    [House Hearing, 111 Congress]
    [From the U.S. Government Publishing Office]

             JAMES ZADROGA 9/11 HEALTH AND COMPENSATION ACT OF 2009

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

                                 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 ELEVENTH CONGRESS

                                 FIRST SESSION

                                       ON

                                    H.R. 847

                                   __________

                                 MARCH 31, 2009

                                   __________

                               Serial No. 111-12

                                   __________

             Printed for the use of the Committee on the Judiciary

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

                       U.S. GOVERNMENT PRINTING OFFICE
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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            DANIEL E. LUNGREN, California
    MAXINE WATERS, California            DARRELL E. ISSA, California
    WILLIAM D. DELAHUNT, Massachusetts   J. RANDY FORBES, Virginia
    ROBERT WEXLER, Florida               STEVE KING, Iowa
    STEVE COHEN, Tennessee               TRENT FRANKS, Arizona
    HENRY C. ``HANK'' JOHNSON, Jr.,      LOUIE GOHMERT, Texas
      Georgia                            JIM JORDAN, Ohio
    PEDRO PIERLUISI, Puerto Rico         TED POE, Texas
    LUIS V. GUTIERREZ, Illinois          JASON CHAFFETZ, Utah
    BRAD SHERMAN, California             TOM ROONEY, Florida
    TAMMY BALDWIN, Wisconsin             GREGG HARPER, Mississippi
    CHARLES A. GONZALEZ, Texas
    ANTHONY D. WEINER, New York
    ADAM B. SCHIFF, California
    LINDA T. SANCHEZ, California
    DEBBIE WASSERMAN SCHULTZ, Florida
    DANIEL MAFFEI, New York
    [Vacant]

           Perry Apelbaum, Majority 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
    HOWARD L. BERMAN, California         STEVE KING, Iowa
    SHEILA JACKSON LEE, Texas            GREGG HARPER, Mississippi
    MAXINE WATERS, California            ELTON GALLEGLY, California
    PEDRO PIERLUISI, Puerto Rico         DANIEL E. LUNGREN, California
    LUIS V. GUTIERREZ, Illinois          TED POE, Texas
    LINDA T. SANCHEZ, California         JASON CHAFFETZ, Utah
    ANTHONY D. WEINER, New York
    CHARLES A. GONZALEZ, Texas
    WILLIAM D. DELAHUNT, Massachusetts

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

      Subcommittee on the Constitution, Civil Rights, and Civil Liberties

                       JERROLD NADLER, New York, Chairman

    MELVIN L. WATT, North Carolina       F. JAMES SENSENBRENNER, Jr.,
    ROBERT C. ``BOBBY'' SCOTT, Virginia  Wisconsin
    WILLIAM D. DELAHUNT, Massachusetts   TOM ROONEY, Florida
    HENRY C. ``HANK'' JOHNSON, Jr.,      TRENT FRANKS, Arizona
      Georgia                            STEVE KING, Iowa
    TAMMY BALDWIN, Wisconsin             JIM JORDAN, Ohio
    JOHN CONYERS, Jr., Michigan          LOUIE GOHMERT, Texas
    STEVE COHEN, Tennessee
    BRAD SHERMAN, California
    SHEILA JACKSON LEE, Texas

                         David Lachmann, Chief of Staff

                        Paul B. Taylor, Minority Counsel

                                C O N T E N T S

                                  ----------

                                 MARCH 31, 2009

                                                                       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..............................................     1
    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................     3
    The Honorable F. James Sensenbrenner, Jr., a Representative in
      Congress from the State of Wisconsin, and Ranking Member,
      Subcommittee on the Constitution, Civil Rights, and Civil
      Liberties......................................................     5
    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..     6
    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....................................     8

                                   WITNESSES

    Mr. Kenneth R. Feinberg, former Special Master, Victim
      Compensation Fund
      Oral Testimony.................................................    11
      Prepared Statement.............................................    13
    Ms. Barbara Burnette, former Detective, New York City Police
      Department
      Oral Testimony.................................................    25
      Prepared Statement.............................................    27
    Mr. James Melius, MD., Administrator, New York State Laborers'
      Health and Safety Trust Fund
      Oral Testimony.................................................    29
      Prepared Statement.............................................    31
    Ms. Christine LaSala, Chief Executive Officer, World Trade Center
      Captive Insurance Fund
      Oral Testimony.................................................    36
      Prepared Statement.............................................    38
    Mr. Michael A. Cardozo, Corporation Counsel, City of New York
      Oral Testimony.................................................    46
      Prepared Statement.............................................    47
    Mr. Theodore H. Frank, American Enterprise Institute
      Oral Testimony.................................................    50
      Prepared Statement.............................................    53
    Mr. Richard Wood, President, Plaza Construction Corporation
      Oral Testimony.................................................    69
      Prepared Statement.............................................    72

                                    APPENDIX
                   Material Submitted for the Hearing Record

    Prepared Statement of Christine C. Quinn, Speaker, New York City
      Council........................................................    91
    Prepared Statement of Associated Builders and Contractors (ABC)..    92
    H.R. 847, the ``James Zadroga 9/11 Health and Compensation Act of
      2009''.........................................................    95

