 
health of the workers and the other people at Ground Zero and 
area residents a prime area of concern.
    Needless to say, the City of New York strongly supports the 
bill that we are discussing today, introduced by Chairman 
Nadler and Representatives Maloney and Fossella, and 
particularly supports what we are talking about today, a 
reopening of the Victims Compensation Fund.
    Six and one-half years ago, 90,000 people from every State 
in this country responded to the attack on this Nation and 
participated in the Ground Zero rescue and recovery effort. 
Today, over 10,000 of those people report that they suffer from 
a wide range of ailments. And, unfortunately, it is anticipated 
that many, many more may claim and report accurately that they 
are also sick as a result of 9/11.
    Now, medical care for these people is being provided by the 
city, the Mount Sinai Consortium and others, and enactment of 
this bill would provide the stable funding required to ensure 
that, as Mayor Bloomberg has committed, everyone who was hurt 
as a result of the 9/11 attacks has access to medical care at 
no cost.
    But in addition to these health problems, many of the 
people are unable to work, and some have other losses. Those 
individuals who rushed to the scene of the devastation without 
a thought for their personal safety, New York City and the 
contractors who provided aid to the city without a written 
contract and without adequate insurance, are now battling 
against one another. Some of those people are sick, and others 
may become sick.
    But New York City and the contractors do not believe that 
they committed a wrong that makes them liable for these 
illnesses. And in any event, the amount of money available in 
the captive insurance company, $1 billion--a congressionally 
authorized insurance company, not a victims' compensation 
fund--that money is not sufficient to resolve the claims of 
those who claim to have become ill let alone future claimants.
    And as a result, we are locked in a litigation. And 
regardless of the result of that litigation, no one is going to 
win. If the city and the contractors prevail, people who became 
sick as a result of 9/11 will receive nothing. And if the 
plaintiffs win, many of the contractors will face very, very 
substantial financial jeopardy, since as I have noted the 
available insurance may not be adequate to cover them.
    Reopening the VCF, therefore, offers the means of resolving 
this terrible dilemma. As you have just heard from my very good 
friend Ken Feinberg, who so ably administered the 9/11 Fund, 
that fund allowed for compensation to injured people without 
any need to establish fault. And it worked just as Congress 
intended.
    But the critical limitations on the VCF that Mr. Feinberg 
just noted have made it unavailable to the more than 10,000 
people who are now suing the city and the contractors. If 
someone became ill as a result of 9/11 exposure even days after 
September 15, 5 days after the attack rather than 4, that 
person was not eligible for a VCF payment. If someone 
manifested an illness weeks after December 2003 when the fund 
statutorily expired, she was not eligible to recover. And if 
someone was cleaning buildings three blocks from Ground Zero, 
that person, too, was ineligible to recover.
    There is no just reason for these people to receive nothing 
while many others who were in essentially the same position, 
but who met the strict eligibility requirements, were 
compensated. Reopening the VCF would deal with these problems.
    Now, I do want to note that if this Committee and the 
Congress reopens the VCF as we urge, there will undoubtedly be 
some, hopefully few, who will nevertheless decide to pursue a 
claim through the courts. If the Congress would provide an 
indemnity to the city and the contractors in the event of such 
claims, it would mean that the $1 billion presently in the 
captive insurance company could be used to help fund the VCF. 
Without it, the captive would have to continue.
    In conclusion, let me just note as I have explained in 
detail in my written statement, the VCF would provide fair, 
fast and certain relief. And providing compensation through the 
VCF will help ensure that if, God forbid, we have another 
attack the response from the contractors, the relevant city and 
the area workers will be as generous and robust as it was after 
9/11.
    Thank you very much.
    [The prepared statement of Mr. Cardozo follows:]
                Prepared Statement of Michael A. Cardozo
    Good morning, Chairman Nadler, Chairwoman Lofgren, ranking members 
Franks and King, and committee members. My name is Michael A. Cardozo 
and I am the Corporation Counsel of the City of New York. I want to 
start off by thanking the members of the New York delegation and their 
staffs who have long made the issue of the health of the responders and 
the area residents to the attack on the World Trade Center a top 
priority. I also want to thank you for holding this hearing on 
compensation for the responders and community members affected by the 
September 11 attack.
    The federal government contributed substantially to New York City's 
economic and physical recovery from the 9/11 attacks. Mayor Bloomberg 
and the people of New York City are grateful for the federal 
government's strong support.
    The federal government has also provided some funding through 
annual appropriations for screening, monitoring and treatment of 
responders and community members and for that we are also grateful. But 
what is needed is long-term, stable funding and a method to address 
compensation for non-health-related concerns. The City of New York 
strongly supports H.R. 3543, the James Zadroga 9/11 Health and 
Compensation Act of 2007 introduced by Chairman Nadler and 
Representatives Carolyn Maloney and Vito Fossella. That bill would 
provide the stable funding required for health issues.
    But I am here today to testify in support of the provision of that 
bill that would re-open the Victim Compensation Fund, thereby providing 
a fast, fair, and efficient way to compensate the Ground Zero workers 
and area residents who report that they were injured as a result of the 
terrorist attack. I am also going to recommend a very important 
addition to the bill: that the City and its contractors be indemnified 
for the claims of any person who does not accept an award from a 
reopened Victim Compensation Fund.
    Approximately six-and-a-half years ago, over ninety thousand people 
took part in the rescue and recovery effort--including workers and 
volunteers who came from all 50 states and are constituents of every 
member of these subcommittees, and indeed of virtually every member of 
the House. In addition, some residents, students and area workers were 
exposed to the dust and fumes.
    While many who were at or near the site and who reportedly fell ill 
have recovered, others continue to report a range of ailments. The most 
commonly reported are respiratory illnesses, such as asthma, and mental 
health conditions, such as Post-Traumatic Stress Disorder (PTSD) and 
depression. We do not yet know the extent to which these conditions 
will remain or will be successfully resolved with treatment.
    We also do not yet know whether late-emerging conditions, like 
cancer and pulmonary fibrosis, will arise in the future; but concern 
about these illnesses developing was raised time and again in 
discussions with responders and residents alike. We know that we must 
build the capacity to detect and respond to any conditions that may 
reveal themselves in the future.
    In addition to the health effects reported by these individuals, 
many report other losses. Some report they are unable to work, some 
have out of pocket medical expenses or other losses. Simply providing 
medical care, as important as that is, would not compensate them for 
these types of losses.
    Some of these people are City employees, particularly members of 
the FDNY and NYPD. Others worked for the contractors the City retained 
in the rescue, recovery and clean-up efforts in this attack upon our 
country. Many of these contractors began work on September 11 itself. 
They came forward out of patriotism and a sense of civic duty without 
having a contract in hand or insurance to cover their liabilities.
    As you are aware, almost 10,000 of those who worked on the rescue, 
recovery and clean-up efforts have sued the City and the contractors 
seeking compensation. Resolving these issues through the courts is not 
in anyone's interest. It is especially not in the nation's interest, if 
we want to assure that the next time--if God forbid there is a next 
time--that people and companies will once again step forward.
    We have a model of how we can proceed in a way that will quickly, 
efficiently and fairly resolve these issues--the Victim Compensation 
Fund of 2001, which was enacted shortly after September 11.
                          the vcf worked well
    In the aftermath of the terrorist attack on the World Trade Center, 
Congress established a Victim Compensation Fund (VCF). When Congress 
created the VCF in 2001, it chose a no-fault compensation program--
those injured were compensated without any need to establish negligence 
or fault. As ably administered by Kenneth Feinberg, the VCF worked 
exactly as Congress had intended. Determinations were made promptly and 
without the delays, litigation risks or rancor that lawsuits inevitably 
engender. Approximately 5,500 claimants opted to accept awards rather 
than to pursue a lawsuit.
                         limitations of the vcf
    Unfortunately, the VCF had some limitations on it that made it 
unavailable to most of the workers at Ground Zero. For example, to be 
eligible for the fund, a claimant had to have been present at Ground 
Zero within four days of the attack. And claims had to be filed by 
December 2003.
    Because of these limitations, there are now many rescue and 
recovery workers, not to mention those in the community, who report 
injuries, but have no option for compensation other than litigation. 
More than 10,000 of those people have sued New York City and/or its 
contractors. Most of them say they did not develop symptoms of their 
injury until long after the filing period for the original VCF passed. 
Also, many of them were not present at Ground Zero within four days of 
the attack and were therefore not eligible for compensation from the 
fund. These individuals, however, if they were hurt as a result of 
their work helping their country recover from a terrorist attack, or 
exposure to dust and fumes from the attack, deserve to be compensated 
by their country for their losses. There is no just reason for them to 
get nothing while many others, who were in essentially the same 
position, but who met the strict eligibility requirements for 
compensation, were compensated.
                      the downsides of litigation
    Regrettably, these individuals have been relegated to the tort 
system to obtain compensation for their injuries. The many downsides of 
litigation are well known.
    First, the outcome is uncertain for all concerned. Each plaintiff, 
in order to prevail, must prove:

        1.  that the City or its contractors are not entitled to the 
        civil defense immunities provided by law, and

        2.  that the City or its contractors were negligent, a 
        difficult standard for them to meet.

Needless to say, we believe we are entitled to civil defense immunities 
and we do not believe that we or our contractors were negligent.
    Second, even today, some six-and-a-half years after the attacks and 
since the first suits were filed, we may still be years away from an 
end to the litigation. To be prepared for trial on plaintiffs' claims, 
which they say total billions of dollars, both sides must engage in 
extensive discovery, which has barely begun. Finally, as with any 
litigation, if the plaintiffs are successful, much of the compensation 
awarded will not go to them, but to their lawyers.
    Even more regrettably, because the plaintiffs must prove that the 
City or its contractors were at fault, the lawsuit necessarily pits the 
City and the patriotic companies, which rushed to the City's aid 
without a written contract or adequate insurance, against the heroic 
workers, who rushed to the scene of the devastation without a thought 
for their personal safety. Holding the City or its contractors liable 
because of their response to an attack on our nation runs the risk that 
the next time there is a similar disaster, cities and contractors will 
hesitate to provide the needed help.
    In the wake of September 11, because of these lawsuits and the 
inability to obtain insurance, a number of the contractors experienced 
business difficulties and continue to do so. The defendants all face 
very substantial potential monetary exposure. To try and alleviate this 
burden, Congress used a portion of the assistance provided to New York 
City after the attacks to create an insurance company for the City and 
the contractors to protect them from the very large potential exposure 
they face in the lawsuits. The $1 billion provided was used, as the 
legislation required, to set up a captive insurance company. This is an 
insurance company set up under New York State law and regulated by the 
insurance commissioner of New York to provide insurance to the City and 
its contractors for liabilities relating to the rescue, recovery, and 
debris-removal efforts following the September 11 attacks. It is not a 
victim compensation fund.
    Some have suggested that all that needs to be done is for this one 
billion dollars of insurance be used to settle the claims brought by 
the 10,000 plaintiffs. But this approach overlooks two critical 
factors.
    First, the plaintiffs' attorneys have said in open court that the 
$1 billion, which would amount to about $60,000 per plaintiff when 
standard plaintiff's legal fees and costs are factored in, will not be 
nearly enough to settle all of the current claims. So, according to the 
plaintiffs' attorneys, the $1 billion held by the captive insurance 
company would be nothing more than a down payment on their claims. The 
contractors would remain exposed to billions of dollars of additional 
liability without the benefit of the insurance that Congress explicitly 
provided for them and the City.
    Second, even if the Captive were able to settle all of the current 
claims for $1 billion that would leave the contractors vulnerable to 
any claim that might be filed in the future. New cases are literally 
being filed every week. And there is concern that there are some 
potential diseases, like cancer, that could arise, but would not 
develop for years. Without the protection of indemnity, which I will 
speak about shortly, settling all of the cases currently pending will 
not solve the problems faced by the City and its contractors.
                 reopening the victim compensation fund
    Fortunately, there is a better way: re-opening the Victim 
Compensation Fund. Compensation from the fund will be prompt and 
certain and there will be no need to assign blame to anyone. In 
addition, there will be no need to marshal the services of hundreds of 
lawyers and experts in a pitched battle between the plaintiffs and the 
City and its contractors. And there will be no need to use the valuable 
resources of the federal judiciary.
                               indemnity
    But simply re-opening the Victim Compensation Fund will not be 
enough. Under the original VCF, individuals could opt not to accept the 
award from the fund and instead pursue a claim through the court 
system. Some did so. Under the Zadroga Act, there would be a similar 
option and some will undoubtedly avail themselves of it. That means 
that the need for the captive insurance company, although diminished, 
will continue. The plaintiffs' lawyers have estimated that their claims 
are worth billions of dollars. And they have asserted that there are 
many claims that have yet to manifest themselves, like cancer, and that 
may not develop until years in the future. Thus, the contractors remain 
exposed to potential liability for their patriotic actions.
    The way to eliminate this highly undesirable outcome is to provide 
for an indemnity for any remaining claims for those who decide not to 
pursue a VCF award. I emphasize that this indemnity would only cover 
the claims of those who do not opt for the VCF. Past experience leads 
us to believe that most will take the award from the reopened VCF. And 
medical costs would be covered under another part of the bill. 
Moreover, once an indemnity is in place, the captive insurance company 
would no longer be needed and the funds it holds would be available to 
fund the reopened VCF.
    We all hope and pray that 9/11 will remain a unique event in this 
nation's history. But if it is not, and if we do not resolve these 
difficult issues fairly, the next time there is a major disaster, we 
are concerned that the response will not be as robust as it was after 
9/11. Workers will be reluctant to pitch in because they won't know if 
they will be taken care of if they are injured on the job. Companies 
will be slow to bring their resources to bear until they are satisfied 
that they are not sacrificing their very existence by helping out. I 
have been told that, because of the lessons the contractors learned 
from 9/11, many engineering firms were reluctant to participate in the 
recovery following Hurricane Katrina.
    The solution I have outlined ought to take care of every party's 
concerns. Re-opening the Victim Compensation Fund will provide fast, 
fair, and certain relief to the workers and area residents. And 
providing indemnity for the companies involved in the response to 9/11 
will give them the peace of mind, and the protection against possible 
financial ruin, they deserve.
    I will be happy to answer any questions you may have.

    Mr. Nadler. Thank you.
    I will now recognize for her statement Ms. Lasowski.

 TESTIMONY OF ANNE-MARIE LASOWSKI, ACTING DIRECTOR, EDUCATION, 
       WORKFORCE, AND INCOME SECURITY ISSUES, GOVERNMENT 
                     ACCOUNTABILITY OFFICE

    Ms. Lasowski. Mr. Chairman, Madam Chairwoman, Ranking 
Members and Members of the Subcommittees, I appreciate the 
invitation to talk to you today about our prior work on Federal 
compensation programs.
    Compensating victims is one of the key issues Congress 
continues to face in light of those injured from the terrorist 
attacks at the World Trade Center. As you well know, the 
Federal Government has played an increasing role in providing 
benefits to individuals injured from exposure to harmful 
materials ever since 1969 when the Black Lung Program was 
established. Since then, Congress has established other such 
programs. Most recently, legislative proposals have been 
introduced regarding the September 11th Victim Compensation 
Fund.
    My remarks are based on work GAO reported in 2005 on four 
Federal compensation programs including Black Lung, the Vaccine 
Injury Compensation Program, the Radiation Exposure 
Compensation Program and the Energy Employees Occupational 
Illness Compensation Program.
    Today I will focus on three key areas: first, the structure 
of these programs; second, the initial cost estimates and the 
actual cost of benefits paid; and, third, claims filed and 
paid. We did not review the September 11th Victim Compensation 
Fund as part of this report.
    First, all four Federal programs we reviewed are structured 
very differently, including who administers the program, how 
they are funded, the benefits provided and who is eligible for 
benefits. Now, to address each of these points.
    In terms of administration, several Federal agencies are 
responsible for administering these four programs including the 
Departments of Labor and Justice along with other agencies.
    In terms of funding, funding of the four programs varies. 
For example, the Black Lung Program is funded by a trust fund 
that is financed by an excise tax on coal and supplemented with 
additional funds. In contrast, the Energy Employees 
Compensation Program and the Radiation Exposure Program are 
fully federally funded.
    In terms of benefits, benefits vary among the four 
programs. Some of the benefits they provide include lump sum 
compensation payments and payments for lost wages, medical and 
rehabilitation costs, and attorney fees.
    In terms of eligibility, the groups who are eligible for 
benefits under the four programs and the proof of eligibility 
required for each program vary widely. It is also worth noting 
that in terms of structure, the Federal Government role has 
increased since the inception of these programs, and all four 
have been expanded eligibility to additional categories of 
claimants, cover more medical conditions, or provide additional 
benefits.
    Second, as the Federal role of these four programs has 
grown and eligibility has expanded, so has cost. In addition to 
the costs associated with expanded eligibility, rising medical 
costs have increased the cost of the programs.
    Actual costs for benefits paid through fiscal year 2004 
significantly exceeded the initial estimates for the Black Lung 
and Radiation Exposure Programs. For example, for the radiation 
program, the cost of benefits paid through fiscal year 2004 
exceeded the initial estimate by about $247 million because the 
original program was expanded to include additional categories 
of claimants.
    Third, regarding claims: the number of claims filed 
generally exceeded initial estimates. For example, at the end 
of fiscal year 2004, actual claims filed for the energy 
employees program exceeded the estimates by over 46,000. 
Furthermore, factors that affect the amount of time it takes 
agencies to finalize claims includes statutory and regulatory 
requirements for determining eligibility, changes in 
eligibility criteria, the agency's level of experience in 
handling claims, and the availability of funding. In addition, 
the approval process and the extent to which programs allow 
appeals can affect the time it takes to process claims.
    In conclusion, the Federal Government has played a growing 
role in providing benefits to individuals injured by exposure 
to harmful materials. As the four programs we reviewed changed 
and grew, so did their actual costs. In addition, the programs 
varied in their ability to handle claims, and in some cases 
took years to compensate claimants.
    In designing a Federal compensation program, it is 
important to consider how the program is to be structured. 
Decisions about how to structure compensation programs are 
critical because they ultimately affect the cost of the 
program, an important issue in light of the Federal deficit, 
and they affect how quickly those injured are compensated.
    This concludes my prepared statement. I would be pleased to 
respond to any questions. Thank you.
    [The prepared statement of Ms. Lasowski follows:]
               Prepared Statement of Anne-Marie Lasowski


























    Mr. Nadler. Thank you.
    Detective Valentin is recognized.