             JAMES ZADROGA 9/11 HEALTH AND COMPENSATION ACT OF 2009

                                  ----------

                            TUESDAY, MARCH 31, 2009

          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 Subcommittees met, pursuant to notice, at 10:06 a.m.,
    in room 2141, Rayburn House Office Building, the Honorable
    Jerrold Nadler (Chairman of the Subcommittee on the
    Constitution, Civil Rights and Civil Liberties) presiding.
        Present from the Subcommittee on Immigration, Citizenship,
    Refugees, Border Security, and International Law:
    Representatives Lofgren, Jackson Lee, Waters, Weiner, King,
    Harper, Lungren, and Chaffetz.
        Present from the Subcommittee on the Constitution, Civil
    Rights and Civil Liberties: Representatives Nadler, Watt,
    Scott, Johnson, Conyers, Jackson Lee, Sensenbrenner, Rooney,
    and King.
        Also present: Representative Maloney.
        Staff present from Subcommittee on Immigration,
    Citizenship, Refugees, Border Security, and International Law:
    David Shahoulian, Majority Counsel; Zachary Somers, Minority
    Counsel; and Andres Jimenez, Majority Professional Staff
    Member.
        Staff present from Subcommittee on the Constitution, Civil
    Rights, and Civil Liberties: David Lachmann, Subcommittee
    Majority Chief of Staff; Paul Taylor, Minority Counsel; and
    Matthew Morgan, Majority Staff Assistant.
        Mr. Nadler. [Presiding.] This joint hearing of the
    Subcommittee on the Constitution, Civil Rights, and Civil
    Liberties, and the Subcommittee on Immigration, Citizenship,
    Refugees, Border Security, and International Law will now come
    to order.
        We will begin the proceedings by recognizing the
    distinguished Chair of the Subcommittee on Immigration,
    Citizenship, Refugees, Border Security, and International Law
    for an opening statement.
        Ms. Lofgren. Thank you, Mr. Nadler.
        Last year, the Immigration and Constitution Subcommittees
    held a joint hearing on the 9/11 Victims Compensation Fund,
    where we examined the need to reopen the funds for those who
    were injured as a result of the 9/11 attacks but whose injuries
    did not become clear until after the VCF fund expired.
        That hearing was instrumental in leading us to the bill we
    are considering today. Congress created the VCF in the
    immediate aftermath of the 9/11 attacks. What we learned at the
    hearing is that the VCF was a stunningly successful program, at
    least as far as it went.
        A truly bipartisan effort quickly conceived days after 9/
    11, the program established a system to compensate injured 9/11
    victims and the family members of the deceased. Over its short
    existence, the VCF distributed just over $7 billion, $6 billion
    of which was distributed to the surviving family members of
    2,880 people who were killed in the attacks and $1 billion to
    the 2,680 people who were injured in the attacks during the
    rescue efforts conducted immediately after the attacks.
        The average award for families of the dead was about $2
    million. The average award for injured victims was just under
    $400,000. As we learned in our last hearing, this was all done
    in 33 months, with overheads costs of less than 3 percent and
    with 97 percent of the families of deceased victims opting into
    the fund rather than pursuing tort relief in the court.
        As Special Master Ken Feinberg states in his written
    testimony before us today, ``This was one of the most
    efficient, streamlined, and cost-effective programs in American
    history.''
        We now have a bill before us that would reopen the VCF and
    provide protection for those who, by no fault of their own,
    could not take advantage of the fund when it was available.
    This is as important as ever.
        Last year, we were dealing with some 10,000 lawsuits. We
    are now up to over 11,000. These suits have been filed by first
    responders, workers, and volunteers from around the country who
    rallied to help locate survivors recover the dead and clean up
    debris from the fallen towers. Most of these people are now
    suffering because of their exposure to the toxic dust that
    covered much of Lower Manhattan.
        These lawsuits, filed by people who were not eligible to be
    compensated under the VCF because they discovered their
    illnesses too late, didn't even know they could even apply
    because they thought the fund was only for those who died or
    who worked on the site after the first 96 hours after attacks,
    taking far too long to decide.
        As noted last year, the doctors and scientists already
    agree: People are sick and will continue to get sick because of
    their exposure to World Trade Center dust. We must resolve this
    problem.
        The question is, how? Workers' compensation has failed.
    Medical programs aren't covering enough people. And the Captive
    Insurance Fund created by Congress to resolve claims has
    instead used the money to defend against each and every one of
    them. Five years and $270 million in administrative and legal
    costs later, the Captive Insurance Fund has settled less than
    10 claims.
        Last year's hearing led us to determine it was necessary to
    reopen the VCF for those who deserve our help. After months of
    hard work and difficult negotiations, Chairman Nadler, along
    with Representative Carolyn Maloney, Peter King, and Michael
    McMahon, arrived at the compromise we have before us today.
        I believe this bill, while perhaps not perfect, goes a long
    way to establish a fair and just program to compensate those
    who continue to bear the deep scars from 9/11. Now, I look
    forward to hearing from the witnesses on this bill. Their
    thoughts and discussions we will have today will help us as we
    continue to work on these issues and move this bill through the
    legislative process.
        It is unusual to have a joint hearing of two Subcommittees.
    And although the Immigration Subcommittee is known for
    immigration, we do have assigned to us a responsibility for
    claims, which is why we are part of this hearing. And certainly
    the issue of due process is one that the Constitution
    Subcommittee plays a lead role in.
        And luckily for us, not only is the Chairman of that
    important Subcommittee here today; he also knows about this
    because the World Trade Center was in his district, and he is a
    New Yorker and a terrific lawyer and will run the rest of this
    hearing.
        And I thank the gentleman and yield back.
        Mr. Nadler. I thank the gentlelady. And I will now
    recognize myself for 5 minutes.
        Today, these two Subcommittees 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
    after the terrorist attack on 9/11.
        Last year, we held a hearing that examined the possible
    mechanisms that could be used to compensate those suffering
    from 9/11-related health effects. And this year, we have a
    bill, H.R. 847, the ``James Zadroga 9/11 Health and
    Compensation Act of 2009,'' which I believe provides the best
    avenue to making our first responders, area residents, workers,
    students and others whole.
        [The bill, H.R. 847, is availble in the Appendix.]
        Mr. Nadler. I want to first thank the Chair of the
    Immigration and Claims Subcommittee, Congresswoman Lofgren, not
    only for agreeing to hold this joint hearing, but for her
    support and outstanding work on this issue over the last couple
    of years.
        I would also like to thank my colleagues, Congresswoman
    Carolyn Maloney, Congressman Peter King, and Congressman Mike
    McMahon, with whom I have introduced the 9/11 Health and
    Compensation Act, which would both provide comprehensive
    medical treatment to any person whose health was affected and
    would reopen the Victims Compensation Fund so that people can
    be compensated for their economic losses.
        And I particularly want to mention Congresswoman Maloney,
    who has worked for, what, 6, 7 years now so heroically and on
    this problem.
        We came very close to passing this bill last year, and I am
    hopeful that, with the changes we have made to the bill this
    year and with the support of my colleagues on the Committee, we
    can finally pass it this year and provide relief to so many
    people who desperately need it.
        I also want to welcome our witnesses and thank them for
    their participation. We are fortunate to have an expert panel
    with us today to discuss this legislation.
        Finally, I would like to recognize those individuals who
    have traveled to Washington to attend this hearing. I thank you
    all for coming.
        I want to specifically recognize Ms. Leona Hull, the sister
    of Leon Heyward.
        Many of you in the audience are among those who have been
    denied proper compensation thus far, and I hope we can examine
    today how this system has failed so many of you and how we can
    help with this legislation.
        After the collapse of the Twin Towers on 9/11, tens of
    thousands of first responders, residents, area workers, and
    students were exposed to a cocktail of toxic substances that
    was said to be worse than the Kuwaiti oil fires. They are now
    coming down with diseases like sarcoidosis, lymphoma, and rare
    blood cancers.
        In June 2007, then-Senator Clinton and I held companion
    hearings on the actions of the Environmental Protection
    Administration and other Federal agencies that clearly were a
    contributory factor to causing harm to the health of many
    people.
        At the House hearing, we heard the callous voice of former
    EPA Administrator Christine Todd Whitman trying to explain why
    she told New Yorkers that the air was safe to breathe, when in
    fact she had considerable evidence to the contrary. We reviewed
    the EPA inspector general's report, which found that the EPA's
    statements ``were falsely reassuring, lacked a scientific
    basis, and were politically motivated.''
        We heard about how the White House changed the EPA press
    releases ``to add reassuring statements and delete
    precautionary ones.''
        After the hearing, I was more convinced than ever that the
    Federal Government not only failed to protect the first
    responders, workers, residents, and school children who were in
    the area, but that the Federal Government bore responsibility
    for not preventing many of their injuries, which it could well
    easily have done had it been honest in the first place.
        Obviously, none of these injuries would have occurred were
    it not for the terrorists, who are ultimately to blame, but
    many of the injuries we are seeing today would have been
    avoided if the Federal Government had not acted dishonestly.
    The Federal Government, therefore, has a moral and legal
    obligation to compensate the victims of 9/11, to provide for
    their health care, and to attempt to make them whole from their
    subsequent financial losses.
        In 2004, Congress appropriated $1 billion for what became
    the World Trade Center Captive Insurance Company in order to
    provide health care for people who sustained injuries and
    illnesses in the aftermath of 9/11. I am hopeful that, through
    this hearing, we can find a way to ensure that this billion
    dollars goes toward healing those affected by this tragedy, as
    Congress intended.
        I should note that there have been many hearings that
    examined the health issues and degree of people's illnesses and
    in which we heard from many who are too sick to work. It is
    unfortunately very clear that many more people will become sick
    in the future.
        In a September 2006 peer-reviewed study conducted by the
    World Trade Center Medical Monitoring program, of 9,500 World
    Trade Center responders, almost 70 percent had a new or
    worsened respiratory symptom that developed during or after
    their time working at Ground Zero.
        Furthermore, another study documented that, on average, a
    New York City firefighter who responded to the World Trade
    Center has experienced a loss of 12 years of lung capacity.
        Now, obviously in these kinds of cases, whether by
    radiation from a nuclear bomb blast or exposure to radiation or
    exposure to other toxic substances, it is impossible to
    establish individual causality to 100 percent certainty, but
    the statistics that show increases of 70 percent or 80 percent
    from expected rates of illnesses are damning.
        The pain and suffering of the living victims of 9/11 is
    real and cannot be ignored. We as a Nation must do more. John
    F. Kennedy once remarked that, ``as we express our gratitude,
    we must never forget that the highest appreciation is not to
    utter words, but to live by them.''
        In the nearly 8 years after 9/11, we have done enough
    talking. Now it is time to pass H.R. 847, the 9/11 Health and
    Compensation Act.
        I yield back the balance of my time.
        And I now recognize the distinguished Ranking Member of the
    Constitution Subcommittee for an opening statement.
        Mr. Sensenbrenner. Thank you very much, Mr. Chairman.
        First, I would like to thank all those first responders who
    risked their lives and health by doing whatever they could do
    to mitigate the horrors of the September 11th attack and all
    who supported them.
        Those public servants and other volunteers toiled
    ceaselessly for months under a toxic cloud that hung over and
    around the former site of the World Trade Center. They, too,
    suffered as a result of vicious attacks perpetrated by blood-
    thirsty terrorists whose driving mission was to cause the death
    and injury of as many innocent people as possible. We must
    never forget that.
        Along with the first responders and other volunteers,
    private contracting firms played an invaluable role in
    facilitating the recovery site of the attacks. These
    contracting firms were asked by the city of New York to
    immediately begin clean-up efforts, and they responded with the
    same drive to serve and protect that motivated other public
    servants.
        They did so even though they and the city of New York were
    unable to secure the liability insurance they would normally
    obtain before starting a recovery project.
        But while other major entities affected by the 9/11
    attacks, including the airlines, the World Trade Center, and
    the Port Authority, were protected by Federal legislation from
    excessive and undeserved liability exposure, the private
    contractors and other private entities were left in the lurch.
        I regret to say that, when Congress passed the legislation
    addressing liability concerns in September of 2001, I warned my
    colleagues that failing to comprehensively address the
    unprecedented liability issues raised by the 9/11 attacks would
    inevitably lead us to where we are today.
        On the House floor of 2001, I said that, while the airlines
    would not face bankruptcy as a result of the liability limits
    in the 2001 legislation, should the bill pass, the failure to
    limit others' liability will mean that Congress will need to
    pass corrective legislation again and again to protect American
    companies and their workers' jobs because this bill didn't do
    it right.
        Clearly, that bill didn't do it right. But if we seek to
    correct one failing in the original legislation, we must be
    careful not to aggravate other failings.
        I also opposed the 2001 legislation because it created an
    entitlement program that set a dangerous precedent in the
    future.
        Again, on the House floor in 2001, I said, ``No entitlement
    was created by Congress to compensate victims of the Oklahoma
    City bombing, earthquakes in California, hurricanes in Florida,
    and floods along the Mississippi River. If this entitlement is
    approved, does Congress really want to say no to victims of
    future tragedies, whether as a result of natural or manmade
    disasters?''
        ``If a disaster strikes in any of our hometowns, how can we