               TESTIMONY OF MICHAEL A. VALENTIN, 
                     FORMER NYPD DETECTIVE

    Mr. Valentin. I would like to thank everyone here for 
inviting me to speak, and I apologize for my informality.
    My name is Michael Valentin. I was born in the Bronx. I am 
43 years old, and I am the son of a New York City police 
officer. My father retired with 24 years of service. I am 
married for 23 years to a wonderful and understanding wife. I 
have three beautiful kids.
    I joined the police department in 1995 and retired with a 
line of duty disability on January 2007--11 years of service to 
the City of New York. I remember the academy like it was 
yesterday. It was the longest academy in NYPD history--11\1/2\ 
months. I remember being able to run five to eight miles per 
day. Now I lose my breath walking up a flight of stairs or 
walking a short distance.
    On September 11, like so many others, I responded to the 
attacks on the World Trade Center. For the next few months I 
worked on or around Ground Zero. I assisted in bucket brigades, 
searching for human remains, transporting supplies, and 
perimeter security. I don't like talking about these things. I 
saw too many bad things, and it brings bad memories to me, and 
I would really like to try to forget them.
    There are so many people like me, sick or dying with 
terminal illnesses, that first responders need the help of this 
Congress. I suffered health problems after 9/11, and on my 40th 
birthday I was told that I possibly had lymphoma. The doctors 
found a four-centimeter mass in my chest. Subsequently, my 
partner also, approximately 2 or 3 months later, was diagnosed 
with B-cell lymphoma; so was my lieutenant, a year before, B-
cell lymphoma, blood cancer. I just find that a little strange 
that that would happen to one unit.
    This was the beginning of something that I did not expect. 
I went through four operations. They had to biopsy the tumor 
twice because it got larger. Then they removed my gall bladder 
and found a lymphatic tumor under it. I have been lucky that 
none of my tumors were cancerous.
    The doctors at Long Island Occupational and Environmental 
Health in Hauppauge, Long Island, along with my family doctor 
diagnosed me with the following: RADS, restricted airways 
disease syndrome; GERD; sinusitis; pleural thickening, which is 
indicative of asbestos exposure; pleurisy, very painful to 
breathe. They attribute my illnesses to the exposure of toxins 
and particulates from Ground Zero. I need to use my nebulizer 
every 4 to 6 hours and to take over 10 medications a day, 
including oral steroids.
    I get all my pulmonary medicine through Long Island 
Occupational, which is part of Mount Sinai, which saves me a 
lot of money. And I, please, hope that you guys keep that 
funded. There are over 1,000 police officers that attend that 
one unit in Long Island, and at least 3,000 first responders 
from all the building trades.
    I am presently more than $160,000 in debt. Due to my 
illnesses, I have recently depleted my 401K plan to catch up 
with my bills. I feel embarrassed talking about these, but I 
know that I am not the only one like this. There are hundreds 
of us like me, in the same situation, and many cases much worse 
than me. I consider myself fortunate to have the help and 
support of my family.
    I would like to talk about the captive insurance fund. It 
is my understanding that Congress gave the City of New York $1 
billion. It is a disgrace that the city is using the money for 
a legal defense fund. I am sure that it was not what the 
Congress intended this money to be used for. I still can't 
understand why Christine LaSala, the CEO of Captive, is paid 
$350,000 a year and $20,000 a year in benefits. That is sad 
when I pay my own insurance, which costs me $250 a month.
    What has she done for the money? So many families are 
struggling with illnesses and deaths of loved ones? When men 
and women who stand in my shoes and cannot pay their bills or 
purchase medication, we need to take care, take control of that 
money. I am tired of hearing about the city law firms making 
hundreds of millions of dollars just to defend against us.
    It is my understanding that the city exhausted their 
appeals, and yet they claim that victory will be theirs on the 
backs of police, firemen, and all the building trades and 
volunteers.
    Does this make any sense? Just like September 11, none of 
it makes sense.
    I am proud to have served the City of New York as a police 
officer. I love my city. I love my country. I love my work. If 
I had a chance to go back, I would go back in a New York 
minute. Thank you. [Applause.]
    [The prepared statement of Mr. Valentin follows:]
               Prepared Statement of Michael A. Valentin
    Chairwoman Lofgren, Chairman Nadler, Ranking Member King, Ranking 
Member Franks and Members of the Committee, good morning. Thank you for 
giving me the opportunity to speak with you today about my experiences, 
and those of so many others of my colleagues, following the World Trade 
Center attacks on September 11, 2001.
    My name is Michael Valentin. I was born in the Bronx, and I am the 
second generation of my family to serve as a New York City Police 
Officer; my father retired in 1988 as an NYPD Detective after 24 years 
of service. Today, at the age of 43, I am retired on medical disability 
from my work as a New York City Police Detective. Although I loved my 
work for the NYPD, I have been forced to retire as a result of my 
exposure to toxic dust and particulate matter while working at the 
World Trade Center site beginning on September 11, 2001 after the 
towers fell, through mid-December of 2001. Although it is difficult for 
me to relive those terrible memories, I am here to speak to you today 
because it is important that this committee fully understands why its 
work here is so important to so many brave and hardworking men and 
women who--without thought for their own safety--ran to their City's 
aid in its darkest days.
    In September of 2001, I was a New York City Police Officer working 
undercover for the Manhattan South Vice Unit. I was subsequently 
promoted to Detective in April of 2002. On the morning of September 
11th I was awakened by my wife, who told me that a plane had hit the 
World Trade Center. I turned on the television in time to see the 
second jet hit the South tower, and, like millions of other Americans, 
I realized immediately that we were under attack. I contacted 
colleagues who lived close by and we drove together to ``Highway 3,'' a 
police unit located by the Grand Central Parkway. There, we met my 
Lieutenant, who kept his department issued vehicle at that location, 
and we all proceeded to the 7th Precinct, located in Manhattan's lower 
east side. As we drove, I remember seeing a convoy of police officers 
and firefighters who were all desperate to get to lower Manhattan, and 
we were no different.
    When we arrived at the 7th Precinct, a young woman was walking past 
the Precinct, covered with what looked like powdered cement. Her face 
was covered with powder except for circles around her eyes--but you 
could see the look of horror in her face. I asked if she needed help, 
and told her to come in so we could help her get cleaned up and check 
her for injuries, but she said no, she just wanted to go home, and that 
she was going to walk over the Williamsburg Bridge. As I entered the 
Precinct, I saw a sobbing firefighter who was being consoled by one of 
his colleagues. Realizing that the world we had known until that 
morning was suddenly in chaos, I was overwhelmed by a feeling of 
helplessness.
    When we arrived at the Trade Center site on the West Side Highway, 
one of my team members was visibly upset and crying uncontrollably 
because he could not get in touch with his father, an NYPD Police 
Chief. Although his father was later found alive and unhurt, he had 
every reason to believe at that point that his father had been caught 
in the collapse and there was no consoling him. We all had tears in our 
eyes as we stood there watching his heartbreaking attempts to contact 
his father. As we know now, many, many families of police officers and 
firefighters--and those of the thousands of innocent civilians who 
worked in the towers--had no happy relief at the end of that day, 
because their husbands, wives, fathers, mothers and children did not 
miraculously turn up safe and sound.
    Later that afternoon when 7 World Trade Center collapsed, I was 
standing only a block away. The scene was surreal--I remember feeling 
like I was watching a disaster movie. Quite simply, I could not believe 
what I was seeing with my own eyes. But if that scene was surreal, it 
did not begin to let me know what waited for me in the days and weeks 
to come. During the next few months, working in and around the World 
Trade Center site, I saw things that were unimaginable--the sights, 
sounds and smells of those months were burned into my memory for the 
rest of my life. Looking back now, my memory of 9/11 seems like one 
long nightmarish blur from beginning to end.
    Throughout the initial attempts at rescue and continuing through 
the recovery and clean up efforts in the months to come, my team and I 
were assigned to many posts in and around the site. We performed 
perimeter security, worked on the bucket brigade, did door-to-door 
searches, recovered human body parts from the surrounding roof tops, 
and transported equipment and supplies.
    In October or November of 2001, I had a physical examination that 
included a chest x-ray--my lungs were clear, and I was healthy, as I 
had always been up until 9/11. Initially, during the time I was still 
working on the World Trade Center site, I began to suffer from chronic 
sinus problems and inflammation, and developed a hacking cough. I 
coughed so hard that I actually developed back spasms. In 2003 and 2004 
I began having intractable lung and sinus infections, and burning 
inside my ears. Throughout 2004, I suffered from night sweats, and in 
September 2004, on my 40th birthday, my doctors told me that they had 
found a four-centimeter mass in my chest between my aorta and trachea, 
and that it was most likely lymphoma. I underwent a surgery called a 
mediastinoscopy, to biopsy the tumor. The mass turned out to be benign, 
but when the surgeon and pathologist examined my lymph nodes, they 
found black particulates in the lymph node. Not long thereafter, I was 
diagnosed with gall bladder problems, and when I underwent surgery to 
remove the gallbladder, my doctors found another lymphatic tumor. I 
underwent a PET scan because of the continuing night sweats, and that 
scan revealed that the lymphatic tumor had grown. A broncoscopy failed 
to drain the tumor, so I underwent another mediastinoscopy. This was 
the fourth operation I had since 9/11. While I was in the hospital, 
they found that my lung function was diminished, and the doctors told 
me to have that checked. Since then, I have been diagnosed with 
reactive airway disease syndrome, gastro-esophogeal reflux disease, 
esophagitis, sinusitis, thickening of the pleural lining of my lungs, 
which is indicative of asbestos exposure, and pleurisy, which is a very 
painful inflammation of the lining of the lungs. I also have severe 
ankle swelling, and severe throat pain 24 hrs a day from the excessive 
stomach acid production. I need to use a nebulizer to inhale medication 
every 4 hours, and oral steroids so that I can breath. I take ten 
medications daily.
    I was lucky to find the Long Island Occupational and Environmental 
Health of Stony brook University Hospital located in Hauppauge, Long 
Island. They treated me for my pulmonary problems and tested me for 
other illnesses. I am fortunate to receive all of my pulmonary 
prescriptions through them. This is vital to my family and me because 
the average cost for these medications over the course of a year is 
about 8 thousand dollars that would have otherwise come out of my 
pocket. This Long Island Office has treated over one thousand New York 
City police officers and over three thousand first responders from 
firefighters to the building trades. It is my understanding that their 
funding is in danger. I hope that you can do something about funding 
for them.
    Because I am unable to work, I had to sell my house in 2005 and 
today, my wife and our children and I live with my parents. I've had to 
stop all of my physical activities, like going salsa dancing with my 
wife, bike rides with my kids, and my wife has taken over coaching my 
girls' basketball team. I often feel as if I am married to my 
nebulizer, and today, as a result of my illnesses, I am more than 
$160,000.00 in debt. I worry about my children's future, and whether I 
will be around to see them grow up. I have no life insurance, and no 
long-term health care insurance. I am horrified at the thought of 
burdening my family with my illnesses.
    Two of my co-workers, Lt. William Serpe and my partner, Detective 
Ernie Vallebouna were diagnosed with B-cell lymphoma, a cancer that is 
usually extremely rare. The odds of two co-workers being diagnosed with 
this disease is infinitesimal. Another colleague, Sergeant Dave 
Moloney, suffers from reactive airway disease and had part of his 
palette removed so he could breath. Like me, they have bleak life 
expectancies and because of our grim prospects, insurance companies 
have labeled us uninsurable
    And we are not the only ones who have suffered. Literally thousands 
of my fellow police officers, firefighters, construction workers and 
laborers are all desperately ill and many have already died, including 
Detective James Zadroga, a HERO who died of 9/11 illnesses with his 
baby daughter by his side--only to have Mayor Bloomberg sully his 
memory with public statements implying that Zadroga had caused his own 
death by abusing his pain medications--pain medications that were kept 
under lock and key by his father to prevent even an accidental 
overdose. Detective Bobby Williamson died of pancreatic cancer leaving 
behind a wife and three beautiful children. Sergeant Mike Ryan, who 
lived only two miles from my home, died of lymphoma also leaving behind 
a wife and children. These men and many more died because they put 
their City and their duty ahead of their own safety. They died waiting 
for their government to do the right thing and provide for their health 
care and for the support of their families.
    Even now, many police officers are being denied the three-quarter 
salary line-of-duty pensions they should have received, and instead are 
only given ordinary disability. Even to get that much, we have to face 
a maze of bureaucracy that is frustrating, demoralizing and needless. 
These brave men and women are not asking for a free lunch--all they 
want is to be taken care of in their time of need. I was fortunate in 
that I received a line of duty pension. Thanks to the intervention of 
Congressman Israel I am also receiving social security disability 
benefits. But here's the point--I should not have needed the help of a 
United States Congressman to get the social security benefits I am 
entitled to as a disabled police officer. Many of my colleagues have 
been denied Social Security disability benefits--and today I am here to 
ask for your assistance on their behalf.
    In 2003, you and your colleagues allocated a billion dollars 
through FEMA to provide the City of New York and its debris removal 
contractors with coverage for claims arising from debris removal 
performed after collapse of World Trade Center (WTC) buildings on 
September 11, 2001. You left it to the City to determine the best 
mechanism to administer those funds, and the City created the World 
Trade Center Captive Insurance Company. Today, we know that the 
Captive, and the city's control of that mechanism, is a national 
disgrace akin to our nation's treatment of Iraq war veterans under 
deplorable conditions at Walter Reed Hospital and its abandonment of 
our Viet Nam veterans. I don't need to remind this committee that 
America has a poor record in assisting our national heroes, leaving 
them to fend for themselves after they've given unselfishly of 
themselves in the service of their country.
    I can't believe that my Congress would have set aside a billion 
dollars to have that money go to pay insurance executives and law firms 
hundreds of millions of dollars to fight the very heroes that money 
should have been helping for these last five years. Surely you did not 
intend that money to be used as a legal defense fund or to pay for 
expensive dinners for the City's lawyers. I find it incredible and 
offensive that my Mayor has the audacity to pay Christine LaSala, CEO 
of the Captive Insurance Company, a salary of 350,000 dollars a year 
and 20,000 dollars in benefits, while the men and women who stand in my 
shoes cannot pay their bills or purchase their medications.
    In the past week, the Court of Appeals for the Second Circuit 
affirmed a decision of the District Court holding that the City of New 
York and its Contractors are not immune from litigation for their 
failure to provide adequate safety protections such as respirators and 
hazmat suits to those of us who worked in hazardous conditions at the 
World Trade Center Site. What is the City's reaction to that decision? 
In the New York Times on Thursday, March 27, one of the City's Senior 
attorneys was quoted as saying that this decision only means that 
``victory is going to take longer to achieve, and we're going to have 
to get into the underlying facts of the case.'' Victory? Let's think 
about that for a minute. The victory that attorney was talking about is 
a victory over the men and women who put their lives in mortal danger 
to protect and serve this Country in its darkest time. Men and women 
who are mortally sick and dying and forsaken by their country.
    We had hoped that the Second Circuit's decision would spur the City 
and the Captive to sit down and resolve our claims for medical care and 
lost income. Instead, the City's lead defense attorney Jim Tyrrell told 
the New York Law Journal that ``the `net result' of [the courts 
decision] . . . will be the extension of `this litigation for years.' 
'' Congressmen, with all do respect, I don't have years to wait. My 
colleagues and the other men and women who are sick and out of work 
because of their time at Ground Zero don't have years to wait. What 
they do have is mounting frustration, worsening illness and disability, 
bills and mortgages they can't pay and medications they can't afford. 
They have children who may grow up without a parent, and spouses who 
will be left young and widowed. We don't have the luxury of time to 
wait while our Mayor and his Captive Insurance Company pay their 
lawyers to fight us in court, and their claims administrators to do 
nothing but generate bills. We need you to take control of that money 
and see that it reaches the people you intended to help back in 2003.
    I am proud to have been a New York City police officer. 
Notwithstanding my comments here about the City's control of the 
Captive Insurance Company, I love my city and I loved my work, and if 
my health would permit me, I would go back to that work in a New York 
minute. I still believe that New York is the greatest city in the world 
and I love it dearly. Don't let the City and its lawyers discount my 
testimony here today by telling you that my colleagues and I are just 
disgruntled employees, because the NYPD treated me with decency and 
respect through my illnesses. It was, and it is, an honor to be a New 
York City police officer. We are only asking that our City and our 
country help us now in our own hour of need.
    Thank you for letting me speak with you today. On behalf of all of 
my colleagues--not just the police officers and the firefighters, but 
also the construction and building trades people and the volunteers, we 
appreciate all of your dedicated work and your continuing efforts on 
our behalf.

    Mr. Nadler. Thank you very much.
    Mr. Frank is recognized.

   TESTIMONY OF THEODORE H. FRANK, RESIDENT FELLOW, AMERICAN 
ENTERPRISE INSTITUTE, DIRECTOR AEI LEGAL CENTER FOR THE PUBLIC 
                            INTEREST

    Mr. Frank. Thank you, Mr. Chairman and Ms. Chairwoman and 
Members of the Subcommittee for your kind invitation to testify 
today.
    The September 11 Victim Compensation Fund was a short-term 
administrative program to compensate victims of the terrorist 
attacks while limiting litigation against innocent third 
parties who had also been victimized. Unfortunately, H.R. 3543 
fails to protect innocent third parties from unfair litigation, 
does not have the advantages that made the fund successful, and 
magnifies the disadvantages and fairness problems of the 
original fund.
    The original fund used a non-adversarial structure to 
compensate a limited set of claimants in time and place with 
relatively uncontroversial claims. This structure will not work 
for a longer-term compensation scheme involving a substantially 
larger set of potential claimants with injuries with much more 
ambiguous causation. For example, as the New York Times notes, 
there is no scientific evidence that exposure to World Trade 
Center dust leads to lymphomas or cancer.
    I discuss problems in much more detail in my written 
testimony, but let me touch on a few of them briefly. First, 
the largest problem is that reopening the fund creates a 
compensation program that is especially susceptible to error 
and fraud because the fund was not designed to resolve 
causation issues. A passenger on the September 11 planes or 
someone killed or injured in the Towers or Pentagon was plainly 
entitled to compensation from the fund. Thus, determining 
eligibility for compensation was largely a ministerial 
function.
    The fund structure was not designed to vet recipients' 
claims. But it is not the case that anyone with a pulmonary or 
cancerous or psychological ailment in the greater New York area 
is an appropriate claimant. The fund is required by law to 
adjudicate claims within 120 days but has no provisions for 
independent medical review or testing of claims. This creates 
what is known as a Field of Dreams problem: ``If you build it, 
they will come.''
    If Congress reopens a system where geographic proximity and 
a diagnosis are the only prerequisites for a large government 
check and an attorney's contingent fee, attorneys will have 
every incentive to manufacture a fake diagnosis. The law firm 
behind many of the thousands of pending 9/11 lawsuits have 
plaintiffs eligible for reopened fund compensation has 
previously used questionable medical diagnoses to obtain huge 
sums in the fen-phen litigation.
    If the bill is passed in the current form, trial lawyers 
will steal billions from taxpayers.
    Second, expanding the program to include psychological 
injury will result in double recovery for thousands of 
claimants. Claimants who have already recovered millions, 
including hundreds of thousands in non-economic damages, will 
be permitted to double-dip and resubmit new claims for 
psychological injury. And the legislation is so broad that 
taxpayers could end up paying for psychotherapy for Woody Allen 
and half of Manhattan.
    Third, 3543 fails to protect innocent contractors who are 
faced with tremendous liabilities simply for volunteering to 
help New York City in its hour of need, often without pay. 
Calls for government indemnification are not a solution because 
they do nothing to stop the chilling effects on future 
volunteers.
    Prospective immunity is needed. And indemnification is 
fraught with peril for abuse of the government fisc if 
statutory language is not finely crafted to permit the 
government to protect its interest in the underlying litigation 
and if damages caps are not included.
    Fourth, 3543 fails to provide adequate protection to 
taxpayers that taxpayer money will be spent on compensation of 
victims rather than on attorneys' fees.
    Fifth, 3543 compounds problems of unfairness in the 
original fund, as Special Master Feinberg noted, where victims 
of one terrorist attack received millions and those of another 
received nothing. The bill calls for a government bureaucrat to 
define the ``New York City disaster area,'' and those who lived 
or worked south of that cross street will be entitled to 
potentially millions of dollars in compensation and benefits, 
while those living and working to the north will do without. 
And if you think school boards get lobbied hard over the 
boundary lines between high schools, imagine what pressure the 
WTC program administration will face when she decides which 
Manhattan cross street is the dividing line for millions of 
dollars of government largesse.
    There are many, many more issues that outstrip the time I 
have, and I welcome your questions.
    [The prepared statement of Mr. Frank follows:]
                Prepared Statement of Theodore H. Frank




























    Mr. Nadler. Thank you for your statement.
    Dr. Melius?