    explain voting for an entitlement in this bill, but not for our
    own constituents? Stop and think of the precedent this bill set
    when a future disaster strikes.''
        My concerns after 9/11 were confirmed by the findings of
    the nonpartisan Rand Institute for Civil Justice, which
    analyzed the September 11th Victims Compensation Fund in 2004
    and concluded that, ``pre-commitments by government programs
    reduced the ability of government and society more generally to
    allocate resources to meet the most pressing needs after an
    attack.''
        A 2005 study of four Federal compensation programs by the
    GAO also cautioned that, ``Because these programs may expand
    significantly beyond the initial cost estimates, policymakers
    must carefully consider the cost and precedent-setting
    implications of establishing any new Federal compensation
    programs, particularly in light of the current Federal
    deficit.''
        That deficit was much lower--than what it is today. Today
    the current economic crisis should magnify such concerns
    exponentially. At the same time, we have seen too much costly
    and wasteful legislation pass this Congress without adequate
    time for thoughtful analysis. I hope the hearing today will
    help us avoid repeating recent practice.
        With that, I look forward to hearing from all of our
    witnesses and yield back the balance of my time.
        Mr. Nadler. I thank the gentleman. I will now recognize the
    distinguished Ranking Member of the Immigration and Claims
    Subcommittee for an opening statement.
        Mr. King. Thank you, Mr. Chairman.
        I want to thank the witnesses, also, in advance.
        On September 11, 2001, terrorists carried out mass murder
    of innocent Americans on our own soil. These attacks were
    carried out solely because some people hate our country and the
    freedoms it represents.
        This terrorist attack ripped away our security and
    devastated thousands of families. My heartfelt sympathy goes
    out to those who suffered in the wake of the attacks on 9/11.
        One of the groups that suffered in the aftermath of 9/11 is
    Ground Zero workers who worked heroically day and night for
    months in rescue, recovery and cleanup efforts at the World
    Trade Center site.
        Many of these workers went in without contracts, insurance
    policies, or knowledge that there were toxins in the air. Some
    of these workers are having health problems as a result of
    their work at Ground Zero, as are residents in the area.
        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 over 10,000 plaintiffs who
    allege that they were injured from the contaminants in the
    debris. The victims are being forced to sue because they do not
    qualify for relief under the 9/11 Victims Compensation Fund,
    and the companies in the city are being forced to vigorously
    defend against these lawsuits because of lack of adequate
    insurance coverage.
        In order to address compensation for the victims and to
    provide liability protection to the construction companies that
    came to the city's aid after the towers fell, H.R. 847 proposes
    to use the 9/11 Victims Compensation Fund as a blueprint.
        Now, if we are to follow the 9/11 fund as a blueprint, we
    also must make sure we do so responsibly. First, we must make
    sure that we provide adequate compensation to the victims
    without handing the keys to the U.S. Treasury or the trial
    lawyers.
        The 9/11 fund is essentially a no-fault administrative
    scheme that does not require proof of complex tort theories.
    Thus, if the fund is reopened, it should include provisions to
    maximize the victims' recovery by limiting the contingency fees
    that personal injury lawyers may receive.
        In a letter to Congress regarding the original 9/11 fund,
    the Association of Trial Lawyers of America stated that 100
    percent of the compensation funds from the fund should go
    directly to these families.
        Second, if we are going to reopen the 9/11 fund, we must do
    so in a manner that protects our taxpayers. To be careful
    stewards of the taxpayers' money, we must require that victims
    be able to produce proof that they were in immediate proximity
    of Ground Zero during the cleanup period. We must also require
    them to medically document that their illnesses are a direct
    result of exposure to the air around the site.
        Additionally, to protect the taxpayers, we should consider
    limiting the compensation from the fund to objectively
    verifiable economic damages, such as past and future medical
    expenses and earnings. What is more, the fund should only be
    reopened for a reasonable, but limited period of time. H.R. 847
    would reopen the 9/11 fund for 22 years, and that will be 30
    years beyond September 11th.
        But as a former special master, Mr. Feinberg, has pointed
    out--and we will hear from you today--no latent claims need
    such an extended date. Moreover, if the reopened period proves
    to be too short, we can always revisit this issue in Congress.
        So, finally, to ensure that the taxpayers are protected if
    we decide to reopen the 9/11 fund, we need to follow pay-as-
    you-go rules for this legislation. And in following PAYGO, we
    need to pay for the reopening of the fund by offsetting
    government spending, not by increasing taxes.
        In closing, let me just say that we owe it to the victims
    to at least try to provide them with a better path than the
    ineffective and expensive litigation they are currently
    pursuing. And we owe it to the contractors that rushed in to
    help the immediate aftermath of the attacks to limit their
    liability exposure.
        But as we look forward to compensating the victims and
    providing liability protection to contractors, we need to
    remember that we also owe it to the American taxpayers to act
    responsibly with their tax dollars.
        I can only think what it is like as a contractor having run
    to the sound of the guns, not in such a massive way as many of
    the contractors did in New York on 9/11, but still always
    deployed our manpower and our machinery at an instant's notice
    without regard to the risk or the liability when people needed
    help, I want to see that scenario. That is the American way.
    Now, that is what we saw in New York and we saw around the
    country on September 11th.
        And whatever comes out of this legislation, I want to
    encourage that kind of response and not have the threat of
    litigation hanging over their heads. They did the American
    thing. They did the right thing. And we need to do the right
    thing by the contractors.
        Thank you, Mr. Chairman. And I would yield back.
        Mr. Nadler. I thank the gentleman.
        And I will now recognize the distinguished Chairman of the
    Judiciary Committee for an opening statement.
        Mr. Conyers. Thank you, Mr. Chairman.
        I want to welcome everybody here that has traveled to this
    hearing because I think this is a critical test of what the
    Congress believes, in terms of helping out these first
    responders and people who, through no fault of their own, have
    been put in this incredible health situation.
        For some, it is too late. But the rest of us are here can
    do something.
        And I was heartened by my colleague's remarks here. Steve
    King and I are working on a number of issues. And he has muted
    his normal hostility toward lawyers in a very admirable way. I
    feel very good about this hearing.
        It is all in the Judiciary Committee. Don't ask me why it
    is the lawyers that hate the lawyers groups more than anybody
    else in the Congress. So I am feeling much better about this.
        Carolyn Maloney has done a great job, as have Jerry Nadler,
    Zoe Lofgren, Peter King.
        Now, I am composing a letter to a Congressman that came to
    this Committee in 1981. His name is Chuck Schumer. And he did a
    brilliant job on this Committee. And I have watched him and all
    the work he has put in for his country ever since.
        He got a little too close to Wall Street for my two cents,
    but Wall Street was his district. It was in his state. So I
    forgave him for that.
        But now the letter I am going to send the distinguished
    senior senator from New York will deal with the need for us to
    close ranks, resolve these differences, and get this show on
    the road.
        Now, I am as sensitive to costs and budget overruns and
    deficits as the Chairman emeritus of this Committee. But for
    goodness' sake, I mean, we talk about the war and terrorists
    and then get it confused with natural occurrences and natural
    disasters, as bad as they are. But this is the war that we kept
    hearing about, these people that attacked us.
        And so I want to commend all of our leaders that have
    pulled together a new bill that makes more sense, that has
    spoken to some of the problems from before, but we have to move
    the other body. That is where the problem is.
        And I would welcome working with the Chairmen of these
    Subcommittees and others----
        Mr. Sensenbrenner. Will the gentleman yield?
        Mr. Conyers. Of course.
        Mr. Sensenbrenner. May I make a suggestion on how to get
    Senator Schumer's attention?
        Mr. Conyers. Please do. I am waiting with baited breath.
        Mr. Sensenbrenner. Bring along a television camera or two.
        Mr. Conyers. Could we instruct--wait a minute--could we
    instruct the stenographer to strike that phrase from the----
        Mr. Nadler. Would the gentleman yield?
        Mr. Conyers. Who seeks? Who wants----
        Mr. Nadler. I do.
        Mr. Conyers. Oh, yes. Of course, Mr. Nadler.
        Mr. Nadler. I would simply point out that the senior
    Senator from New York has been very much involved in the
    negotiations on this bill and in getting the appropriations
    that have helped with the medical care for the last several
    years.
        So all jesting aside, he has been involved, and we expect
    him to help with this effort in the Senate, as it still
    proceeds.
        And I yield back to the gentleman.
        Mr. Conyers. I thank the Chairman. Then I am going to put
    his response to my letter in the record, just to confirm your
    unyielding confidence in the senior senator. And I thank you
    for allowing me to make these intemperate remarks.
        And I return my time.
        Mr. Nadler. I thank the gentleman.
        And I recognize for brief comment the distinguished Chair
    of the Immigration Subcommittee.
        Ms. Lofgren. I just wanted to note that we have been joined
    here by one of the authors of the bill, Carolyn Maloney. It has
    been Ranking Member Lamar Smith's policy not to grant unanimous
    consent to Members of the Committee to actually question
    witnesses, but we are glad that she is here joining us to
    listen. And I just wanted to note that for the record, and I
    thank you for yielding.
        Mr. Nadler. Thank you. And I join those comments and your
    observations.
        In the interest of proceeding to our witnesses and mindful
    of our busy schedules, I ask that other Members submit their
    statements for the record.
        Without objection, all Members will have 5 legislative days
    to submit opening statements for inclusion in the record.
    Without objection, the Chair will be authorized to declare a
    recess of the hearing.
        We will now turn to our witnesses. As we ask questions of
    our witnesses, the Chair will recognize Members in the order of
    their seniority on the Subcommittees, alternating between
    majority and minority, provided that the Member is present when
    his or her turn arrives.
        Members who are not present when their turns begin will be
    recognized after the other Members have had the opportunity to
    ask their questions. The Chair reserves the right to
    accommodate a Member who is unavoidably late or only able to be
    with us for a short time.
        Ken Feinberg served as the special master of the Federal
    September 11th Victims Compensation Fund estimated by Congress
    after the attacks of September 11th, 2001. He is currently the
    managing partner and founder of the Feinberg Group, LLP.
        Mr. Feinberg has taught at the Georgetown University Law
    Center, University of Pennsylvania Law School, New York
    University School of Law, University of Virginia Law School,
    and Columbia Law School. Mr. Feinberg received his J.D. from
    NYU School of Law.
        Barbara Burnette is a former New York City police
    detective. After 18 years of service, she retired from the NYPD
    due to injuries she sustained while working at the World Trade
    Center site. She lives in Arverne, New York, with her husband
    and three children.
        Christine LaSala has been the president and CEO of the
    World Trade Center Captive Insurance Company since its creation
    by Congress in 2004. In agreeing to serve as president of the
    Captive, Ms. LaSala came out of retirement after a lengthy
    career as the first female partner of Johnson & Higgins, the
    fourth-largest global insurance broker and employee benefits
    consultant.
        Her broad experience in the insurance industry includes 2
    years as an underwriter and over 25 years as an insurance
    broker working with corporations and public institutions to
    design their risk-management program. She is a graduate of the
    College of New Rochelle and studied finance at Fordham
    University.
        Dr. James Melius is an occupational physician and
    epidemiologist. For the past 10 years, his work with the
    Laborers' International Union of North America and currently as
    administrator of the New York State Laborers' Health and Safety
    Trust Fund and director of research for the Laborers' Health
    and Safety Fund of North America.
        He chairs the steering committee of the World Trade Center
    Medical Monitoring and Steering Committee, which overseas this
    program for World Trade Center responders. He received his M.D.
    from the University of Illinois in 1974 and a doctorate in
    epidemiology from the University of Illinois School of Public
    Health in 1984.
        Michael Cardozo has served as the corporation counsel and
    chief legal official of New York City since January 2002. He
    serves as legal counsel to 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 for the late
    Judge Edward McLean in the United States district court for the
    southern district of New York.
        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 price liability,
    class actions and civil procedure, corporate regulation,
    antitrust and patent litigation, lifestyle litigation, medical
    malpractice, and judicial selection, a wide range.
        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 product
    liability cases, class-action defense, and antitrust and patent
    cases.
        Richard Wood, our final witness, is the president of Plaza
    Construction Corporation since 1997, where he has been involved
    in many of New York City's most complex building projects,
    including 299 Park Avenue, the St. Thomas Choir School, Random
    House World Headquarters, 200 Chambers Street, the residential
    tower at 26th Astor Place, and 11 Times Square, among others.
    Plaza was among the contractors who worked at the World Trade
    Center site.
        I am pleased to welcome all of you. Your written statements
    in their entirety will be made part of the record. I would ask
    each of you to summarize your testimony in 5 minutes or less.
    To help you stay within that 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 would please stand and raise your
    right hand to take the oath.
        [Witnesses sworn.]
        Thank you.
        Let the record reflect that the witnesses answered in the
    affirmative.
        You may be seated.
        Mr. Feinberg will have to leave early. In order to
    accommodate the Members, I am going to ask him to testify and
    then allow Members the opportunity to question him before he
    has to depart.
        So, Mr. Feinberg, microphone please?