   TESTIMONY OF JAMES MELIUS, ADMINISTRATOR, NEW YORK STATE 
             LABORER'S HEALTH AND SAFETY TRUST FUND

    Dr. Melius. Thank you.
    Honorable Chairmen Conyers, Nadler and Lofgren, other 
Members of the Committee, I greatly appreciate the opportunity 
to appear before you this morning.
    I think, as we know, in the period after September 11, over 
50,000 emergency responders and recovery workers were exposed 
during the initial rescue work at the site and in the 
subsequent cleanup and recovery activities. Tens of thousands 
of people living, working and going to school in the areas 
around the World Trade Center area were also exposed either in 
the immediate collapse of the buildings or in the subsequent 
weeks and months in their apartments, workplaces or schools.
    These people were exposed to a myriad of toxic materials 
including pulverized concrete, asbestos, lead and many highly 
toxic chemicals. I think as we all know, the failure of the 
Federal Government to properly inform and protect these people 
from these exposures added substantially to their subsequent 
health risks. Due to the incomplete monitoring of these 
exposures at the time, we will never know the full range of 
their exposures and still cannot predict with certainty all of 
the subsequent adverse health effects.
    However, we do know that these exposures and the subsequent 
accompanying psychological trauma have caused adverse health 
effects in thousands of those exposed. These are not rare 
isolated medical conditions. The proportions of those exposed 
who have become ill is quite alarming. In a recent Mount Sinai 
Medical Center study of responders and recovery workers, lower 
respiratory disease symptoms were found in 46 percent of those 
evaluated, upper respiratory problems in 64 percent, and mental 
health problems in approximately one-third. Similar studies 
have been found in other peer-reviewed studies of the exposed 
population.
    As we all know, the federally funded medical programs for 
responders and recovery workers sometime after September 11 
have provided excellent medical care for thousands of these 
workers. Though it is difficult to document, I believe that 
these programs have prevented disability in many thousands of 
the people who have participated in them.
    However, the continuation of these medical programs alone 
is not sufficient to address all the harm being suffered by 
these individuals. Many of these rescue and recovery workers 
are no longer able to work because of the progressive 
disability caused by their health conditions.
    In my testimony, I offered two sources of information I 
compiled on the numbers of those currently disabled that are 
being treated in the medical program. Based on these, I can 
conservatively estimate at the present time that at least 2,000 
World Trade Center rescue and recovery workers became disabled 
due to World Trade Center related illnesses, are no longer able 
to work, and are not currently covered by any compensation 
program. Many hundreds more are getting some assistance from 
Workers' Compensation, Social Security, Disability and other 
programs, which do not adequately cover their income loss and 
other expenses due to their illness.
    In summary, I think the economic needs of several thousand 
people who willingly risked their health to respond to this 
terrorist attack are not currently being addressed. I think as 
we have heard from Mr. Valentin today, and I think there are 
many other people who have testified at other hearings, many 
other people I have talked to, the human suffering, including 
the suffering in their families, is quite devastating to the 
individuals involved. And I think the individuals like Mr. 
Valentin speak much more clearly than I can about the problems 
being experienced by these people.
    But where do they look to for assistance?
    One possible source of assistance for the people with World 
Trade Center related conditions is workers' compensation 
insurance. It is supposed to be a no-fault system to provide 
workers who are injured or become ill due to job-related 
factors with compensation for their wage loss as well as full 
coverage for the medical costs associated with the monitoring 
and treatment of their medical conditions.
    For many reasons I have outlined in my testimony, including 
the long delays, the difficulty dealing with complex medical 
cases, and unresolved legal issues related to the compensation 
legislation, the multiple workers' compensation systems 
currently covering World Trade Center and recovery workers are 
unable to provide timely and appropriate medical benefits 
compensation for economic losses for the World Trade Center 
responders.
    Although some steps have been taken in New York to try to 
address some of these problems, I think it is unlikely that 
this can be accomplished in time to provide significant timely 
relief for World Trade Center rescue and recovery workers 
through the current compensation systems.
    Another possible source of support is the World Trade 
Center Captive Insurance Company. In March of 2003 when the 
formation of that was being planned and was being announced, 
Mayor Bloomberg stated in his press release this legislation is 
necessary for the city to expedite the payment of claims 
related to this World Trade Center effort. For many people, 
including myself, we were hopeful that this would become the 
source that would address both the medical problems as well as 
the disability and economic losses being suffered by the many 
World Trade Center workers.
    Unfortunately, as we know, almost 4 years after its 
formation the fund has paid out less than five actual claims--
four or five, I am not sure of the exact number. Meanwhile, 
thousands of rescue and recovery workers and community 
residents who have become ill have had to struggle without any 
compensation and without any assistance until Federal funding 
recently became available to at least help cover the medical 
costs involved.
    I am not an expert on insurance and cannot speak directly 
to legal issues involved; however, it seems obvious to me that 
the $1 billion could have been better used to help these 
thousands of men and women with their medical bills and 
compensation for their inability to continue to work rather 
than being invested in a long-term legal battle in order to 
protect the city and its contractors.
    While I understand that the City of New York and the 
construction contractors have very legitimate concerns about 
their financial risks incurred in responding and recovering 
from the terrorist incident, denying medical benefits and 
compensation for the many rescue and recovery workers involved 
in this effort is a tragically misguided policy. Moreover, as 
Mr. Cardozo has stated, the Captive as currently funded does 
not appear to be adequate to cover all the medical and economic 
losses for the rescue and recovery workers and community 
residents. We certainly need, I think, a more comprehensive 
solution to this issue.
    As I have stated before, I believe that H.R. 3543, 
introduced by Representatives Maloney, Nadler and Fossella, 
provides a comprehensive legislative approach to accomplish 
this. In other hearings I have addressed some of the medical 
program issues related to this legislation. I would just like 
to offer two recommendations relative to the compensation 
portion of that legislation.
    First, I believe that reopening the Victims Compensation 
Fund is the best mechanism for addressing economic losses. I 
believe that it would provide the flexibility to properly 
handle claims from workers and community residents with varying 
circumstances and with varying degrees of economic loss.
    I think it is far preferable to relying on the many other 
compensation systems currently in place that are delaying 
compensation and lead to gross inequities among the ill 
claimants due to the specific processes used in each of those 
systems.
    I also believe that the VCF should develop a common 
mechanism for ensuring that all of the claims are for 
legitimate World Trade Center-related illnesses. For the most 
part, this could be based on the designation on mechanisms for 
World Trade Center medical program currently included in the 
medical section of the legislation.
    At the same time, I believe VCF could then provide an 
appropriate and equitable way of taking into account individual 
economic circumstances similar to the approach taken when the 
VCF was administering the earlier 9/11 claims.
    Secondly, I think the long-term medical monitoring and 
treatment for World Trade Center-related medical problems 
should be handled separately, as outlined in the currently 
legislation.
    I think that program is best handled in conjunction with 
the current centers of excellence, and that this approach would 
also reduce the problem in trying to take into the account the 
potential costs of future medical care for conditions that 
might later develop as part of the current economic 
compensation.
    We have already gone over 6 years after 9/11, and I think 
it is very important for all the people who volunteered and 
came to the assistance of our country at that time, and did 
that without hesitation, to now be properly cared for. These 
are unique circumstances, and I would hope that we could 
provide a quick and equitable solution for the economic losses 
and medical problems that these people will face in the future 
and that will help address what hopefully will not ever occur 
again which is another terrorist incident like this. Thank you.
    [The prepared statement of Dr. Melius follows:]
                   Prepared Statement of James Melius
    Honorable Chairmen Nadler and Lofgren and other members of the 
Committee. I greatly appreciate the opportunity to appear before you 
this morning.
    I am James Melius, an occupational health physician and 
epidemiologist, who currently works as Administrator for the New York 
State Laborers' Health and Safety Trust Fund, a labor-management 
organization focusing on health and safety issues for union 
construction laborers in New York State. During my career, I spent over 
seven years working for the National Institute for Occupational Safety 
and Health (NIOSH) where I directed groups conducting epidemiological 
and medical studies. After that, I worked for several years for the New 
York State Department of Health where, among other duties, I directed 
the development of a network of occupational health clinics around the 
state. I currently serve on the federal Advisory Board on Radiation and 
Worker Health which oversees part of the federal compensation program 
for former Department of Energy nuclear weapons production workers.
    I have been involved in health issues for World Trade Center 
responders since shortly after September 11th. Over 3,000 of our union 
members were involved in response and clean-up activities at the site. 
One of my staff spent nearly every day at the site for the first few 
months helping to coordinate health and safety issues for our members 
who were working there. When the initial concerns were raised about 
potential health problems among responders at the site, I became 
involved in ensuring that our members participated in the various 
medical and mental health services that were being offered. For the 
past four years, I have served as the chair of the Steering Committee 
for the World Trade Center Medical Monitoring and Treatment Program. 
This committee includes representatives of responder groups and the 
participating medical programs (including the NYC Fire Department) who 
meet monthly to oversee the program and to ensure that the program is 
providing the necessary services to the many people in need of medical 
follow-up and treatment. I also serve as co-chair of the Labor Advisory 
Committee for the WTC Registry operated by the New York City Department 
of Health and as a member of the Community Advisory Committee for the 
WTC Environmental Health Center at Bellevue Hospital. These activities 
provide me with a good overview of the benefits of the current programs 
and the difficulties encountered by responders seeking to address their 
medical problems and other needs.
                  health consequences of september 11
    In the period after September 11, over 50,000 emergency responders 
and recovery workers were exposed during the initial rescue work at the 
site and in the subsequent clean-up and recovery activities. Tens of 
thousands of people living, working, and going to school in the areas 
around the WTC were exposed immediately after the WTC buildings 
collapsed or in subsequent weeks or months in their apartments, work 
places, or schools. These responders, recovery workers, and other 
people were exposed to a myriad of toxic materials including pulverized 
concrete, asbestos, lead, and many highly toxic chemicals. As we know, 
the failure of the government to properly inform and protect these 
people from these exposures added substantially to their health risks.
    Due to the incomplete monitoring of these exposures at the time, we 
will never know the full range of their exposures and still cannot 
predict with certainty all of the subsequent adverse health effects 
from these exposures. However, we do know that these exposures and the 
accompanying psychological trauma have caused adverse health effects in 
thousands of those exposed. These adverse health effects include lower 
respiratory disease (including asthma or asthma like conditions, 
pulmonary fibrosis, and significant loss of lung function); upper 
respiratory conditions including chronic sinusitis; gastrointestinal 
problems most commonly reflux disorder or GERD; and mental health 
problems including Post Traumatic Stress Disorder and depression. These 
medical problems have been documented in peer reviewed scientific 
publications of research studies done by several independent research 
groups. Similar health problems have been documented in fire fighters, 
other responders and recovery workers, and WTC community residents, 
students, and workers (to the extent that this latter group has been 
evaluated).
    There is no doubt that these disorders and others not listed above 
are occurring at a much higher rate than would be expected in this 
population and that these health problems are due to the toxic 
exposures and psychological trauma related to 9/11.
    These are not rare isolated medical conditions found in a small 
number of those exposed. The proportion of those exposed who have 
become ill is quite alarming. In a recent Mount Sinai Medical Center 
study of responders and recovery workers, lower respiratory disease was 
found in 46% of those evaluated; upper respiratory health problems in 
64%; and mental health problems in 32%. Similar results have been found 
in other studies of the exposed populations. New patients are 
continuing to come to the monitoring and treatment programs with these 
illnesses that were not evident before this time. Although many of 
these conditions do improve with medical treatment, the full scope and 
the ultimate medical outcome for the people currently being treated or 
who will become ill in the future is uncertain. Thousands are no longer 
able to work, and thousands more require lifelong medical monitoring 
and treatment.
    As you may know, the federally funded medical programs for 
responders and recovery workers some time after September 11 have 
provided excellent medical care for thousands of these works. 
Initially, only medical monitoring was available. However, two years 
ago, Congress also provided funding for medical treatment programs for 
those with WTC-related medical conditions. In December of last year, 
Congress also provided money for medical monitoring and treatment for 
community residents, workers, and students exposed after 9/11. These 
programs have been an immense help to those who have become ill from 
their exposures. Although it is difficult to document, I believe that 
without these program thousands more of these people would have 
developed much more serious health problems, and many more would have 
become permanently disabled.
                why medical programs are not sufficient
    However, the continuation of these medical programs alone is not 
sufficient to address all of the harm being suffered by these 
individuals. Many of these rescue and recovery workers are no longer 
able to work because of the progressive disability caused by their 
health conditions. We do not have an exact count of those who have 
become disabled, but I can provide some estimates. In the fire 
department, over 800 fire fighters have received disability pensions 
because of health problems related to their 9/11 exposures. These are 
people whose illness is so severe that they are no longer capable of 
working as fire fighters. Over the past year, nearly 1800 hundred 
patients in the WTC treatment program at Mount Sinai Medical Center 
have been evaluated by their social work unit. Of these, 870 are no 
longer able to work because of illness. Of these 870 patients who are 
out of work, less than 40% are receiving any financial assistance from 
Workers' Compensation, Disability Retirement, or Social Security 
Disability. In other words, over 500 of these ill police officers, 
construction workers, utility repair workers, and others are now 
without personal income and having to rely on their spouses, families, 
or other financial resources. Most have lost all health insurance 
coverage for their families, and many can no longer afford their 
mortgage payments and have lost their homes. These are, for the most 
part, blue collar workers without significant financial resources to 
fall back on.
    Another source of information on the number of disabled 9/11 rescue 
and recovery workers is the the NYC 9/11 Unmet Needs Roundtable, 
administered by New York Disaster Interfaith Services (NYDIS). Since 
2002, the NYC 9/11 Unmet Needs Roundtable has brought together donor 
agencies and community-based case management agencies to financially 
assist persons impacted by 9/11, provide emergency assistance, and 
facilitate victims' long-term recovery and return to self-sufficiency 
when all other means of assistance are no longer available. In 2007, 
these organizations provided assistance to over 2300 ill 9/11 
responders who are disabled and suffering economic hardship due to 
their 9/11-related illnesses. Of those 2300 ill 9/11 responders, 
approximately two thirds are currently unemployed due to their 
illnesses. The Roundtable used to be one of several charitable and 
governmental financial assistance programs available to 9/11-impacted 
persons, but is currently the ONLY program in existence that offers 
financial assistance to ill 9/11 responders and other 9/11 health-
impacted persons while they await the receipt of long-term benefits, 
such as Workers' Compensation, Social Security, and union disability 
pensions.
    Projecting these numbers to all of the people in the Monitoring and 
Treatment Program, I can conservatively estimate that, at the present 
time, there are over 2000 WTC rescue and recovery workers who have 
become disabled due to WTC-related illnesses, who are no longer able to 
work, and who are not currently covered by any compensation program. 
Many hundreds more are getting some assistance from workers' 
compensation, Social Security Disability, or other programs, most of 
which do not adequately replace the incomes that these disabled workers 
received before they became ill. The economic needs of these many 
people who willingly risked their health to respond to this terrorist 
attack are not being addressed.
    These statistics alone do not convey the economic hardship of the 
many individuals disabled by their WTC exposures. We will hear from one 
individual at this hearing and have heard from many others at other 9/
11 related hearings. They have testified about about losing their 
homes, being unable to provide any assistance for their children to 
attend college, and relying on food pantries and community charities to 
feed their families while enduring a seemingly endless process to 
obtain compensation only to discover that this compensation is far less 
than what they were previously earning. The individual impact of this 
frustration on their lives and on their ability to care for their 
family cannot be conveyed in these statistics.
                         workers' compensation
    One source of assistance for people with WTC-related conditions is 
workers' compensation insurance. Workers' compensation is supposed to 
be a no fault insurance system to provide workers who are injured or 
become ill due to job-related factors with compensation for their wage 
loss as well as full coverage for the medical costs associated with the 
monitoring and treatment of their medical condition.
    The WTC program participants are covered by a variety of state, 
federal, and local programs with different eligibility requirements, 
benefits, and other provisions. Most private and city workers are 
covered under the New York State Workers' Compensation system. New York 
City is self insured while most of the private employers obtain 
coverage through an outside insurance company. Uniformed services 
workers are, for the most part, not covered by the New York State 
Workers' Compensation system but rather have a line of duty disability 
retirement system managed by New York City. A fire fighter, police 
officer, or other uniformed worker who can no longer perform their 
duties because of an injury or illness incurred while on duty can apply 
for a disability retirement which allows them to leave with significant 
retirement benefits. However, should a work-related illness first 
become apparent after retirement, no additional benefits (including 
medical care) are provided, and the medical benefits for even a 
recognized line of duty medical problem end when the person retires. 
Federal workers are covered under the compensation program for federal 
workers. Coverage for workers who came from out of state will depend on 
their employment arrangements with their private employer or agency. 
However, volunteers from New York or from out of state are all covered 
under a special program established by the New York Workers 
Compensation Board after 9/11 and supported by federal funding.
    A major difficulty with these compensation systems is the long 
delays in obtaining coverage. For example, the NYS Workers' 
Compensation system is very bureaucratic. The insurer may challenge 
every step of the compensation process including even diagnostic 
medical testing. This challenge usually requires a hearing before a 
Workers' Compensation Board (WCB) administrative judge to evaluate the 
case, and this hearing may often be delayed for months. Even once the 
case is established, the insurer can still challenge treatments 
recommended for that individual even for a medication that the 
individual may have been taking for many months for a chronic work-
related condition. Thus, it may be many years before the case of a 
person with a WTC-related condition is fully recognized and adjudicated 
by the compensation system. The average time for just having a claim 
established for a WTC-related condition at the Mount Sinai clinic is 
over three years, and it may be many more months before reimbursement 
for medical costs or lost income is allowed. Meanwhile, the claimant 
may not be receiving any medical or compensation benefits or may have 
had their benefits disrupted many times. These bureaucratic systems are 
designed to address acute injuries. They are not flexible enough to 
provide the comprehensive medical support and income replacement needed 
for a WTC responder who has developed several medical problems 
requiring frequent medical visits and continual modifications in their 
treatment.
    There are many other difficulties in getting these claims accepted. 
Their medical circumstances are often quite complicated. Many are being 
treated for multiple WTC-related medical problems. Legal issues about 
causality, statutes of limitations for filing claims, and determination 
of disability are often raised in these cases and may take many months 
to adjudicate. Claimants are often confronted with a choice to accept 
lump sum payments or a limited weekly payment. The lump sum payment is 
often very appealing because of their backlog of unpaid bills and debt 
incurred while waiting for their claim to be processed. However, 
accepting the lump sum payment, usually means giving up their options 
to reopen their claim to cover future medical costs should their 
condition worsen.
    In order to alleviate some of the problems for WTC claimants, two 
years ago New York State implemented some new programs that were 
deigned to improve coverage for WTC responders. These included the 
availability of some medical coverage for people waiting for their 
claim to be adjudicated and an extension of the time to file a claim. 
New York is also in the midst of implementing major reforms in the 
overall workers' compensation system that may also assist with WTC 
claims. However, all of these new programs will take some time to 
implement, and the changes will not alleviate the basic inadequacies of 
the system to provide support for WTC responders with significant 
medical problems.
    In summary, the multiple workers' compensation systems covering WTC 
rescue and recovery workers are unable to provide timely and 
appropriate medical benefits and compensation for economic losses for 
the WTC providers. Although some steps are being taken to address some 
of the problems with these programs, it is unlikely that this can be 
accomplished in time to provide significant relief for WTC rescue and 
recovery workers.
                           captive insurance
    Another possible source of support for workers and community 
residents who have become ill as a result of their WTC-related 
exposures is the special captive insurance fund set up after the 
September 11. The World Trade Center Captive Insurance Company was 
formed in July of 2004 based on earlier Congressional legislation that 
allowed FEMA to provide up to $1 billion in coverage for the City and 
its contractors for claims arising from debris removal after the 
collapse of the World Trade Center buildings. In March of 2003, Mayor 
Bloomberg and Governor Pataki announced the introduction of state 
legislation to allow the implementation of the captive insurance 
arrangement. Mayor Bloomberg stated in his press release, ``This 
legislation is necessary for the City to expedite the payment of claims 
relating to this effort.''
    For many people including myself who were becoming increasingly 
concerned about the growing number of responders and recovery workers 
who were becoming ill from their work at the WTC, it appeared as if 
this insurance entity would become the financial mechanism to assist 
these ill workers. However, as subsequently became very clear, the WTC 
Captive Insurance Company had little interest in ``expediting claims 
payment''. In fact, while spending millions of dollars in legal and 
consulting fees, the company has focused all of its efforts on 
attempting to fight the many thousands of WTC medical claims made 
against it. Almost four years after its formation, the fund has paid 
out less than five actual claims, all reportedly for orthopedic 
injuries related to 9/11 work. Meanwhile, thousands of WTC rescue and 
recovery workers and community residents who have become ill as a 
result of their exposures after September 11 have had to struggle to 
pay the medical bills related to these illnesses until federal funding 
recently became available to defray these costs. Hundreds more who can 
no longer work because of their WTC-related illnesses have struggled to 
support their families while trying to obtain workers' compensation or 
other disability benefits.
    I am not an expert on insurance and cannot speak directly to the 
legal issues involved. However, it seems obvious to me that the $1 
billion could have been better used to help these thousands of men and 
women with medical bills and compensation for their inability to 
continue to work rather than invested in a long term legal battle in 
order to protect the City and its contractors. That was the intent of 
the federal government providing this funding as Mayor Bloomberg 
apparently understood it in 2003. I believe that the current policy of 
the Captive to use all of its resources to challenge and fight claims 
is misguided and blatantly unfair to the many men and women who put 
their lives and health as risk to respond to the terrorist attack on 
our country on 9/11 and are now in need of assistance. While I 
understand that the City of New York and the construction contractors 
have legitimate concerns about their financial risks incurred in 
responding and recovering from a terrorist incident, denying (or at 
best delaying) medical benefits and compensation for the many rescue 
and recovery workers involved in this effort is a tragically misguided 
policy.
    Moreover, the Captive as currently funded does not appear to be 
adequate to cover all of the medical and economic losses for the rescue 
and recovery workers and community residents with WTC-related 
illnesses. Medical monitoring and treatment costs for the rescue and 
recovery workers alone are estimated to cost over $200 million per 
year. A more comprehensive solution is needed.
                         what needs to be done
    I believe that we must develop a comprehensive solution to address 
the medical care and economic losses of the thousands of rescue and 
recovery workers, community residents, and students whose health has 
been harmed by exposures related to 9/11. HR 3543 introduced by 
Representatives Maloney, Nadler and Fossella provides a comprehensive 
legislative approach to accomplish that. In other hearing, I have 
addressed the medical program outlined in that legislation. I will 
focus my recommendations on the aspects of the legislation related to 
compensation for economic losses. I would like to make several 
recommendations.
    First, reopening the Victims Compensation Fund (VCF) is the best 
mechanism for addressing economic losses. I believe that the VCF would 
provide the flexibility to properly handle claims from workers and 
community residents with varying circumstances and degrees of economic 
loss. Relying on the many other compensation systems for disabled 
workers and community residents for economic compensation would lead to 
continued long delays and gross inequities among the ill claimants due 
to the specific processes used for compensation in each of these 
systems. I also believe that the VCF should develop a common mechanism 
for ensuring that all of the claims were for legitimate WTC-related 
illnesses. For the most part, this could be based on the designations 
and mechanisms for designating World Trade Center-related conditions 
included in the medical program sections of the legislation. At the 
same time, the VCF would provide an appropriate and equitable way of 
taking into account individual economic circumstances (including 
payments from other sources of compensation) similar to the approach 
taken when the VCF was administering the earlier 9/11 claims.
    Secondly, the long term medical monitoring and treatment for World 
Trade Center related medical problems should be handled separately as 
outlined in the current legislation. I believe that medical care for 
these complex medical conditions would best be delivered in conjunction 
with the current Centers of Excellence. This approach would also reduce 
the problem of trying to take into account the potential costs of 
medical care for conditions that might develop in the future as part of 
the current economic compensation.
    Thank you again for allowing me to testify. I would be glad to 
answer any questions.