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

        Mr. Feinberg. Thank you, Mr. Chairman.
        Once again, I am honored to be here at your request. For
    me, it is sort of a reunion. I worked with closely Chairman
    Conyers and Congressman Lungren during the years when I was on
    the Senate Judiciary Committee.
        I want to thank the Committee for taking another look at
    whether or not the 9/11 fund should be reauthorized. I was
    appointed by the attorney general of the United States, John
    Ashcroft, to serve as the special master of the original 9/11
    fund. It was a bipartisan effort.
        I had tremendous support throughout my 33-month tenure as
    the head of the 9/11 fund, not only from the people on this
    Committee, but from the American people, Republican, Democrat,
    liberal, conservative. Everybody was very, very supportive,
    particularly the Department of Defense and the city of New
    York.
        I note Michael Cardozo is here today. On Friday of this
    week, he becomes the longest-serving corporation counsel in the
    history of New York City. He either loves his job or he is a
    glutton for punishment, or maybe both, but he was enormously
    helpful to me in the administration of the 9/11 fund.
        The Chairwoman has pointed out the success of the 9/11
    fund, if statistics are any indication.
        Should the fund be reauthorized, as it is in this
    legislation before you? I think it should, but it is a very
    close question.
        Congressman Sensenbrenner points out some of the
    philosophic difficulties in reauthorizing the 9/11 fund. There
    is no 9/11 fund for Katrina, for Oklahoma City, for the flood
    victims this week in North Dakota. There is no 9/11 fund.
        Yet, on the other hand, it should be pointed out a
    fundamental point about this legislation. Many of the people,
    rescue workers, who are now litigating in New York City, the
    only reason they are litigating is because the 9/11 fund
    compensated their brethren but could not compensate them before
    the fund statutorily expired on December 22, 2003.
        Had these people who are now litigating manifested a
    physical injury within the timeframe set by Congress to be
    compensated, they would have met all of the criteria, and they
    would have been compensated.
        We compensated over 2,000 rescue workers at a cost to the
    taxpayer of about $1 billion of the $7 billion that was spent.
    Had the sum of these very litigants today manifested
    respiratory illness before December 22, 2003, we would have
    readily under that statute compensated them.
        So the answer that Congress may find convincing is that
    elementary fairness says, if we compensated rescue workers
    prior to 2003, why not compensate these very same rescue
    workers post-2003?
        That is the dilemma here. It may be an answer to
    Congressman Sensenbrenner; it may not be. It is a close
    question. But I think one can make the argument that but for
    the termination of that statute and the fact that many of the
    thousands now litigating didn't become eligible with a physical
    injury until after 2003, they would have been compensated. That
    is the argument for Congress to consider.
        Now, whether or not Congress wants to go beyond the 9/11
    fund, with some of these other provisions, both in terms of
    contractor indemnity or caps, in terms of broadening the
    eligibility criteria as to who would be eligible if the fund is
    reauthorized by this legislation, I completely defer to
    Congress.
        I had enough problems determining eligibility and
    compensating 5,300 people back in 2001. Whether or not a fund
    like this should be reopened and the eligibility criteria
    expanded to include additional types of injury, that is up to
    the Congress to decide.
        And whether or not you can expect a special master to serve
    pro bono for up to 20 years as opposed to 33 months is another
    question that I defer to Congress.
        But those are the arguments pro and con. It is really an
    interesting dilemma for the Congress to consider whether it is
    appropriate to deal with the unfairness of not compensating
    some of these rescue workers pursuant to the original 9/11
    criteria. And if it should, what other criteria will be made
    part of this legislation?
        The Chairman has asked me to summarize within 5 minutes. I
    have done so. Thank you very much.
        [The prepared statement of Mr. Feinberg follows:]

                   Prepared Statement of Kenneth R. Feinberg

        My name is Kenneth R. Feinberg and I am honored to once again be
    invited to testify before these two distinguished House Subcommittees.
        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.
        I believe it is worthwhile to once again highlight the success of
    the 9/11 Fund. 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 $2,082,035.07; 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 K. 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 few remaining cases still being litigated in
    federal court in Manhattan some eight years after the 9/11 tragedy.
        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 terrorist 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 my
    understanding that over 11,000 responders have filed lawsuits to date,
    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 when their physical
    injuries become apparent.
        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 truly ironic that many of 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 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 these individuals who would have been
    compensated by the 9/11 Fund now 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 is 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 some period of time, 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 additional statutory modifications and additions, e.g.,
    indemnity protection for contractors at the World Trade Center site;
    new eligibility criteria for rescue workers and others who allegedly
    suffered respiratory injuries well beyond the geographical boundaries
    of the World Trade Center site; and revised eligibility filing
    deadlines for claimants who manifested a physical injury during the
    period of the original 9/11 Fund, but did not make a timely filing
    claiming they were unaware of 9/11 Fund filing deadlines. 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 could be made available as
    part of an overall comprehensive settlement 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/
    or 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 of the 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 ideas 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. I thank the gentleman. And as I said, we will
    have questions for Mr. Feinberg now, and then we will go to the
    other witnesses, since Mr. Feinberg has to leave.
        And I recognize myself to start the questioning.
        Mr. Feinberg, let me just ask you the following question.
    We have heard in some of the opening statements the problem
    that there are 11,000 tort claims pending against the city. We
    have heard concerns about paying too much to trial lawyers and
    so forth.
        If this bill were to be enacted--and you are familiar with
    the bill--if this bill were to be enacted, would it reduce the
    tort claims? Would it reduce the compensation or the amount of
    money spent on trial lawyers? Would it make sure that more of
    the money that is paid goes to victims?
        What do you think the effect would be in terms of two
    alternatives, adopting this or not adopting this?
        Mr. Feinberg. Well, I think that, a fortiori, the
    legislation would vastly reduce the amount of litigation by
    encouraging those 11,000 litigants to enter a newly enacted 9/
    11 fund. Now, how many of them would pick up on that option?
        Whether they would meet the 9/11 criteria, we would have to
    go through the 11,000 cases, but I suspect that, as with the 9/
    11 fund, a substantial number of those currently litigating
    would take advantage of the provisions of the fund to get
    prompt payment without the need to litigate any further.
        Mr. Nadler. Now, in the original 9/11 fund, 97 percent went
    to the fund----
        Mr. Feinberg. That is correct.
        Mr. Nadler [continuing]. Rather than litigate, correct?
        Mr. Feinberg. Correct.
        Mr. Nadler. And this might be 97 percent or it might be
    somewhat less, depending on different circumstances, but you
    would think it would be the overwhelming majority.
        Mr. Feinberg. I would hope. I would hope.
        Mr. Nadler. Do you have any suspicion?
        Mr. Feinberg. I have no idea.
        Mr. Nadler. Okay. I will yield back the balance of--well,
    actually, since we are only questioning one witness, we are all
    going to have our 5 minutes. I am sure it is a 5-minute thing
    now.
        But I yield to the distinguished gentleman from Wisconsin.
        Mr. Sensenbrenner. Thank you very much.
        Mr. Feinberg, welcome back.
        Mr. Feinberg. Thank you.
        Mr. Sensenbrenner. Let me ask you a question, and it goes
    to the whole issue of attorneys' fees. This bill proposes what
    is essentially a no-fault system. And it would be up to the
    plaintiff or the petitioner to prove up the damages that would
    be caused.
        Obviously, that requires a lot less lawyering than
    providing liability, particularly with a situation like this.
    Would you be in favor of having a statutory limit on attorneys'
    fees, like the 10 percent that we put in private claims bills
    before they go to the House floor?
        Mr. Feinberg. I don't know if Congress has to actually
    formalize a cap on attorneys' fees with this legislation. You
    will recall, Congressman, that when the 9/11 fund was enacted,
    the overwhelming number of claimants who filed with the fund
    using lawyers acquired those lawyers pro bono.
        The legal profession in the 9/11 fund stepped up. And about
    2,000 claimants were represented in which the lawyers
    voluntarily waived all rights to attorneys' fees.
        As to those who required a fee, we had a recommendation in
    our regulations--not a formal regulation, but a
    recommendation--that attorneys' fees remain at no more than 5
    percent. To my knowledge, with rare exceptions, even in those
    cases where attorneys did receive a fee, it was a single digit
    fee.
        So in this fund, I don't think it would be necessary to
    require that fees be capped, because I think the profession
    would step up and do it voluntarily, as they did with the 9/11
    fund.
        Mr. Sensenbrenner. You are a little more optimistic than I
    am, but then the claims in the original 9/11 fund were
    immediately in the aftermath of 9/11, when the memory of that
    horror was very vivid in the minds of the American people.
        Five-and-a-half years have gone by since the statute ran