    Mr. Nadler. Thank you Dr. Melius. [Applause.]
    We will now have a round of questioning. I will recognize 
myself to begin the questioning for 5 minutes.
    The first question is to Mr. Cardozo: While you have 
stressed that because the Captive is not a victims' 
compensation fund the city must continue to litigate against 
virtually all claims, the mayor, back in 2003 stated that the 
creation of the Captive was necessary ``for the city to 
expedite the payment of claims relating to this effort.''
    You can see why some of us in Congress are now surprised 
that 5 years later we have made no progress toward this goal 
articulated by the mayor. In the same press release, Governor 
Pataki, then Governor Pataki, stated that the ``the city 
explored various options and decided the formation of the 
captive insurance company was in its best interest for claims 
arising out of the cleanup effort at and near the World Trade 
Center.''
    Ms. LaSala, at a meeting of the board of directors--I think 
it was the first meeting or one of the first meetings back in 
December of 2004--was reported, the minutes say she emphasized 
that the fundamental purpose behind creating and funding of the 
Captive is to ``conserve and disperse its assets in as 
equitable a manner that maximizes compensation to those parties 
who suffered damage as a result of the World Trade Center site 
debris removal program.''
    So in light of these--and I could also quote from a letter 
the entire congressional delegation from New York wrote back in 
2002 when we were considering this. It says that the coverage 
envisioned in this proposal ``will ensure that sufficient 
resources will be available to satisfy legitimate claims by 
individuals affected by the recovery operations while 
safeguarding the fiscal health of the city and the 
contractors.''
    In light of this, it seems to me evident that the purpose 
of appropriating that billion dollars and setting up the 
Captive was to enable the swift compensation of victims, and 
that the city's or the Captive's policy of litigating every 
single claim would be sort of like my insurance company saying 
``We will never pay for your house burning down until you beat 
us in a lawsuit.''
    Mr. Cardozo. Congressman, if we all knew in 2001 or 2003 
the extent of the claims, we perhaps would not be here today.
    As I think all of us would agree at this table--although we 
may differ on other things--the extent of damage to the people 
who are now, unfortunately, suing us as well as, according to 
Mr. Feinberg, 25,000 or 30,000 additional people, it was far, 
far greater than had been anticipated.
    And so given the fact that this captive is an insurance 
company, we are faced with the problem that, at least according 
to every estimate that we have seen, the billion dollars is not 
sufficient.
    Mr. Nadler. Sir, excuse me, sir, the billion dollars is 
clearly not sufficient--I think we all recognize that----
    Mr. Cardozo. And then----
    Mr. Nadler. Given that fact, therefore, the conclusion is 
instead of using that billion and trying to get more money from 
Congress or somebody else, we should pay nobody?
    Mr. Cardozo. Given the fact, Congressman, that this is an 
insurance company designed, if you look at the conference 
report and the other legislative history, to be an insurance 
company to protect the city and the contractors--it is what the 
appropriation bill says; that is what the conference report 
says; that is what the IG report for the Department of Homeland 
Security says.
    Given the fact that neither the city nor the contractors 
believe they did anything wrong and that this is to insure them 
against claims, there is really no choice that they face but to 
use--to defend against these claims. The analogy, if I may draw 
it, the analogy I would suggest is if you had, if someone had a 
car accident, and you are insured for a million dollars, and 
the claims against you are for a million-and-a-half dollars, 
you wouldn't expect your insurance company to pay the million 
dollars----
    Mr. Nadler. Let me--my time is running out, and I have some 
questions for Mr. Feinberg. First, let me just proceed with one 
more question.
    What, if anything, has the city done to ascertain the 
availability of other insurance from the Port Authority, the 
four major contractors, to see if there is enough insurance to 
perhaps enable a global settlement along the lines that was 
talked about?
    Mr. Cardozo. That is a very good question, and Judge 
Hellerstein, who as you know is in charge of that litigation, 
has ordered that all the available information about insurance 
be produced right now in discovery on just that subject. It is 
going on right now.
    Mr. Nadler. Okay.
    Mr. Cardozo. The city obviously doesn't know the 
individual----
    Mr. Nadler. Thank you.
    Mr. Feinberg, first of all I note--and you wouldn't 
disagree with this, from your testimony in commenting on Mr. 
Frank's testimony--that the VCF did compensate the victims who 
had pulmonary diseases that weren't evident the day after.
    So let me ask you the following: You testified that the VCF 
did not have an indemnity. And I take it that you do not agree 
with Mr. Cardozo that if we reauthorize the VCF or reopen it 
that we should indemnify the contractors, and the city for that 
matter. Why?
    Mr. Feinberg. Well, I think if you want to indemnify the 
contractors and hold hearings on the wisdom of that, that is 
entirely up to Congress. I think the VCF never had to worry 
about that on a simple one line re-extension because we were 
able, when we settled the claims, to get full releases from 97 
percent of the people that were litigating.
    Mr. Nadler. But would you agree, or disagree, or have no 
opinion on the question of whether--granted that if we reopen 
the VCF, 97, 98 percent of the people go through it; the other 
2 percent might consider lawsuits--would it be as a matter of 
policy, should we indemnify the city and the contractors? If 
yes, why? If not, why not?
    Mr. Feinberg. I don't think you should. I don't think you 
should.
    Mr. Nadler. Because?
    Mr. Feinberg. The litigation system will take care of that. 
If there is--the point I want to emphasize is that that is 
really a separate issue. Indemnifying any defendant or any 
litigant from lawsuits is a separate issue from the question of 
whether or not public compensation should be available to 
compensate people who are in desperate need of help.
    I suggested a liability immunity will politically greatly 
slow down the likelihood that you will be able to get that type 
of compensation to the people that most need it.
    Mr. Nadler. Thank you. My time is expired. I now recognize 
the Ranking Member of the Subcommittee on the Constitution, 
Civil Rights and Civil Liberties, the gentleman from Arizona, 
Mr. Franks.
    Mr. Franks. Well, thank you, Mr. Chairman.
    Mr. Feinberg, I have been very impressed with your 
understanding of all this. It is got to be a challenge to do 
what you had to do given the grave circumstances that 
surrounded all of it.
    And some have proposed that the private contractors be 
fully indemnified by the Federal Government for claims arising 
out of the 9/11 attacks such that any damage or awards or 
settlements resulting from private litigation would be drawn 
from the U.S. Treasury and paid by taxpayers.
    Given your experience, can you elaborate on what you think 
would be the advantages or disadvantage? What would be the 
outcome of such a policy?
    Mr. Feinberg. I think that a compensation fund, like the 9/
11 Fund which was enacted, should be focused on compensating 
victims. If the fund works properly, as the 9/11 Fund seemed to 
have worked, at least statistically, issues concerning 
liability of would-be defendants become irrelevant because when 
you settle 97 percent of all the claims brought by the families 
of lost loved ones, they are waiving their right to litigate 
against anybody. We are getting a full release for domestic 
would-be tortfeasors.
    And I am suggesting that that solution guarantees 
compensation to people in need while at the same time avoiding 
the arguments over liability or no liability. Fault does not 
become an issue.
    Mr. Franks. Would you agree that--you mention in your 
testimony that the standards governing compensation under an 
expanded fund--if we expanded the fund and changed the rules 
that, you know, that would differ from those that governed the 
original fund so that there might be some indication on the 
part of Congress that they were fomenting ill will among the 
different categories of victims. If you agree or don't agree, 
would you elaborate based your experiences in the fund that you 
were master of?
    Mr. Feinberg. A strong argument can be made, substantively, 
a strong argument can be made that the original 9/11 Fund was 
not sufficiently expansive.
    It didn't permit, by statute, compensating pure mental 
trauma without physical injury. It didn't permit it. So I 
couldn't compensate mental suffering from somebody who, through 
the grace of God, escaped from the World Trade Center without a 
scratch and then suffered disability. The statute prohibited me 
from compensating that individual.
    But if you decide to extend the 9/11 Fund and add as an 
eligibility claim mental trauma without physical injury, that 
is up to Congress. That could be millions of people that were 
not eligible under the 9/11 Fund. And my concern is not the 
legitimacy of those claims--those claims may be very 
legitimate. But it is pretty hard to reopen the fund and say 
those people are now eligible, whereas people before weren't 
eligible.
    So Congress has to make that judgment. That is not a 
judgment for a special master administrator to make.
    Mr. Franks. Yes. Well, you bring a common sense and a logic 
to this environment that is more rare than it ought to be.
    Mr. Frank, the legislative proposal that we are talking 
about here, the H.R. 3543, does not limit the ongoing lawsuits 
against the private contracting companies. So, consequently, 
some have floated the idea that they should be indemnified, 
these companies should be indemnified, for their liability in 
these lawsuits by the Federal Government, much like I asked Mr. 
Feinberg. Under such a provision, the lawsuits against the 
companies would be allowed to proceed, but taxpayers would pay 
any damages that were assessed to the companies.
    Do you think that is sound policy, and if not, why not?
    Mr. Frank. The problem there is that there will be a race 
to be who will be the most generous to the claimants. If the 
fund is not sufficiently generous to the claimants, people will 
stay within the litigation system because they have the 
ultimate deep pocket, the United States Treasury, to draw from.
    You will not get that 97 percent response rate that you got 
in the first compensation fund. And the reason you were able to 
get a 97 percent response rate was because Special Master 
Feinberg was able to meet with many of the individual families 
and say, ``Here, here is what you are going to do for you. You 
are going to get millions of dollars. Come over to us. You will 
get the millions of dollars immediately, and that will be 
that.''
    And that will not be possible in a reopened fund. You are 
not going to get the 97 percent response rate. You are just 
going to get a competing set of interests over who can be the 
most generous to claimants, and at great expense to the 
Treasury.
    Mr. Franks. Well, thank you, Mr. Chairman. I think all of 
this just underscores the importance of doing everything we can 
in this country to prevent such attacks from occurring in the 
future----
    Mr. Nadler. Would the gentleman yield for a moment?
    Mr. Franks. Certainly.
    Mr. Nadler. I would just ask if the gentleman would ask Mr. 
Frank why he thinks that what Mr. Feinberg did with the first 
group of claimants couldn't be done, individually meeting and 
so forth, to persuade the next group of claimants if we were to 
reopen the fund to come into the fund as opposed to sue people. 
In other words, why did you say that was impossible?
    Mr. Frank. Well, it is possible if you just make it a blank 
check and anybody who shows up gets funding regardless of 
whether or not their injury was caused by September 11. And, 
you know, there are tens of thousands of lymphomas every year; 
there are tens of thousands of lung diseases every year. Not 
all of them were caused by the World Trade Center. And if all 
these of people are eligible, and they can just show up and say 
``Here is my diagnosis, and I will get the check,'' then you 
will get a good response rate.
    But that is not going to be a few thousand people; that is 
not going to be ten thousand people; that is not even going to 
be 25,000 people. That is going to be close to 100,000 people, 
perhaps more, because you are going to have Napoli, Kaiser & 
Bern with a van in New York signing up people to get 
compensation under the World Trade Center Compensation Fund.
    Mr. Nadler. Thank you.
    I now recognize the distinguished Chairperson of the 
Subcommittee on Immigration, the co-Chair with me of this 
hearing, Zoe Lofgren.
    Ms. Lofgren. Thank you.
    I just have a quick question. Mr. Feinberg, I don't think 
you performed purely ministerial functions in your effort. Can 
you explain how the fund dealt with causation and give your 
thoughts on how the fund if reopened would deal with the 
causation issues?
    Mr. Feinberg. Yes. The statute gave us general guidelines 
on causation that the death or the physical injury----
    Ms. Lofgren. Right.
    Mr. Feinberg [continuing]. Had to occur in the immediate 
aftermath of 9/11, et cetera. We had to develop regulations--
which we publicized; we went around the country to meet with 
the families--with interim regulations asking them what they 
thought of the regulations. Is there a way to improve the 
regulations?
    And we came up with a final set of regulations. And we 
constantly modified those regulations based on the quality of 
the claims. For example, originally our regulations, as Michael 
Cardozo correctly points out, originally our regulations 
required that within 96 hours you not only had to be exposed to 
respiratory particles in the air, but you had to have 
manifested an illness and corroborated that illness with a 
medical visit.
    We quickly realized that there were thousands of people 
like Mr. Valentin who were exposed within 96 hours but didn't 
manifest any injury, didn't cough up blood, didn't experience 
asthmatic attacks, until a year or more after the exposure. We 
quickly changed the regulation to say that anybody who was 
exposed within 96 hours of the World Trade Center attacks but 
didn't go to a doctor until 72 hours after the physical 
manifestation, they were eligible.
    So we adjusted the regulations to deal with the problem of 
causation.
    What the medical criteria would be if the 9/11 Fund were 
reauthorized, what we would require to constitute an eligible 
claim--we will have to work that out with medical 
documentation. We rejected 2,000 claims. The idea that we 
simply rubber-stamped----
    Ms. Lofgren. Yes, you weren't an ATM machine.
    Mr. Feinberg. We rejected 2,000 physical injury claims 
while compensating 2,680 more.
    Ms. Lofgren. You know, Mr. Chairman, I am very happy that 
we are having this hearing, and I am eager that we take action, 
especially listening to Mr. Valentin's testimony--I mean, it is 
so moving. And we are so grateful to you and to people like 
you, that I would like to yield the remainder of my time to 
you. As not only are you co-chairing this hearing, but the 
Towers were in your district, so I yield the remainder of my 
time to you.
    Mr. Nadler. I thank the gentlelady.
    Let me ask Mr. Feinberg, you heard Mr. Frank's testimony 
that if we were to reopen the VCF it would be very difficult--
there are thousands of lymphomas, ten thousands; there would be 
100,000 claimants; you couldn't distinguish. Could you comment 
on that?
    Mr. Feinberg. Well, Mr. Franks makes a good point when he 
says that if we reopen the fund there will probably be 
thousands of claims. I think that is likely. We had thousands 
of claims under the original 9/11 Fund. So I think you will 
probably have thousands of claims.
    The challenging question is whether or not those claims 
will be limited, like the original 9/11 Fund, to physical 
injury only.
    Mr. Nadler. Including respiratory.
    Mr. Feinberg. That is right.
    And then the next challenge will be, assuming that we have 
an understanding from Congress as to what type of injury is 
compensable, what are the regulatory requirements--medical and 
evidentiary, not just medical but evidentiary as well--to 
justify the compensability of that claim?
    Mr. Nadler. And assuming that you had more or less the same 
regulations from Congress--if we just reenacted it, as you say, 
except eliminate the ``you had to be there within 96 hours'' 
because we know now that that was simply not right--do you 
think we would get a 97 percent----
    Mr. Feinberg. Yes. Well, I am often glib----
    Mr. Nadler. We will allow you 96, but something in that 
neighborhood----
    Mr. Feinberg. I mean, I think--now, don't forget as the 
Chairman well knows, the 9/11 Fund had no appropriation, none. 
Mr. Franks is right on that. The 9/11 Fund simply authorized 
the special master to authorize payments out of the United 
States Treasury. There was no appropriation.
    So insofar as Mr. Frank says, ``You know, if you have no 
limitations, other than the good sense of the administrator and 
the Congress oversight, as to what amount will be used to 
compensate victims''--it is a real challenge.
    But I suggest that if the Congress ever went to the limit 
of extending the fund with a one-line extension and said, 
basically, ``Do what you did before,'' I would like to think 
that success promotes success.
    Mr. Nadler. You would get roughly 97 percent again you 
think?
    Mr. Feinberg. I would hope.
    Mr. Nadler. Thank you.
    My time has expired, or rather the gentlelady's time that 
she gave to me is expired. I thank the gentlelady again.
    And I now recognize the gentleman from Iowa.
    Mr. King. Thank you, Mr. Chairman.
    And, again, I appreciate the witnesses' testimony.
    I ask first, before I ask a question, if the staff could 
put the poster back up that shows the percentages of the people 
that were on the site. I want to make sure I am looking at 
those numbers because I have a question--thank you very much.
    And prior to that, I direct my first question to Dr. 
Melius. And that is, I would ask if you could quantify this for 
me. You gave some percentages on the particular types of 
illnesses that are there. Can you start with the universe of 
those that have some record of a claim, start with that number, 
and then break this down for me, in a sense, that I get a 
better understanding of the scope? And multiple different 
diagnoses per individual, as we heard in this testimony, can 
you give me a better sense of what we are really looking at 
here? I am really vague on the overall picture.
    Dr. Melius. Yes. First of all, I can't give you the, sort 
of the percentages to deal with those that have claims against 
the Captive Fund because most of the public information that is 
available has to do, that I am familiar with, is related to 
those that are participating in the medical monitoring and 
treatment programs.
    And most of the information on that doesn't deal as well 
with the number of people that have become disabled. I gave 
some figures in my testimony, but frankly we don't have 
information to exactly pin down the number of those people with 
different illnesses.
    However, I think based on what we know from the medical 
monitoring and treatment programs, we would say that roughly 
75-80 percent of the people that are involved in that have a 
constellation of illnesses related to the respiratory system. 
They usually co-exist. So it is sinus problems, 
gastrointestinal problems and the respiratory health problems.
    Mr. King. Okay. Now, am I hearing you say that of the 
universe of people who were there on site, 75-80 percent have 
some symptoms?
    Dr. Melius. No. No. I think we would say that of the----
    Mr. King. The universe of those----
    Dr. Melius [continuing]. People that are in the monitoring 
program, approximately one-third of those have an illness that 
requires treatment right now through--they are usually referred 
to treatment within the medical monitoring program----
    Mr. King. Okay. About one in three of those----
    Dr. Melius. One in three.
    Mr. King [continuing]. That participated had some symptoms.
    Dr. Melius. Right. Correct.
    Mr. King. That helps me.
    Dr. Melius. Okay.
    Mr. King. I thank you, Dr. Melius.
    And then I direct to Mr.----
    Dr. Melius. Then it is----
    Mr. King. Yes, go ahead.
    Dr. Melius. Then--allow me to just follow up--then about 
roughly about 80 percent of those have health problems related 
to respiratory, upper respiratory/sinus, lower respiratory/
lungs, the asthma kind of problems that Mr. Valentin referred 
to that--and then approximately----
    Mr. King. The clock is ticking, and I do have the answer, 
and I appreciate that.
    I would like to, if I could, direct Mr. Frank's attention 
to the poster that says ``Police Officers 44.57 percent, 
Firefighters 10.76 percent, Laborers 33 percent, and then the 
Other are 11.5 percent. In looking at that deployment, do you 
know, Mr. Frank, if we have a list of those who were required 
or authorized to be on site? Is there a full universe of those 
people that we could start with to start to address the scope 
of this in a fashion that is broader than we have here at this 
hearing?
    Mr. Frank. I imagine Mr. Cardozo would have a better sense 
of that than I would.
    Mr. King. I would then----
    Mr. Frank. I simply don't know.
    Mr. King. Thank you.
    Mr. Cardozo?
    Mr. Cardozo. With respect to police officers and 
firefighters, I think that there is a universe. With respect, 
of course, to the laborers, that is going to--you would have to 
go to talk to each individual contractor. And, of course, there 
is at least a potential some claimants go beyond that----
    Mr. King. But let me ask as my clock ticks, and I am sorry 
about that. Is it possible to put together a list of those who 
were required or authorized to be on site?
    Mr. Cardozo. I would say that firefighters and policemen--
there are 44,000 people have signed up for the World Trade 
Center registry. It doesn't mean they are sick, simply says 
they were there.
    Mr. King. But do we know from their work records that they 
were required to be on site? Or as a volunteer, I understand as 
well, some of them came in and volunteered.
    Mr. Cardozo. Congressman, I am not sure. I would be happy 
to find out and let you know. I don't want to misstate the 
facts.
    Mr. King. I would appreciate that. And if anyone has any 
information on laborers at all, so and I will submit some of 
those questions for the record as the clock ticks down here.
    Mr. Cardozo. I will be happy to do that.
    Mr. King. Thank you.
    And I just turn then back to Mr. Frank and ask if--I spent 
my life in the construction business. I look at the 
proportionality of that, and I understand the size and the 
scope of Ground Zero, and it takes a lot of security personnel. 
But we are not quite 2:1 in security personnel over the number 
of workers that were there on the site, too.
    The proportionality of the claims, does it come in 
proportion to those percentage of workers that we have? I mean, 
are we getting more claims from public employee workers than we 
are from private sector workers? It seems to me that we are, 
and if so, can you explain that?
    Mr. Frank. There are several possible reasons for that. One 
is a legitimate reason, which is that the police officers were 
there at the earliest hours of the Ground Zero time, in which 
case exposure to toxins would have been greater than, say, 
workers who were there in February or March.
    Second, to the extent that the policemen have a union that 
is advocating on their behalf and signing them up for 
litigation, they might be more likely to sue.
    But I simply don't know the ratios involved and to what 
extent they are medically legitimate.
    Mr. Weiner. Would the gentleman yield? Would the gentleman 
yield?
    Mr. King. Yes, I would.
    Mr. Weiner. I just want to clarify something. Just because 
they are listed as police officers doesn't mean they weren't on 
the pile. It doesn't necessarily mean they were only doing 
security. A lot of them came to the scene and started looking 
for their----
    Mr. King [continuing]. Their peers----
    Mr. Weiner [continuing]. And were on the actual pile, not 
just doing security. So even though it says police officers, 
this universe of people is not just at the perimeter. Many of 
them were on the pile.
    Mr. King. And I appreciate that, in reclaiming, and I 
absolutely recognize that. And I want to honor that as well.
    And I would ask the indulgence of the Chair and unanimous 
consent to ask one additional question.
    Mr. Nadler. Without objection.
    Mr. King. Thank you, Mr. Chairman.
    And I would like to direct it to Dr. Melius. And it is 
something that I hadn't thought of, that is until I listened to 
Mr. Frank's comments. Is the proximity to the, let me say, 
September 11--the closer you arrived there on the pile and 
worked, does that increase the likelihood of having a 
respiratory illness? Is it proportional in that fashion, and is 
it also proportional to the time spent on the pile? Have you 
got anything that measures that for me?
    Dr. Melius. Yes, it is actually proportional to both. The 
amount of time that you spent there increases your likelihood 
that you become ill, as well as how early you arrived and were 
involved in working on the pile. So it is the amount of hours 
spent early on, the total length of time that you worked there 
as well as, you know, which days you arrived. If you arrived 
early, you tend to be more likely to have symptoms. There is 
data on that from scientific studies. There is also a breakdown 
I can provide for you on the people in the medical monitoring 
program that breaks it down by their occupation and I think 
would address your earlier question also.
    Mr. King. Thank you very much. I appreciate it.
    And, Mr. Chairman, I yield back.
    Mr. Nadler. I thank the gentleman.
    I now recognize the distinguished Chairman of the full 
Committee, the gentleman from Michigan, Mr. Conyers.
    Mr. Conyers. Thank you, Mr. Chairman, and Chairwoman 
Lofgren. This has been fascinating hearing. But it is the 
American Enterprise Institute's witness, Mr. Theodore Frank, 
that compels my attention most.
    With such minimal requirements for recovery and such 
potentially broad definitions of eligibility, taxpayers may 
find themselves paying for psychotherapy for Woody Allen and 
hundreds of thousands of other New Yorkers, many of whom are 
among the wealthiest people in the Nation.
    Well, I introduce you to the person on your right. A police 
officer is not one of those in that category, I hope not.
    Mr. Frank. Well, I----
    Mr. Conyers. And that----
    Mr. Frank. Can I answer?
    Mr. Conyers. When I recognize you to answer. When I finish.
    Mr. Feinberg, you have been around. What is this? Did you 
have a wide open policy? Were you letting every psychotic New 
Yorker that wanted to climb on board? Not that there are many 
of them in New York--don't get me wrong. Mr. Wiener----
    Mr. Weiner. I thank the Chairman.
    Mr. Conyers. What is going on here?
    Mr. Feinberg. The 9/11 statute, Mr. Chairman, did not 
allow, statutorily did not allow, any compensation for mental 
trauma alone. There had to be, under the 9/11 Fund, a physical 
injury: a broken leg, a burn, a respiratory claim, corroborated 
by doctors. So we didn't pay any psychotherapy mental trauma 
claims. They were ineligible.
    Mr. Conyers. Feeling better, Mr. Frank?
    Mr. Frank. No, sir. Because section 203 of H.R. 3543 opens 
up the fund to precisely the injury the Stabilization Act 
forbid, which was physically or psychologically injured. And, 
given the fact that the New York City disaster area goes well 
beyond Mr. Valentin, who is perfectly entitled to compensation 
to the extent his injuries were caused the problems of working 
on Ground Zero--and I have no dispute with that, and I say that 
in my testimony--but that is not what H.R. 3543 does. It is----
    Mr. Conyers. But it----
    Mr. Frank [continuing]. Substantially broader than that. 
And if you want to fund vet Mr. Valentin, that doesn't require 
you to open up section 203 to half of Manhattan.
    Mr. Conyers. Okay. So you have got it in for people who may 
have psychological or mental injuries that are derivative from 
the basic claim. So you want to take all of them out. In other 
words--do you have medical background?
    Mr. Frank. Sir, I explain in my testimony why----
    Mr. Conyers. I just asked you the question.
    Mr. Frank. I do not have a medical background----
    Mr. Conyers. Okay. I don't either.
    Mr. Frank [continuing]. Background, and I see what happens 
when you have broad----
    Mr. Conyers. Well, just a moment now. Here is the problem. 
I can agree with you to an extent. But who am I or you to 
determine that there are other kinds of injuries?
    It just so happened over the weekend--and this is a 
fortuitous circumstance--I spoke before the Detroit Chapter of 
the American Psychiatric Association. So as a disclaimer, I am 
not carrying any of their water or trying to help them in any 
way. But don't you see a relationship, a possible relationship, 
between mental and physical injury? Is that conceivable?
    Mr. Frank. Well, certainly. In the original 9/11 Fund, when 
people had physical injury and asked for compensation, they 
were also compensated for their non-economic mental injuries. 
And that was in the statute, and that was in the definition of 
how non-economic injury was defined in the Stabilization Act. 
And they were compensated for that.
    Mr. Conyers. So you go along with that, but you think that 
this bill now has gone a little bit too far, or a lot too far?
    Mr. Frank. You are holding up Mr. Valentin as who you want 
to help, but that is not who this bill helps. It helps many 
hundreds of thousands of people beyond that--helps in terms of 
just giving away taxpayer money----
    Mr. Conyers. Well, Carolyn Maloney has never given away a 
dime in taxpayers' money, not even to New Yorkers who were 
psychos. But, I mean, the problem that we are faced with is how 
do we address your problem? Now, you are talking with some of 
the most veteran lawmakers, including my friends on the other 
side who may not be lawyers, but--and they have a little 
feeling and attitude about lawyers that we will talk about 
later--but the fact of the matter is, couldn't you trust it in 
our tender hands to create a bill that would meet the 
objections? Because I don't want to be giving out money in the 
fashion that you derive. I mean, Woody Allen, he ought to be 
helping us, not us helping him.
    Mr. Frank. Well, that is what I try to do in my written 
testimony, sir, where I identify the problems in the existing 
legislation and what Congress needs to do to correct them. And 
even Mr. Feinberg agrees with me that opening up to 
psychological injury without proof of physical injury would be 
a huge can of worms.
    Mr. Conyers. Well, Mr. Feinberg, let me just close with 
this question: Do you see a relationship between mental and 
physical injuries? I mean, people can get hurt in a lot of 
ways.
    Mr. Feinberg. Of course there is a relationship. Of course.
    The 9/11 Fund statute did not permit compensation for pure 
mental trauma without an accompanying physical injury. So if 
you reenact the 9/11 statute and add to it mental trauma 
without physical injury, that would be a major shift from the 
original statute.
    Mr. Conyers. Would you accept an invitation from the 
American Psychiatric Association in my place next year when 
they meet?
    Mr. Feinberg. Mr. Chairman, anything you asked me to do.
    Mr. Conyers. Thank you, Mr. Chairman.
    Mr. Nadler. I thank the gentleman.
    And now---- [Applause.]
    Mr. Nadler. I now recognize the gentleman from California.
    Mr. Issa. I thank the Chairman.
    I am not a psychiatrist, psychologist, medical doctor or an 
attorney. I have got that off my chest real early. But I am a 
taxpayer. So I am going to make my line of questioning purely 
as a taxpayer from the state of California.
    Mr. Cardozo, how much money has the Federal Government put 
out in post-9/11, including the buckets of $10-$20 billion that 
we just threw at the State and the City of New York versus how 
much has been paid out by the city and the state of New York to 
the victims in direct aid? And we are talking about victims--
direct, indirect--all the people that this bill is dealing 
with. What has been your end of the take?
    Mr. Cardozo. Congressman, if you--I don't know the precise 
answer, certainly. But including the pensions--and I think it 
is important, apropos of Congressman King's question as to who 
would be covered here, that New York City as a matter of State 
law now gives firefighters and police and any other city worker 
who was affected by 9/11, who can show that he or she became 
ill as a result of the attack, gives them a three-quater 
pension basically meaning tax-free. So as a practical matter--
--
    Mr. Issa. Yes, and you are able to give Federal State tax-
free because if you give somebody a medical tax-free status the 
IRS recognizes that, and they pay no federal.
    Mr. Cardozo. That is right. The State legislature enacted 
that statute, and most of that money as a pension matter comes 
from New York City.
    The specific answer to your question is, as far as I have 
said before in response to the Chairman's question, because of 
the fact that the $1 billion captive insurance fund is, based 
upon everything we know, not at all sufficient to cover the 
claims we have been talking about, and because neither the city 
nor the Captive believe they did anything wrong, we have no 
choice but to be litigating. And so the Captive has paid 
virtually none of the claims.
    Mr. Issa. Okay. Because, well, you know, my question from 
the dais is purely a Federal one. We voted in the wake of 9/11 
huge amounts of money to the city and the state of New York. We 
have spent, arguably, between $1-$2 trillion related to the 
post-9/11, if you include going to Afghanistan and so on.
    I have to ask why damages from a fire that had no dirty 
bomb in it--it had no chemical munitions in it, it simply was 
an aircraft, residue of two aircraft, and residue of the 
materials used to build this building--why the firefighters who 
went there and everyone in the City of New York needs to come 
to the Federal Government for the dollars versus, quite 
frankly, this being primarily a State consideration.
    You know, it is very simple: I can't vote for additional 
money for New York if I can't see why it would be appropriate 
to do this every single time a similar situation happens, which 
quite frankly includes any urban terrorist. It doesn't have to 
be somebody from Al Qaida. It can be somebody who decides that 
they don't like animal testing at one of our pharmaceutical 
facilities.
    Mr. Cardozo. Congressman, this was, I believe, an attack on 
the United States of America. It was located at Ground Zero, 
but it was an attack on America. The question which Congress 
answered right after 9/11 is because it was an attack on 
America, we should compensate these people.
    I am also suggesting to you if, God forbid, there is an 
attack, be it in San Francisco, Los Angeles, Houston, Seattle, 
the next time, if we do want the contractors, the city and the 
workers to give the same kind of response that they gave in New 
York City, which enabled us to be able to deal with the 
aftermath, if we want that to happen again we need this kind of 
an approach.
    Mr. Issa. But we turned $20 billion over to the City of New 
York almost immediately after it. I think Hillary Clinton went 
to the White House and walked away, essentially, with the 
commitment from the President.
    Are you saying that this, whether or not we pay to the 
downwind hazard and anyone else who has alleged emotional 
problems as a result of the trauma of 9/11, that if we don't do 
that firemen and police aren't going to go to a fire regardless 
of how it is caused?
    Mr. Cardozo. No, what I am saying is--and I think if you 
look at what happened in Katrina alone as an example, and a 
cautionary example--if you were running the largest 
construction companies in the world, as they were in New York, 
and you are faced with this kind of liability, and your 
government says there has been an attack in Los Angeles, please 
come in--we know from a fact that there were people slow to 
come in after Katrina because of that concern.
    And I think because this was--and certainly 9/11 was an 
attack on the Nation, and the only other alternative we all 
know is the tort system with the inadequacies that we have 
discussed today--I would suggest to you that, yes, it is an 
obligation that the Federal Government should take----
    Mr. Issa. I appreciate that.
    Mr. Chairman, my time has expired. But I might note that we 
had Filipinos fighting with us in World War II, and we promised 
to give them full pensions as military personnel. As of today, 
we still haven't done that. And I would say that we have to 
look at this and every other commitment of the Federal 
Government in light of that. And as a taxpayer, I would have to 
say that I would like to see my Filipine veterans----
    Mr. Weiner. Mr. Chairman----
    Mr. Issa [continuing]. Get that for----
    Mr. Weiner [continuing]. Mr. Chairman, we request that the 
gentleman be given an additional minute to answer just a quick 
question, if we could.
    Mr. Nadler. Without objection.
    Mr. Weiner. Would the gentleman yield to a question?
    Mr. Issa. Absolutely.
    Mr. Weiner. I just want to make sure an impression is not 
left here that you don't mean to let. Congress passed the 
compensation fund. A Republican-controlled Congress.
    Mr. Issa. And it is expired.
    Mr. Weiner. And, frankly, the gentleman voted for it.
    Mr. Issa. I did.
    Mr. Weiner. The gentleman voted for it because we had the 
national sense that this was not an attack on New York City. 
This was an attack on our country. And remember something else, 
we also at the same time bailed out the airline industry. And 
we made a decision that there were two imperatives, that we 
should not--that a lot of these decisions were made in the 
context of----
    Mr. Issa [continuing]. And I thank the gentleman. The 
answer to your question----
    Mr. Weiner [continuing]. But I would just, if I could----
    Mr. Issa [continuing]. The answer to your question----
    Mr. Weiner. The point that the gentleman seems to miss is 
that some extant body came in and did this to you. No, in fact, 
you voted for it because there was a reason to vote for it. And 
all this is is an extension of the very same conclusion. If you 
conclude it was then wrong, that is one thing----
    Mr. Issa. Right. And to answer the gentleman's question, so 
that to be clear, I voted, this Congress voted, in order to 
stabilize markets, stabilize confidence throughout the country 
in the wake of 9/11. We did a lot of those things, and I think 
they were the right things.
    I am now asking on the extension whether all the 
commitments and potential commitments, and we could choose to 
commit, whether this one rises to the extent of it. And right 
now I am not convinced. And I cited the Filipine veterans never 
having----
    Mr. Nadler. I would--the time of the gentleman has expired. 
I hope the gentleman is not suggesting because we shamefully 
have not met our commitments to Filipino veterans--which we 
should do--therefore we should be as shameful and not meet our 
responsibilities to people who gave up their health and their 
lives---- [Applause.]
    Mr. Issa. I just want to----
    Mr. Nadler [continuing]. Who gave up their health and the 
balance of their careers because of an attack on this country.
    The time of the gentleman is expired.
    I now recognize the gentlelady from Texas.
    Ms. Jackson Lee. Thank you to both Chairmen and to my 
Chairman of the full Committee.
    And I am glad that Chairman is sitting in front of the flag 
of the United States of America. I happen to be from Texas, but 
the last thing I recognize is Texas is in the Union, and I am 
an American. What that means is that America has an obligation 
to those who were on the front lines of a terrorist act that 
occurred in 2001 and risked their lives to save Americans. And 
as well in 1993, terrorist act.
    And might I add that we have, likewise, though it is not in 
the context of a terrorist act, failed badly the people in the 
Gulf Coast who suffered at the hands of an enormous natural 
disaster. Hurricane Katrina is a story yet unfinished.
    So I am quite quizzical about where we are today, and I 
thank Chairman Nadler for his legislation. I know that I am on 
the bill and look forward to not only supporting this bill, but 
I join him and all uncompensated heroes of America, the 
Filipino veterans and others. America needs to stand up and own 
these issues and respond to them.
    Mr. Cardozo, I just wanted to try and find out what amount 
of monies are left, to your knowledge, in the closed 2003 Fund?
    Mr. Cardozo. In the Victim Compensation Fund?
    Ms. Jackson Lee. Yes.
    Mr. Cardozo. None.
    Ms. Jackson Lee. What are you utilizing to--there are 
11,000 claims, I understand. And how are you addressing those 
claims right now?
    Mr. Cardozo. Well, as you know, there is a captive 
insurance company that Congress set up to defend the city and 
the contractors against that claim----
    Ms. Jackson Lee. Let me have you stop for a moment. So what 
you are doing--even though it a breach of Congress--what you 
are doing is taking money and fighting claims of people who are 
in need?
    Mr. Cardozo. I don't agree with that characterization, 
Congressman, because the money as appropriated--as it said it 
in the Appropriation Act, as it said it in the Inspector 
General's Report--was to create an insurance company. That 
insurance----
    Ms. Jackson Lee. And is that the insurance company where 
the head of it was being paid $350,000 and $20,000 in health 
benefits?
    Mr. Cardozo. And that, as the Inspector General's Report 
notes, the reason that captive insurance company was set up was 
because neither the city nor the contractors could get private 
insurance. In the ordinary course, FEMA would have paid the 
premiums and you would have purchased insurance.
    Ms. Jackson Lee. Mr. Cardozo----
    Mr. Nadler. Would the gentlelady yield for a moment? Would 
the gentlelady yield for a moment----
    Ms. Jackson Lee. I----
    Mr. Nadler [continuing]. A very short moment?
    Ms. Jackson Lee [continuing]. Would be happy to yield.
    Mr. Nadler. Thank you.
    Mr. Cardozo keeps referring to the Inspector General's 
Report. As far as I know, they haven't issued their report yet. 
So I am wondering what he is referring to.
    Mr. Cardozo. Well, you would know better than I. I am 
referring to the January 2008 Report of the Inspector General 
of----
    Mr. Nadler. Well, let me just say that is a draft which was 
withdrawn as inadequate and inaccurate. It was never issued.
    Mr. Cardozo. Well, was that your----
    Mr. Nadler. I yield back. [Applause.]
    Mr. Nadler. Please, please refrain from cheering or booing, 
either one.
    The time is returned to the gentlelady.
    Ms. Jackson Lee. I thank the gentleman.
    Mr. Cardozo, there are often things that Congress does that 
I vigorously disagree with, and I certainly disagree with any 
premise or any--it is an interesting name, Captive, because you 
have really captured and hung out to dry individuals who have 
been on the front line by using those dollars to fight against, 
if you will, or defend against claims of individuals who 
probably legitimately deserve to be compensated. We have 
someone who, I understand has resigned, but formerly was making 
$350,000.
    I don't know if Congress dictated that or not, but 
certainly we deserve an F grade if that is what we did, to give 
money to someone holding back on giving money to others.
    Let me try to ask Mr. Feinberg again to get that 
regulation, I understand it had to do with making sure that 
someone got to the doctor within 96 hours and then 72 hours. Is 
that accurate?
    Mr. Feinberg. The regulations accompanying the original 
statute required exposure at the World Trade Center----
    Ms. Jackson Lee. Right.
    Mr. Feinberg [continuing]. Within 96 hours of the 9/11 
attacks and within 72 hours of that----
    Ms. Jackson Lee. Did it have any language in there about 
latent impact?
    Mr. Feinberg. The subsequent regulations did.
    Ms. Jackson Lee. Okay.
    Let me go to Mr. Valentin. Mr. Valentin, thank you for 
being here. I know that you struggle as well. When did you 
first sense the impact of your disease, or your diagnosis, and 
when did you get to the World Trade--within hours, within days?
    Mr. Valentin. I got to the World Trade Center by 11:30 that 
morning.
    Ms. Jackson Lee. The day of?
    Mr. Valentin. The day of.
    Ms. Jackson Lee. All right, sir. And then when did you get 
this diagnosis?
    Mr. Valentin. Well, subsequently also, I was at No. 7 when 
it fell, a block away.
    Ms. Jackson Lee. Yes.
    Mr. Valentin. I was in the plume dust there.
    I became sick in November, roughly November, 2 months 
later. I went and got a chest X-ray. And they thought I had a 
pneumonia, but my lungs were clear. But it was a progression of 
illness, and I didn't really see it until 2004. And it just 
progressed until it got worse, and----
    Ms. Jackson Lee. So you have a latent impact. And not only 
do you have a physical illness, but I imagine there is some 
mental trauma that goes on as you have been speaking about it.
    Mr. Valentin. Absolutely.
    Ms. Jackson Lee. And so when did you file a claim?
    Mr. Valentin. I haven't filed a claim with Captive for it.
    Ms. Jackson Lee. And for what reason?
    Mr. Valentin. There is no way to file a claim.
    Ms. Jackson Lee. So you are in essence barred from ever 
connecting your disease and your mental trauma to the actions 
of 9/11----
    Mr. Valentin. That is right.
    Ms. Jackson Lee [continuing]. Of which you were present?
    Mr. Valentin. That is correct.
    Ms. Jackson Lee. And you said that your surrounding 
colleagues also--and maybe some of them did not get to a doctor 
within 72 hours. Is that accurate?
    Mr. Valentin. That is accurate.
    Ms. Jackson Lee. And I might just say to you, without 
making any humor out of it, some of you gentlemen who are in 
the firefighters and police and others who work every day, you 
are not apt to go to the doctor every 15 minutes. Am I honest 
to say that? Is your wife here to join me, understand it?
    Mr. Valentin. Exactly. That is exactly right.
    Ms. Jackson Lee. You guys just hang in there, is that it?
    Mr. Valentin. That is right.
    Ms. Jackson Lee. And some of the other workers?
    Mr. Valentin. That is correct.
    Ms. Jackson Lee. I got him smiling.
    Let me just say, Mr. Chairman, I didn't get a chance to 
talk to Mr. Frank, but the Chairman of the full Committee ably 
pointed out some inconsistencies in trying to address this 
question.
    There is no doubt that as we sit in this room and as we 
look at the flag of the United States, you are owed as 
Americans whether you are from New York, California, Texas, 
Louisiana--we owe you. This bill is a responsible addressing of 
the question of individuals who are now experiencing latent 
damage. How dare we deny the recognition of the tragedy of 9/
11, Oklahoma, 1993 World Tower or Hurricane Katrina? We have to 
stop it now, and I hope that this bill moves quickly through 
this Committee.
    And I thank you, and I yield back.
    Mr. Nadler. I thank the gentlelady.
    And I recognize the gentleman from Texas.
    Mr. Gohmert. Thank you. And I do appreciate the hearing. It 
has been very informative testimony, both written and oral has 
been helpful and very informative.
    I am not going to make any political speeches. I am just 
trying to gather information additionally. But I will say, I 
mentioned to some of my firefighters back in East Texas just 
this past week that with all of the horrors that came out of 
that evil attack on 9/11, I am glad that finally our first 
responders have begun to be appreciated as they should have 
been all along. But they have been taken for granted for so 
long. And after 9/11 people began to realize just what it is 
they put on the line every day.
    I want to ask about the insurance policies that were in 
effect covering first responders back at the time of 9/11 and 
whether or not--I guess, Mr. Feinberg, let me ask you--did 
those come into play at all in consideration in the awards or 
the compensation to people under the fund?
    Mr. Feinberg. Absolutely. The statute passed by Congress 
creating the 9/11 Fund required me, once I made the 
calculations, to deduct from any gross award life insurance, 
disability insurance, State victims of crime payments. I was 
required by statute to take into account each individual's 
insurance situation and deduct those amounts before providing a 
public check from the U.S. Treasury.
    Mr. Gohmert. Okay. Thank you. And that seems to me to make 
sense because that is dangers that insurance companies are 
insuring against.
    But in some of the written testimony I had also read that 
some of the first responders who had not been compensated under 
the original fund who now appear to be injured as a result have 
lost their health insurance and are not able to receive health 
insurance.
    Mr. Cardozo, you seem to want to respond, so I am curious 
about that. I mean, normally the unions have been pretty good 
about negotiating, I would hope, decent health insurance 
policies. Are these guys being left out in the cold from health 
insurance?
    Mr. Cardozo. I am glad to answer that question. And I think 
there is a two-pronged answer.
    First of all, with respect to health insurance, once a 
union member has to retire because of some kind of disability, 
there is very good health insurance as a retiree, but it is as 
a retiree, and there is a co-payment and the usual.
    But as a result of both the help of this Congress and Mayor 
Bloomberg's initiative in particular, every person who has been 
injured or thinks he or she may be injured is now entitled to 
free medical care at one of the centers of excellence that the 
city is funding and that is being funded in part by Federal 
dollars.
    Now, that was not in effect on September 12th, and so there 
are some people who had some out of pocket medical care. But as 
far as firefighters and policemen are concerned, they were 
covered by their insurance as long as they were policemen and 
firemen. If they needed to retire because of their health 
problems, they do get health insurance, but they did have to 
pay the usual co-pay. But now they are getting that for free.
    Secondly, and I think this is a very important point I just 
want to mention, that, again, as far as city workers are 
concerned, if you do become injured and have to retire or 
became ill, such as someone unfortunately like Mr. Valentin, 
you retire on a three-quarter pension which gives you three-
quarters of your pay for the rest of your life tax-free. Now, 
that does not deal, obviously, with any past medical benefits, 
it does not deal with pain and suffering, but it does 
compensate you for the lost wages.
    Mr. Gohmert. Well, you mentioned it wasn't in effect on 
September 12th, are you saying there is a group now even under 
this new policy that does not have access to the free medical 
help?
    Mr. Cardozo. Well, no. Today they can come in----
    Mr. Gohmert. Okay.
    Mr. Cardozo. Everyone is covered today.
    Mr. Gohmert. Because that sure caught my attention because 
if these first responders went in there and then they were not 
at a point where they could retire and yet then were left in 
the lurch, that would be a huge problem----
    Mr. Cardozo [continuing]. The gap that I was talking about, 
Congressman, here----
    Mr. Gohmert. Okay.
    Mr. Cardozo [continuing]. Between September 12th, if you 
will, and the time these programs went into effect, policemen 
and firemen who had to retire may have had to put some money 
out of pocket.
    Mr. Gohmert. Mr. Chairman, because of the lengthy answer, 
could I ask unanimous consent to ask one quick question of----
    Mr. Nadler. Without objection.
    Mr. Gohmert [continuing]. The master?
    I am also concerned--most tort systems allow for a 
discovery rule. And it seems like it would certainly be 
applicable here if you had firemen or policemen or workers out 
there who didn't know until much later when the symptoms 
manifested themselves that they were injured, isn't there some 
basis for coming in and filing a late claim based on the date 
of the discovery rather than the date of the injury so they 
still may have access to the original fund? Is that possible?
    Mr. Feinberg. Absolutely. We had a regulation--we modified 
it when we saw this happening, Congressman.
    Mr. Gohmert. Okay.
    Mr. Feinberg. We modified it and allowed anybody who had a 
latent injury to come in, and we would find them eligible if 
they had the requisite medical evidence, etcetera. But the 
statute expired on December 22, 2003. So all of these claims 
that are now being asserted in court----
    Mr. Gohmert. There is no ability for you to address those.
    Mr. Feinberg. I had no ability to pay them because there 
was no longer a statute in existence.
    Mr. Gohmert. Okay.
    Thank you, Mr. Chairman.
    Mr. Nadler. Thank you.
    I now recognize the gentleman from Minnesota.
    Mr. Ellison. I first of all, Mr. Chairman, want to thank 
you for this hearing and also want to thank and commend all of 
the New Yorkers who are here in support of their city. I agree 
that part of what it means to be a citizen of the country is 
that when one part of our country has a catastrophe, we all 
come to their aid. So I just want to restate the sentiments 
already expressed here that I will very gladly and proudly 
support the legislation.
    And with that, I want to yield back to you, Mr. Chairman.
    Mr. Nadler. Are you yielding me the balance of your time? 
Or yielding----
    Mr. Ellison. I am yielding--who wants to----
    Mr. Nadler. No, no, no, I. Thank you. Thank you.
    I have two questions. I just want to see if anybody else 
wants it.
    Dr. Melius, first of all: Given what Mr. Cardozo just 
said--he painted a rather bright picture of benefits available 
to city workers who had to retire on disability because of the 
tragedy--why is it that we have people like Detective Valentin 
who have lost their homes, had to pay their 401Ks? Is it true, 
in other words, or is it a completely accurately picture, I 
should say, because it is true in come cases, that the city and 
State benefits now take care of this?
    Dr. Melius. I think what Mr. Cardozo has presented is a 
very rosy picture of what the situation is for the many city 
workers who have become ill and disabled because of their World 
Trade Center exposures.
    They have great difficulty obtaining coverage, particularly 
those that are disabled and can no longer work. There are long 
delays in getting compensation, typically 3 years or more 
before they can receive compensation, so they lose their homes 
and they have limited health coverage. They have limited 
ability to be able to pay the high co-pays and so forth that 
are needed for their medications and so forth. I mean, I don't 
know whether it is city policy, but it is certainly very common 
for the city to oppose either the line of duty three-quarters 
pension disability or the workers' compensation cases filed by 
other city workers.
    Full prompt compensation is just simply not reality and not 
what we see commonly among the many people that are being 
treated now in the medical programs.
    Mr. Nadler. Thank you.
    And Mr. Feinberg, how would you structure a settlement with 
the Captive Insurance Company and existing insurance funds if 
you were going to do that?
    I said how would you structure a settlement with the 
Captive Insurance Company and existing insurance funds if you 
were going to do that?
    Mr. Feinberg. As I say in my testimony, Mr. Chairman, sit 
down with all of the parties and see if one can negotiate out a 
settlement that will take into account not only the Captive's 
available funds but insurance funds that may or may not--I 
don't know; I haven't seen if there are policies, but would 
have to see that--other sources of contribution that would 
increase the overall aggregate amount.
    And then try and work out a settlement that would give some 
monies to those currently ill, put some monies aside for future 
claims--something of great legitimate concern to the city--and 
also perhaps find an insurer who might insure these claimants 
against the likelihood of subsequent serious disease.
    Mr. Nadler. Thank you.
    I have one quick question for Mr. Cardozo, then I will 
yield the balance of the time to Mr. Weiner.
    Given that you testified about how we have these programs 
in place now--they are funded to a large extent by the $160 
million that Congress voted on a one-time basis in last year's 
budget--if the President's recommendation of--and the estimate 
is it cost $250 million, roughly, a year for the health care--
if the President's recommendation in this year's budget to cut 
that $160 million to $25 million goes through, will this impact 
the ability to provide those medical services?
    Mr. Cardozo. Well, it obviously has that potential, 
Congressman, which is why we strongly support the rest of this 
bill to deal with this. Mayor----
    Mr. Nadler. And you would strongly support a higher level 
of appropriation this year?
    Mr. Cardozo. Yes.
    Mr. Nadler. Thank you.
    Now, would the gentleman from Minnesota yield the balance 
of his time to the other gentleman from New York, Mr. Weiner?
    Mr. Ellison. Yes.
    Mr. Nadler. Thank you.
    Mr. Weiner. Thank you, Mr. Chairman.
    And thanks to the gentleman.
    And I am going to ask on my own time some substantive 
questions about the legislation, but I can't allow the 
gentleman from California's remarks about what led us here to 
go unchallenged.
    The notion that this is the City of New York asking for 
more benefits from the Federal Government because we were the 
point of attack on our country is patently absurd and, frankly, 
insulting to no end. The President of the United States, when 
he stood in our city, did not say New York City was attacked. 
He said our country was attacked. There are people, some of 
them in this audience, that are dying from that attack. That 
was an attack on our Nation.
    The efforts made by this Congress, whatever they might have 
been, were not the reflection of Congress' generosity. It was a 
reflection of our national sense that it was New York City that 
came under this attack, and we had to do what we could to 
repair the breach in our Nation.
    You know, we frequently say that 2,800 some-odd citizens 
died in that attack. That is not true. There are people who are 
every single day, bit by bit by bit, who are dying from that 
attack. And all we are saying here is: How are we going to deal 
with our national obligation to make those people and their 
families as whole as is possible?
    Mr. Nadler. Gentleman's time has expired.
    I now recognize the gentlelady from California.
    Ms. Waters. Thank you very much, Mr. Chairman.
    I have sat here and listened with great interest to the 
debate and discussion about September 11 and the fund that was 
set up to compensate the victims. But I am really taken back by 
Mr. Frank's written testimony that is here in the book. It is 
probably some of the most cynical testimony I have seen since I 
have served on this Committee.
    And I would like to ask Mr. Frank, how do you know that 
psychiatric treatment is more acceptable in New York than in 
other places in the country?
    Mr. Frank. I am sorry. I don't understand the question. It 
was a simple----
    Ms. Waters. Well, let us go back to your testimony where 
you talk about the likelihood that there will be claims for 
psychiatric care and where you say that ``one strongly suspects 
that ratio is higher for a cosmopolitan area such as New York 
City where the stigma of psychiatric care is smaller than in 
the American population at large.'' Where did you get that stat 
from?
    Mr. Frank. That was praise for New York City and for its--
--
    Ms. Waters. I don't care what it was. Where did you get it 
from?
    Mr. Frank. That was just common sense, ma'am.
    Ms. Waters. So you made it up.
    Mr. Frank. That particular----
    Ms. Waters. You are making a case here----
    Mr. Frank [continuing]. Praise for New York City----
    Ms. Waters [continuing]. Why----
    Mr. Frank [continuing]. Was made up. You are correct. I 
made up----
    Ms. Waters [continuing]. The case--you made it up, that is 
right. You are making a case here why taxpayer money is going 
to be unwisely spent for psychiatric claims, and you are 
concluding that it is certainly going to be high in New York 
because everybody knows that it is more acceptable in New York 
to have psychiatric problems, and you have concluded that that 
is going to be costly.
    Mr. Frank. Well, it is well known that New York is a more 
educated community than the United States at large, and more 
educated people are more likely to accept psychiatric----
    Ms. Waters. That is not what you said. Anyhow, let us 
also----
    Mr. Frank. Well, that is what I said.
    Ms. Waters [continuing]. Go to the cynical statement about 
Woody Allen. What did you mean that taxpayers would find 
themselves paying for psychotherapy for Woody Allen and 
hundreds of thousands of other New Yorkers, many of whom are 
among the richest people in the Nation? What kind of testimony 
is this?
    Mr. Frank. Well, if you look at H.R 3543 you will see that 
the definitions of psychiatric injury are very broad, that the 
definitions of eligible claimants are very broad, and the 
absurd example demonstrates how just broad it is. This is a 
bill intended to help heroes like Mr. Valentin, and it is in 
fact a giveaway for a much larger group of people that you 
might not be intending to give that money to.
    Ms. Waters. Your extensive testimony, that probably was 
prepared by 20 or 30 people over at the Institute----
    Mr. Frank. No, ma'am. I prepared that by myself.
    Ms. Waters. You shouldn't be proud of it. This testimony 
that you have supplied here, making all kind of criticism about 
the bill, admit--well, at least you gave the master credit for 
being very responsible in the way that he managed the 
compensation funds. But then you oppose the master having that 
kind of authority in H.R. 3543. Why is that?
    Mr. Frank. Well, I don't think the master should have had 
that authority in the original stabilization----
    Ms. Waters. But you said the master did a good job.
    Mr. Frank. The master did a good job.
    Ms. Waters. He did not abuse the authority.
    Mr. Frank. The master did not abuse the authority he was 
given. He had the potential to abuse the authority, and I 
think----
    Ms. Waters. But that leads you to a conclusion that the 
master shouldn't have this kind of authority in 3543, even 
though they did a good job in the original compensation fund.
    Mr. Frank. Well, if you are going to put Special Master 
Feinberg back in charge of this, and if he is going to be as 
circumspect as he was the first time, but if he is as 
circumspect as he was the first time, then the policemen and 
firemen behind me aren't going to be satisfied.
    You are talking about a much broader statute with much 
broader authority for the special master in the original 
situation. And I also don't know whether Special Master 
Feinberg wants to spend another 5 years doing this.
    Ms. Waters. Well, but he didn't ask you to decide whether 
or not he would like to be the master of this fund. You have 
taken it upon yourself to talk about the fact that he could be 
good, and only if he had it would you be comfortable with the 
fact that a master could be as responsible as he was.
    Mr. Chairman, I thank you for the time that you have 
allotted to me.
    I would just like to say that I am certainly going to 
support 3543. I thank you for this hearing. We are spending a 
lot of time talking about whether or not psychiatric problems, 
mental health problems, are legitimate for compensation.
    And I want to tell you, I am surprised, based on what 
happened September 11 in New York City, that we don't have more 
people who have been psychologically damaged than we appear to 
have. I think it was one of the most traumatic things that 
could have happened to anybody, any time, any place, anywhere.
    And whether or not we are talking about people who did not 
know the negative impact it was having on their health at the 
time or people who discover tomorrow, they deserve to be heard 
and to be considered. And I hope that the Members of Congress 
will do just that.
    Mr. Nadler. I thank the gentlelady. And I thank the 
gentlelady for her important comments.
    I now recognize the gentleman from Virginia.
    Mr. Scott. Thank you, Mr. Chairman.
    Mr. Feinberg, how many claims did you say you paid, and how 
many did you deny? How many claims did you pay, and how many 
did you deny?
    Mr. Feinberg. We paid about 5,300 claims, and we denied 
about 2,000 claims. All the denials were physical injury 
claims.
    Mr. Scott. Okay. Now, let me just go through this a little 
bit the way the settlements work. When somebody settles, it is 
the final settlement--once you settle, that is it?
    Mr. Feinberg. That is it.
    Mr. Scott. You can't reopen it. And if you settled for the 
broken bone and give a release and subsequently have asbestos-
related problems, that is too bad?
    Mr. Feinberg. That is right.
    Mr. Scott. And you didn't make partial payments--there is 
one payment, and that is it?
    Mr. Feinberg. That is correct.
    Mr. Scott. And if someone was not satisfied with the offer, 
they could refuse it and go to court?
    Mr. Feinberg. That is correct.
    Mr. Scott. And was the statute of limitation for the court 
case told while it was pending with you?
    Mr. Feinberg. No. The statute wasn't told, but the life of 
the fund was such that the statute of limitations never really 
entered into this. The fund expired.
    Mr. Scott. Well, if they wanted to reject your claim and go 
to court, a lot of them would have exhausted the statute of 
limitations----
    Mr. Feinberg. No. Because the fund expired by its own terms 
on December 22, 2003, within the tort litigation statute of 
limitations period.
    Mr. Scott. So if they rejected the claim they would still, 
at that time, be within the statute of limitations----
    Mr. Feinberg. That is correct.
    Mr. Scott [continuing]. For a court case.
    We have heard about legal fees. My discussions with the 
fine lawyers in Virginia was such to lead me to believe that 
there was a lot of pro bono legal work being done.
    Mr. Feinberg. Congressman, I am glad you raised that. Legal 
fees were never an issue in the fund. Virtually all families 
and physically injured victims who wanted an attorney were 
provided an attorney pro bono with no fees whatsoever. It just 
never arose as an issue.
    Mr. Scott. Thank you. And you mentioned several of the 
collateral sources. Is workers' compensation a collateral 
source?
    Mr. Feinberg. It is a collateral source, and it was a very 
problematic issue.
    Mr. Scott. Now, Mr. Cardozo, my recollection of workers' 
comp says that you are eligible if your injury was arising out 
of in the course of employment.
    Mr. Cardozo. That is right.
    Mr. Scott. And so that would cover the police officers and 
the firefighters and whatnot. Would it----
    Mr. Cardozo. No. Forgive me for interrupting, Congressman, 
but under New York law, neither policeman nor firemen are 
covered by workers' comp because they get what we call line of 
duty payments instead.
    Mr. Scott. Which is the same thing as workers' comp. Well,
    Mr. Cardozo. Well----
    Mr. Scott. Let me back up a step. Is line of duty pay a 
collateral source?
    Mr. Feinberg. Yes.
    Mr. Scott. Okay, now, what happens to the restaurant worker 
who was just working in the restaurant? Was his injury or 
death--did that arise out of or in the course of employment?
    Mr. Cardozo. Well, that would depend upon the workers' comp 
of his private employer. That wouldn't be New York City 
workers' comp.
    Mr. Scott. Well, it would be a collateral source----
    Mr. Cardozo. Oh----
    Mr. Scott [continuing]. That Mr. Feinberg would look into.
    Mr. Cardozo [continuing]. Yes.
    Mr. Scott. Did anybody in that situation get workers' 
comp--a restaurant worker in the World Trade Center?
    Mr. Feinberg. I don't--I assume so, but would have to go 
back and check our files to get an answer to that. I assume it 
would.
    Mr. Scott. And if you settled, could workers' comp 
subsequently pay for some of the subsequent medical expenses?
    Mr. Feinberg. Of private employees? I would assume that 
they would, yes.
    Mr. Scott. And that wouldn't be a collateral source that 
you would want to get----
    Mr. Feinberg. Once the check was cut, we walked away. We 
would try, Congressman, and calculate what future workers' comp 
benefits would be over the work life of that injured victim----
    Mr. Scott. And you would have that----
    Mr. Feinberg [continuing]. And consider whether we had to 
deduct that or not at that time.
    Mr. Scott. How much is needed in the WTCC Insurance Fund? A 
billion isn't enough, Mr. Cardozo?
    Mr. Cardozo. Well, the plaintiffs have said in open court 
that as to the existing roughly 10,000 claims, a billion 
dollars is not enough. And, of course, as Mr. Feinberg said, we 
are faced with the additional possibility of 25,000-30,000 
additional claims.
    Mr. Scott. Mr. Feinberg, if you were to try to do an 
eligibility, the present requirement is injury had to be in the 
immediate aftermath of the attack--you are talking about 
hours--and you have some geographic limitations. There are some 
of these injuries--asbestos-related, for example--that you can 
show were clearly caused by the 9/11 attack. How would they be 
compensated or not compensated if we extend without amending 
the statute?
    Mr. Feinberg. I think you would have to look at the 
existing, the regulations that we enacted in 2001, and decide 
whether or not those regulations are pertinent in all respects 
to latent claims that you are focusing on. And perhaps the 
regulations would have to be adjusted to determine different 
eligibility----
    Mr. Scott. Well, if somebody could prove, convince by the 
fund as to evidence prove that their situation was caused by 
the 9/11 attack although they didn't have the hours, and they 
didn't have the proximity, would that be a compensable injury 
under, if we extended it?
    Mr. Feinberg. We would have to examine that claim and 
decide, you know, whether or not the assertion is valid. If the 
assertion is valid, they would have a compensable claim, yes.
    Mr. Scott. Thank you, Mr. Chairman.
    Mr. Nadler. Thank the gentleman.
    And I yield to the gentleman from North Carolina.
    Mr. Watt. Thank you, Mr. Chairman. And thank you for 
holding the hearing.
    I would like to ask unanimous consent to submit for the 
record an e-mail from a constituent of mine, Jennifer Hovey, 
just for the purpose of demonstrating that this is not a 
situation that is only affecting New Yorkers. I am from North 
Carolina, and I would just like to lift a part of this just to 
make the point.
    She is talking about her father, a 35-year veteran of the 
New York Police Department Bomb Squad, who suffers from severe 
asthma and heart-related injuries due to his involvement as a 
first responder on 9/11. And she talks about some of the things 
that he could do prior to this response and a number of things 
that he is unable to do, speaking of her father, Detective 
Kevin Berry. So I would just like to submit this for the record 
for that purpose.
    Mr. Nadler. Without objection, so ordered.
    [The information referred to follows:]
    
    
    Mr. Watt. Mr. Feinberg, could you quickly give me kind of a 
snapshot of the kinds of things that you rejected in the 2,000 
claims that you rejected?
    Mr. Feinberg. The statute prohibited compensation for 
mental trauma alone.
    Mr. Watt. So, no, no. I thought you told me you rejected 
some things that were not prohibited under the statute. Is that 
not the case?
    Mr. Feinberg. Well, of the 2,000 physical injury claims 
that we rejected, the overwhelming number of those were mental 
trauma only. The other reason----
    Mr. Watt. Okay. So in the 2,000 physical injury claims, you 
are including emotional trauma claims, not physical injury in 
the sense that----
    Mr. Feinberg. That is right.
    Mr. Watt. Okay.
    Mr. Feinberg. In addition----
    Mr. Watt. Are there other kinds of things that you can 
quickly tell me about----
    Mr. Feinberg. Yes.
    Mr. Watt [continuing]. Aside from the trauma claims?
    Mr. Feinberg. Yes. We rejected physical injury claims where 
the medical documentation did not corroborate the claim.
    Mr. Watt. Okay. I am just trying to get a picture of the 
kinds of things because that seemed to be a fairly high 
incidence of rejections. What portion of that would you say, 
the 2,000 that you rejected, were trauma claims, emotional 
claims, as opposed to physical claims, where you just didn't 
have the substantiation of the physical connection?
    Mr. Feinberg. I will have to go back, Congressman----
    Mr. Watt. Approximate--I am not trying----
    Mr. Feinberg. I really don't know. I would have to go back 
and provide you that information in the next few days.
    Mr. Watt. Now, you suggested that a simple extension, one-
sentence extension, but that leaves me a little uneasy because 
I am--it sounds to me like you all were at some level in your 
regulations defining a category of things that maybe should 
have been the province of the Congress. And because when I hear 
you say you redefined the regulations to fit circumstances, it 
sounds to me like you as a master were doing a lot of the 
things that you contemplated we should have done as--and that 
makes me uneasy as a lawyer and as a legislator when you start 
redefining this because that allows you to legislate.
    Talk to me a little bit about--help me through that 
uneasiness if you can, because shouldn't we at least be 
amending the statute to incorporate the regulatory framework 
that you already acknowledge was legitimate?
    Mr. Feinberg. Well, that is a loaded statement, 
Congressman. I agree with most of what you say.
    I did have the responsibility of trying to clarify some of 
the ambiguities in the statute. There was nothing ambiguous 
about mental trauma alone is not compensable. So there is 
nothing I could do with that. There was nothing ambiguous about 
collateral offsets had to be deducted--like comp and life 
insurance, etcetera. So in certain areas, I had no discretion.
    In other areas, what is the immediate aftermath of the 
attacks? How long is immediate? What is the immediate vicinity 
of the World Trade Center? Canal Street? South Ferry? Lower 
Broadway? We had to take regulations and try and clarify what 
we thought Congress meant when it passed that law.
    One problem now that you have, the statute having been 
initially enacted, the regulations having been initially 
promulgated, 7,300 applicants having been processed, if 
Congress goes back now and decides to extend the statute and 
change the rules, you are going to run into this difficulty, I 
just--you know it very well----
    Mr. Watt. Sure.
    Mr. Feinberg [continuing]. People now will be treated ``A'' 
when people back then were treated ``B,'' and you will have a 
real problem----
    Mr. Watt. So your recommendation actually is to extend the 
statute but incorporate your regulations. You are not saying 
don't do at least that--because then you are going to have the 
same conclusion in the opposite direction.
    Mr. Feinberg. I think that is right. Although Congressman 
Scott----
    Mr. Nadler. The time of the gentleman has expired.
    The witness may answer this question briefly.
    Mr. Feinberg. Congressman Scott raises a very good point, 
which is you had regulations back in 2001, 2002 and 2003. If in 
2008 there is somebody who can demonstrate medically that they 
were injured in a geographic area that might be a block away 
from our regulations but it is now demonstrable--it can be 
demonstrated and corroborated--I suppose you couldn't ignore 
that claim, if it could be corroborated.
    But other than that, I am agreeing with you that if, if the 
statute is extended--a position that I discuss in my written 
testimony is a very difficult philosophic question--if it is 
extended, a one-line extension is the way to go.
    Mr. Nadler. The time of the gentleman has expired.
    I have a statement from the husband of a victim who was 
killed, which I would like unanimous consent to insert into the 
record.
    Without objection, so ordered.
    [The information referred to follows:]
    
    
    
    
    
    
    Mr. Nadler. Before we go to our next questioner, I have to 
say that unfortunately I have a bill of mine under 
consideration on the floor imminently, and I need to briefly 
step out of the hearing. We tried to move the bill so it 
wouldn't conflict with the hearing, but as you can imagine, 
trying to manage the schedules of 235 Members of Congress is 
not always possible. The situation was unavoidable. So you will 
forgive me, I have to leave. I will come back as soon as 
possible. And the other co-Chair of this hearing will Chair the 
hearing. Thank you.
    Ms. Lofgren. [Presiding.] At this point I would recognize 
the gentleman, Mr. Cohen.
    Mr. Cohen. Thank you, Madam Chair.
    Mr. Cardozo--and I apologize, I had to be out of the room 
for a little bit, if you have answered this--but I understand 
that it is the position of the city that for a person to be 
paid, they have to sue and win a judgment. Is that accurate?
    Mr. Cardozo. If we can't--obviously, the best way to do 
this is, we believe, is the Victim Compensation Fund. Barring 
that, if we cannot settle this entire matter--because the city 
does not believe, I am talking to the city, that it did 
anything wrong, and the contractors do not believe that it did 
anything wrong, the huge liability that far exceeds the 
available insurance--that we have no choice but to be fighting 
with people who we don't want to be fighting with. And the 
answer to your question, therefore, would be yes.
    Mr. Cohen. So you don't believe that if somebody has a 
claim that you believe is a just claim that you could settle it 
without the necessity of having an adverse appearance?
    Mr. Cardozo. Well, I don't believe--I believe many people 
are injured, Congressman. But the fact that they are injured 
does not mean that the city's civil defense immunities are not 
valid; it does not mean that the city was negligent in any way. 
And, therefore, I do believe, given the magnitude of what we 
are talking about that far exceeds the insurance, the city and 
the contractors have no choice but to say because we don't 
believe we did anything wrong that we are going to have to 
litigate.
    Mr. Cohen. But don't you sometimes have a claims 
commissioner or claims adjuster that settles claims even though 
the city has immunity?
    Mr. Cardozo. Absolutely you do. But that is in a situation 
where your insurance ultimately will be sufficient to cover. In 
the analogy I drew before to Congressman Nadler--I don't know 
if you were here--if you were in a car accident, and your 
insurance company settled for the full amount of your insurance 
policy with the first plaintiff and left you uninsured for the 
second plaintiff, when you don't think you did anything wrong, 
you would be quite upset.
    Since the city does not believe it did anything wrong, it 
does not mean that these people are not injured, are not sick. 
But the city does not believe it did anything wrong. It 
believes that the captive insurance company was created, as it 
says, to insure the city and the contractors, that it has no 
choice therefore but to say we are not liable and you are going 
to have to prove your case in court.
    Which is exactly why the answer to this whole problem is 
what we have been talking about for the last 2 hours: the 
creation of a victims' compensation fund.
    Mr. Cohen. Let me ask the doctor, please----
    Thank you, sir.
    Dr. Melius, there were some 96 hours, a timeline placed in 
here in this statute, for immediate aftermath. Ninety-six hours 
and 1 minute--just as exposed to injury or illness?
    Dr. Melius. Absolutely. And someone exposed after 96 hours, 
started their exposure after 96 hours, could also have 
developed as severe a respiratory health problem or other 
health problem as someone exposed during that time period.
    Mr. Cohen. Is there some period of time where the elements 
would have dissipated in the immediate area of where the health 
concern would not have been serious?
    Dr. Melius. As long as there was work being done on the 
pile or at Fresh Kills, the other areas, there was always the 
likelihood that people would develop (have had serious 
exposure), enough to develop illness. Now, that probably went 
down as time went by and the exposures might have decreased, 
but one can't say that across the board absolutely for 
everybody.
    So during the time period of the work on the pile and the 
other affiliated or associated operations, almost any time 
someone could have had the exposure and developed disease. The 
problem was that people were not aware of the severity of the 
exposure and were not properly protected for most of the time 
period they were down there.
    Mr. Cohen. What would be an appropriate hour, if you could 
pick one--and it is difficult; there is no magic moment when 
something starts and stops--but when the likelihood of illness 
arising as a result of agents just on the pile, when would it 
have gotten to be considered to be safe? Or was it the whole 
time that it was there?
    Dr. Melius. I believe it was the whole time that it was 
there. It is defining terms of the medical portion of the bill 
in terms of eligibility for the medical programs for people 
that worked on the pile. There is a date when that work ended, 
basically, and that was the time exposure stopped.
    However, I will say that there were other people who did 
not work in the pile but who did some of the cleanup in 
residences and businesses in the downtown area surrounding 
there that occurred sometime after. People left buildings or 
didn't bother to clean them and then came back to try to clean 
them. So there were even exposures occurring after that time.
    I think that can all be defined and constrained within 
eligibility terms. I don't think that would be a significant 
problem. But it is a significant period of time.
    Ms. Lofgren. The gentleman's time has expired.
    Mr. Cohen. Wow, that was the fastest 5 minutes I have ever 
experienced. Thank you.
    Ms. Lofgren. Thank you, Mr. Cohen.
    The gentleman from New York, Mr. Weiner, is now recognized.
    Mr. Weiner. Thank you very much.
    Let me just say, I agree, Mr. Cardozo, completely, that 
this is not the responsibility of the city. This is the 
responsibility of the Federal Government, and there was very 
little disagreement about that in the early days after 
September 11. The Federal Government has a responsibility to 
take care of the people that were harmed in this attack on the 
people of the United States.
    And I have to say that the arguments being made by Mr. 
Frank are evocative of the early days and the months that went 
on during the consideration. You know, while we have a certain 
level of history in our mind about this, let us not forget that 
the work of Mr. Feinberg was very controversial. Just about 
every single day, someone would say ``Well, what do you do 
about this circumstance?''
    And we empowered the master to make decisions that were 
very difficult. If you think it is difficult trying to learn 
whether someone's mental illness was a result of September 11, 
imagine trying to put a value on someone's life. Imagine trying 
to be the master when you are coming and you have the victims 
of a family who was a dishwasher and someone who was a 
stockbroker and someone who was the CEO of a company and 
someone who was a police sergeant, and trying to come up with a 
dollar value. If you think these issues are controversial and 
are subject to difficult judgment calls, that is why we didn't 
do it. We left it to the special master.
    And I think for all of the notion now that ``Wow, that went 
great. Why don't we do that again?'' it was only because of the 
work of the master. And I just want to say publicly what I have 
said before, you know, Mr. Feinberg was in a difficult 
situation because to some degree we in the legislature said he 
could not do things that many people were demanding he do. For 
example, the difference between the attack in 1993 and the 
attack in 2001, you could make a pretty good argument there was 
no difference. Yet the legislature made it very clear we were 
going to cover some things and not others.
    So I am confident that a special master empowered by 
Congress will have to make difficult decisions and will make 
them. And I almost am absolutely convinced that it is true, 
this universe is going to grow--as was the testimony--this 
universe is going to grow. But that is a reason why you have to 
build, not a reason why you don't. That is exactly the reason 
to take some level of the mystery out of how we are going to 
deal with this problem.
    We have too many people who are short of breath today, who 
are getting medical treatment today, trying to figure out what 
it is that they should be doing. We could very easily lawyer 
this for years and years and years. The imperative that we in 
Congress have is to try to find a way to solve this problem.
    And I think that the Victim Compensation Fund for all its 
imperfections, for all of its judgment calls, for all of its 
controversy, worked. We are here because we did this once 
before, and we found, frankly, a model that worked pretty well. 
It was not perfect. And I remember seeing articles about the 
disparities. And listening to Mr. Feinberg trying to explain to 
all of us the decisions--and I remember thinking as I read 
these stories, ``Boy oh boy, I am glad I didn't have to make 
that decision.''
    And the same might happen here. We might have controversy 
that emerges. We might have people that argue extreme cases and 
get extreme judgments. We might have people that have said, 
``You know what, you really have pretty good insurance from 
some other source, maybe you go elsewhere.''
    But the idea that this should be the subject of years and 
years of litigation between the city and the plaintiffs is what 
we need to stop. We need to make sure that that doesn't happen.
    Mr. Conyers. Would the gentleman yield?
    Mr. Weiner. I certainly would.
    Mr. Conyers. That is why I suggested in my opening 
statement, Mr. Weiner, that this is a perfect opportunity for 
these parties to begin coming together to make the kind of 
agreement to work this out so that we don't have lawyers or 
congressmen going through this, hashing this, rehashing this 
out for years.
    Mr. Weiner. Well, and I just wanted, Mr. Chairman, I just 
wanted to say one other thing.
    You know, another thing about the Victim Compensation Fund 
that we should remember in the fondest light is how 
bipartisanly we kind of came together around the idea that this 
was the right thing to do. I would hope that we kind of 
remember that spirit and we shouldn't say to someone, ``Well, 
because you are dying more slowly, we are going to turn our 
back on you.'' Because that is really what is happening here. 
We have a group of victims that are just as much a victim of 
this attack as those people that were in those two buildings 
and those people that were around.
    You know, if you think about it, if we knew then what we 
know today, I ask all of my colleagues: Would we have not 
included this class? If someone said to us in 2002, in 2001, 
``Ladies and gentlemen of the Congress, we believe that we will 
know fully how many people suffered from this by looking at who 
developed respiratory diseases up until the year 2012. That is 
how we are going to do it.'' We would have said, ``Absolutely, 
put those people in,'' because those are the people we wanted 
to help and to serve.
    That group of fact is no different than it is today. And 
let us not forget that a lot of this discussion we had, ruled 
on it, decided in a bipartisan way we wanted to cover, and so 
all we are saying with that one-line extension that Mr. 
Feinberg is suggesting is: Do Congress' will again.
    And I yield back the balance of my time.
    Ms. Lofgren. The gentleman yields back.
    And I believe we have exhausted the number of members 
wishing to ask questions. This has been a very helpful hearing. 
I think it has elicited issues that we might not have fully 
appreciated at the beginning. I think it is worth noting that 
the attack on 9/11 was an attack on America. I was born and 
raised in California. The valedictorian of my high school 
class, Naomi Solomon, died in those Towers. We had firemen from 
California who, search and rescue specialists, the entire 
country responded just as we would expect a response today if 
there were a very serious issue for our country.
    So we want to thank all of the witnesses for their 
testimony here today.
    Without objection, Members will have 5 legislative days to 
submit any additional written questions to any of you 
witnesses, which we will forward. And if we are forwarding 
questions, we would ask that you answer as promptly as you can 
so that the answers may be made part of the record.
    Without objection, the record will remain open for 5 
legislative days for the submission of other additional 
materials.
    And, again, our thanks. People don't realize that our 
witnesses are volunteers who have come here to help inform the 
Congress so that we can do the best job for our country. We 
thank you very much.
    And with that, the hearing is adjourned.
    [Whereupon, at 12:51 p.m., the Subcommittees were 
adjourned.]
                            A P P E N D I X

                              ----------                              


               Material Submitted for the Hearing Record

 Prepared Statement of the Honorable Zoe Lofgren, a Representative in 
Congress from the State of California, and Chairwoman, Subcommittee on 
Immigration, Citizenship, Refugees, Border Security, and International 
                                  Law
    In the immediate aftermath of one of our nation's greatest 
tragedies, Congress created the 9/11 Victims Compensation Fund. By all 
accounts, the VCF was a stunningly successful program.
    At least as far as it went.
    The program, a truly bipartisan effort conceived hurriedly during 
what would become the long shadow of the attacks of 9/11, provided a 
means to compensate the victims of the 9/11 attacks and their family 
members. In exchange for consideration of claims through an 
administrative process of remarkable simplicity, those who elected to 
apply under the VCF agreed not to pursue lawsuits.
    Over the short, 33-month period during which the VCF was conceived 
and operated, it distributed over $7.049 billion to survivors of 2,880 
people killed in the attacks and to 2,680 people injured in the attacks 
or in the rescue efforts conducted immediately after the attacks.
    The average award for families of the dead exceeded $2 million. The 
average award for injured victims came to nearly $400,000.
    According to the final report of Special Master Feinberg, one of 
our witnesses today, ``97% of the families of deceased victims who 
might otherwise have pursued lawsuits for years . . . received 
compensation through the fund.''
    As I said, a stunning success.
    And I look forward to hearing today from Mr. Feinberg. His able 
administration of the fund and his expertise regarding administrative 
alternatives to tort litigation will help the Committee greatly.
    I mention the specter of tort litigation for a reason. Over 10,000 
lawsuits have been filed in New York City by people--first responders, 
building and trades workers, volunteers from around the country who 
rallied to the World Trade Center site to help locate survivors, 
recover the dead and clean up the debris from the fallen towers--most 
of whom have suffered illnesses resulting from their exposure to the 
toxic dust that covered so much of lower Manhattan and surrounding 
areas.
    These lawsuits--filed by people who, by no fault of their own, were 
not eligible to be compensated under the VCF because they discovered 
their illnesses too late, they didn't know they could even apply 
because they thought the fund was only for those who died, or they came 
to site a few short hours after the 96-hour ``immediate aftermath''--
are taking far too long to decide.
    The doctors and scientists seem to all agree. People are sick and 
will continue to get sick because of their exposure to the World Trade 
Center's noxious dust. From the City's testimony today, it seems clear 
the City agrees.
    The question is what do we do about it? Worker's compensation has 
failed. Medical programs haven't covered every one. The 
Congressionally-created Captive Insurance Fund has paid pitifully few 
claims--five to be exact--while the City defends every claim.
    Today's hearing is the beginning of our quest to answer the 
question: what do we do?
    I want to thank Chairman Nadler for his leadership on these issues. 
The bill, HR 3543, the ``James Zadroga 9/11 Health and Compensation Act 
of 2007,'' authored by Chairman Nadler, Rep. Maloney and Rep. Fossella 
represents a good first attempt at addressing the issues.
    I believe this hearing will help us begin to answer the question, 
``What do we do?'' I believe we will leave here today with a better 
sense of the problems people are facing. From there, I am hopeful that 
we can begin to structure a fair and just program to compensate those 
who continue to bear the deep scars from that terrible day in 
September, almost seven years ago.

                                

Prepared Statement of the Honorable John Conyers, Jr., a Representative 
  in Congress from the State of Michigan, Chairman, Committee on the 
Judiciary, and Member, Subcommittee on the Constitution, Civil Rights, 
                           and Civil Libertie
    In the wake of the World Trade Center attacks, a victims' 
compensation fund (VCF) was put together quite quickly. That effort was 
a success, and we are happy to be joined today by the former Special 
Master in charge of that effort, Kenneth Feinberg.
    The VCF, and the legislation that created it, was a response 
focused on the immediate--the persons killed or injured that morning 
and those who went into the wreckage while the fires still raged. Those 
people and their family received assistance through the VCF.
    But there were others. Some didn't know that there was a place for 
them in the VCF because outreach was focused on the families of the 
dead, rather than on the living. Some weren't eligible for the VCF 
because they were on-site within the first 96 hours after the planes 
hit. Others' symptoms have been gradually manifesting themselves, and 
there is little recourse for them.
    What do we see now? 70% of the workers being monitored showing 
respiratory problems. Hundreds of people already stricken with cancer 
from airborne particles--cancers so virulent that people have already 
died. Many of these victims bravely rushed in to help in an emergency. 
Others trusted their employers who sent them to do clean-up in the 
months that followed, even though they were sent into the site without 
protective gear.
    Even as the environmental disaster spread a dust of poison over the 
site and the surrounding area, the EPA, OSHA, the City, and State 
officials took a ``do it yourself'' approach to protecting the public. 
FEMA refused to relocate people from contaminated homes and apartments, 
and refused to pay for cleanup. The suggestion to just wipe things down 
with a wet rag was as ineffective a response to asbestos, lead, and 
PCBs as duct tape would have been to a chemical weapons attack.
    In 2003, we put a billion dollars into the World Trade Center 
Captive Insurance Company (WTCC) to handle continuing claims from 
debris removal. This was done through FEMA, which was supposed to be 
the place to go for emergency services. Since then, we have learned a 
lot more about how FEMA sees its mission, and how it is managed.
    The WTCC was supposed to serve these victims by providing a 
mechanism to pay claims. But instead, the WTCC spends most of its time 
challenging claims, and even litigating against the very people they 
were chartered to help! Sadly, instead of a duty to serve the victims, 
the WTCC has chosen to argue that they have a ``duty to defend'' 
against every claim. As a result, the WTCC has only compensated five 
victims. While the WTCC fights and denies, the illnesses worsen.
    There are over 8,600 claims outstanding. Will there be any money 
left to compensate these victims once the WTCC has spent it all on 
attorneys fees fighting them?
    Compare this for a moment against what Mr. Feinberg was able to do 
with the VCF, where 97% of claimants were compensated.
    The WTCC needs to stop wasting the money we gave it, and start 
dealing with the thousands of people who they were created to serve.
    I want thank Chairwoman Zoe Lofgren and Chairman Jerry Nadler for 
having this joint hearing, and to congratulate Jerry Nadler for all of 
his hard work on H.R. 3543, legislation that seeks to confront these 
hard issues.

                                

Prepared Statement of the Honorable Jerrold Nadler, a Representative in 
Congress from the State of New York, and Chairman, Subcommittee on the 
            Constitution, Civil Rights, and Civil Liberties






                                

       Prepared Statement of the Honorable Sheila Jackson Lee, a 
    Representative in Congress from the State of Texas, and Member, 
 Subcommittee on Immigration, Citizenship, Refugees, Border Security, 
                         and International Law
    Chairwoman Lofgren, and Chairman Nadler, ranking members King and 
Franks, thank you for convening today's very important hearing on 
``Paying with Their Lives: The Status of Compensation for 9/11 Health 
Effects.'' In this hearing, will address past successes, as well as the 
current and future challenges of compensating people for illnesses and 
injuries that resulted from the tragic September 11, 2001 attacks on 
the World Trade Center.
    The sad reality is that when the World Trade Center collapsed on 9/
11, thousands of first responders, local residents, workers, students, 
and others inhaled a poisonous mixture of asbestos, lead, PCBs, and 
other contaminants. More than six years later, many of these people 
have become sick from the toxic dust, and there is currently no 
comprehensive federal program to provide them with health care or 
compensation.
    Existing health coverage for this population varies widely, and a 
number of people are either uninsured or under insured. The existing 
system of workers compensation has failed, and the World Trade Center 
Captive Insurance Fund, established with a $1 billion federal 
appropriation, has spent millions of dollars in administrative and 
legal costs to fight against rather than to pay claims filed by first 
responders and others whom Congress intended to assist. Only a handful 
of claims have been paid.
    Following 9/11, over 50,000 individuals responded to the call and 
engaged in clean0up activities at Ground Zero. Individuals were exposed 
to asbestos and other harmful chemicals at the site.
    Tens of thousands of people were living, working, and going to 
school in the areas around the World Trade Center. People were exposed 
to the harmful chemicals weeks or months after the buildings collapsed. 
There was no complete health monitoring of the risks of exposure to the 
dangerous substances that were present.
    These dangerous substances included hundreds of tons of asbestos, 
nearly half a million pounds of lead, and vast amounts of glass fibers, 
steel, and concrete that blanketed New York and the surrounding areas. 
This dust was blown into nearby buildings, schools, and residences.
    Fires burned for many months, in part due to the 150,000 gallons of 
oil stored in the buildings, which emitted heavy metals, PCBs and other 
toxic chemicals, like dioxin and benzene. Lower Manhattan had been 
turned into a 16-acre disaster zone, which resulted in an unprecedented 
environmental assault for the city. The air was hazardous and caused 
serious physical injury and death.
    A study prepared for New York City Mayor Michael Bloomberg 
estimates that the number of individuals most heavily exposed to the 
possible environmental hazards and trauma of the 9/11 attach amount to 
over 400,000 people.
    In the immediate aftermath of 9/11, Congress created the Victim 
Compensation Fund, a unique program designed to compensate people for 
losses sustained as a result of the attacks on the World Trade Center, 
and to limit litigation against the airline industry.
    Attorney General John Ashcroft appointed Kenneth Feinberg as the 
special master over the Fund. The fund was established as an 
entitlement for eligible individuals and was not subject to 
appropriation. Mr. Feingold has discretion to determine eligibility and 
the amount of compensation. In return for accepting these funds, 
recipients waved their right to sue the airlines.
    The fund had an application deadline of December 22, 2003. Over a 
33-month period, the Fund distributed over $7 billion to survivors of 
nearly 2,880 people killed on 9/11, and to 2, 680 people who were 
injured in the attacks or the rescue efforts.
    Families of the deceased were paid in amounts from $800,000 to $6.5 
million. Individuals were compensated for physical injuries from $500 
to $7.1 million, and the Fund paid $1 billion in claims to people who 
suffered physical injuries.
    The Fund was successful because it provided an alternative to 
litigation. It was expedient and less costly. Ninety-seven percent of 
the families that participated in the program received compensation.
    There was an application deadline for people to file claims under 
the Fund. Most of the persons had filed claims with the Fund, but many 
individuals who were injured as a result of 9/11 were time-barred. The 
Fund's regulations limited compensation to workers who were injured 
within the immediate 96 hours after the attack.
    Specifically, in 2003 Congress provided $1 billion in 9/11 disaster 
assistance to the Federal Emergency Management Agency (FEMA) to 
establish a captive insurance company for claims arising from removing 
debris, which also included claims by city employees.
    The purpose of the Fund was to remove the financial burden from the 
City and provide compensation for those working at Ground Zero. In the 
five years since the fund has closed, thousands of individuals have 
claimed to be suffering from 9/11-related health effects. 
Approximately, 8,000 plaintiffs are suing the City of New York and 
several contractors whose employees worked at Ground Zero.
    The City has expressed concern that if it begins paying claims, it 
would exhaust the $1 billion appropriated by Congress, and that it 
would be deemed to have waived its claims to immunity. In a recent 
ruling, the U.S. Court of Appeals for the Second Circuit held that 
``New York defenses are just that: defenses to liability, rather than 
from immunity from suit.''
    Congress has responded with a bipartisan bill, H.R. 3542, ``9/11 
Health and Compensation Act.'' This bill introduced by Representatives 
Maloney, Nadler, and Fossella. I am a proud co-sponsor of this bill.
    This bill has two main components. First, it would provide 
comprehensive health care to everyone who was exposed to the toxins at 
Ground Zero. Second, it would provide compensation for economic damages 
and losses by reopening the 9/11 Victim Compensation Fund. These latter 
provisions are before the Judiciary Committee.
    Possible changes to the Fund have been suggested. These include, 
extending the date for people to submit claims; expanding the 
definition of ``aftermath of 9/11'' to cover a longer period; expanding 
the geographical boundaries to include more people that suffer 
respiratory ailments; expanding the Fund to include psychological harm; 
allowing second claims to be made in limited circumstances; expanding 
the pool of applicants to include residents, area workers, students, 
and others.
    I believe this legislation is taking us in the right direction. I 
welcome the opportunity to learn more information so that we can craft 
the best legislation that provides the maximum assistance to the most 
people.
    Thank you, I yield the balance of my time.

                                

 Prepared Statement of the Honorable Darrell Issa, a Representative in 
Congress from the State of California, and Member, Subcommittee on the 
            Constitution, Civil Rights, and Civil Liberties
    Mr. Chairman, thank you for holding this important hearing. It has 
been over six years since the tragedies of September 11, 2001 occurred, 
and I appreciate this opportunity to discuss the status of compensating 
both the victims of 9/11 as well as those individuals who risked their 
lives in rescue and cleanup efforts.
    As with the assassination of President John F. Kennedy, we can all 
remember where we were when we first heard of the planes striking the 
World Trade Center, the Pentagon, and the plane downing in Pennsylvania 
due to the bravery of those onboard. It was one of the darkest days in 
American history.
    The country responded with a remarkable outpouring of unity and 
generosity. Americans from all states found some way to assist during 
the aftermath--everyone wanted to do everything they could to hold a 
shocked country together.
    In Congress, we acted to appropriate at least $20 billion to the 
City of New York alone for cleanup and rebuilding efforts. We tightened 
our security at airports and on personal identification, and we 
launched an unprecedented offense against terrorism worldwide.
    Today our country is safer than it was before September 11, but the 
scars from the attack still remain. Nearly 3000 people lost their lives 
on 9/11, and many more were injured. The Victims Compensation Fund of 
2001 distributed approximately $6 billion to the survivors of those 
killed on 9/11 and over $1 billion to individuals injured in the 
attacks or rescue efforts. However, many individuals who worked in the 
cleanup effort at ground zero were injured at the site, and not all of 
these injuries occurred immediately.
    The Victims Compensation Fund (VCF) is widely held to have been a 
success. This is in no small part attributable to the fact that the 
claimants were relatively easily identifiable. We knew who was hurt or 
killed in the attacks and rescue efforts, and we knew who their 
survivors were.
    H.R. 3543, the ``James Zadroga 9/11 Health and Compensation Act of 
2007,'' is a well-intentioned but unrealistic attempt to expand the 
claimant base of the original VCF. The bill's main goal is to 
compensate individuals injured by air contaminants in New York 
following 9/11, but the bill also opens up the pool to people who 
experienced emotional distress without physical harm. Additionally, the 
claimants include anyone who lived, worked, or attended school in the 
New York City disaster area, an area defined ambiguously at best. I 
cannot support H.R. 3543 in its current form for several reasons.
    While some individuals may deserve compensation for exposure to air 
contaminants caused by the 9/11 attack, opening the pool to an 
extremely broad geographic area would generate limitless claims. Also, 
as we have realized from the World Trade Center Captive Insurance 
Company established to compensate cleanup workers for injuries, it is 
extremely difficult to determine which injuries, especially respiratory 
injuries, were caused by working at and around ground zero. Along those 
same lines, allowing individuals with only psychological harm access to 
any compensation pool would exponentially increase the number of 
claimants. It is not that some people do not have genuine emotional 
distress and are in need of assistance, it is that it is incredibly 
difficult to wean out the fraudulent claims from the genuine claims. 
That is why so many states do not allow damages for emotional distress 
without physical harm.
    I supported past funding efforts for the City of New York following 
September 11, and I will continue to support efforts to assist 
individuals harmed during the attacks, rescue efforts, and cleanup. We 
should be able to work together to find ways to improve this 
legislation, and I look forward to working with my colleagues on that 
effort.

                                












                                


                                
























































                                




                                
























                                




                                








                                


                                










                                 
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