    out on claims on the original 9/11 fund. And, unfortunately, I
    think that the American public's memory has been dulled
    somewhat.
        We do have a 10 percent cap on private claims bills that
    are routinely reported out of this Committee and considered by
    the House of Representatives. And if jawboning is good enough,
    I guess we can leave it at that, but let me say that I think
    that is an open question.
        The other question that I have in my 5 minutes, Mr.
    Feinberg, is, do you believe that there should be kind of a
    standard compensation schedule like happens in workers' comp
    claims for various types of injuries that are alleged by people
    who are petitioning out of the fund that is re-established in
    this bill?
        Mr. Feinberg. Yes. You would need, for purposes of
    efficiency, a streamlined process. We had in the original 9/11
    fund for purposes of physical injury compensation--I think it
    was three levels of compensation, depending and tied directly
    to the objective determination of physical disability, like
    workers comp.
        If somebody was 100 percent disabled, 60 percent disabled,
    40 percent disabled, and could confirm and corroborate
    objectively that degree of disability, we compensated them at
    those levels.
        Mr. Sensenbrenner. But you wouldn't be paying someone who
    is a highly compensated employee more than someone who was a
    far less compensated employee for the same injury?
        Mr. Feinberg. Oh, yes, we would. Under the 9/11 fund, we
    were required by Congress to take into account the economic
    loss suffered as a result of the physical injury of the victim.
        Mr. Sensenbrenner. Do you think that requirement should be
    maintained in this legislation?
        Mr. Feinberg. If you are reauthorizing the 9/11 fund, it
    was essential, an essential feature of the 9/11 fund.
        Mr. Sensenbrenner. Okay. But isn't a life a life a life,
    and a broken arm a broken arm a broken arm?
        Mr. Feinberg. Congressman, you won't have to convince me of
    that. The Congress in the original legislation required that
    stock brokers or bankers get more than busboys, waiters,
    firemen, soldiers, or policemen. The law was the law. I had to
    follow it.
        I have written that that is a very difficult inequitable
    calculation to make, but it was one that was required by the
    Congress of the United States.
        Mr. Sensenbrenner. Thank you. I think I have made my point,
    and I yield back the balance of my time.
        Mr. Nadler. Does anyone else wish to ask questions of this
    witness?
        The gentleman from Virginia--oh, I am sorry, the
    distinguished Chairperson of the Subcommittee.
        Ms. Lofgren. Yes, just one question. When you appeared
    before us last time, you had a few concerns about the bill as
    drafted. Does this newly drafted bill address those concerns?
        Mr. Feinberg. It addresses some of them; it doesn't address
    others. It is a good-faith effort.
        Understand, this bill addresses some of the immediate cost
    concerns----
        Ms. Lofgren. Right.
        Mr. Feinberg [continuing]. At the same time it broadens the
    eligibility requirements so that more people would be
    compensated under this fund, if it was re-enacted, than under
    the original 9/11 fund.
        Ms. Lofgren. Due to time, but not the nature of the
    illnesses----
        Mr. Feinberg. Oh, there is geographical expansion. There is
    geographical, that this fund would not only compensate people
    at the World Trade Center----
        Ms. Lofgren. Right.
        Mr. Feinberg [continuing]. It would compensate those
    claiming injury transporting material all the way out to Fresh
    Kills.
        Ms. Lofgren. But the theory is that whether you were
    transporting the material, or you were in the pit, you were
    still responding to this disaster.
        Mr. Feinberg. Correct. That is correct.
        Ms. Lofgren. All right.
        Mr. Feinberg. That is the goal, at least.
        Ms. Lofgren. That is the goal.
        All right. I yield back, Mr. Chairman. Thank you.
        Mr. Nadler. I thank the gentlelady.
        I now recognize the gentleman from Iowa.
        Mr. King. Thank you, Mr. Chairman.
        Thank you, Mr. Feinberg, for your testimony again. Would
    you be comfortable with a 5 percent cap on attorney fees?
        Mr. Feinberg. Well, I was comfortable with it in the 9/11
    fund. I would be comfortable with it now. It wasn't a formal
    regulation. It was sort of an legislative history we
    recommended. And for all intents and purposes, it worked, so I
    would be comfortable with whatever is decided.
        Mr. King. Thank you. And you have looked this bill over, I
    take by your testimony, so I would ask you if you have an
    opinion on as to whether the contractors might have liability
    for non-economic damages or punitive damages?
        Mr. Feinberg. Congressman, when you say they might have
    liability, I think that is a fair comment.
        Mr. King. And as you analyze the language that is in the
    bill, would there be any statutory protection from that to your
    knowledge?
        Mr. Feinberg. Sure. As I read the bill, there is some
    protection for the contractors in this legislation, yes.
    Whether or not it would provide blanket immunity and
    protection, again, I am not sure of that. But, clearly, there
    is an attempt to do just that.
        Mr. King. Okay. Let me just say that I think it is worth
    taking an extra look to ensure that there isn't some punitive
    damages or non-economic damages, liability on the other side of
    this bill that might not be properly introduced into the
    language, so I want to protect the contractors on the other end
    of this. I am concerned about that.
        Mr. Feinberg. I will look it over and respond directly to
    your staff.
        Mr. King. I thank you very much. Now, another question
    would be, if an individual opts into the health care benefits
    in Title I, is there then a presumption of liability that might
    go along with that?
        Mr. Feinberg. Oh, I don't think. I will check. I think if
    an individual opts into Title I, they have made a decision to
    avoid any debate over liability, in terms of favoring a no-
    fault compensation system.
        Mr. King. Do you think we know----
        Mr. Nadler. Would the gentleman yield?
        Mr. King. I would yield.
        Mr. Nadler. I think there is a bit of confusion here as to
    which is Title I and Title II. You might want to specify at
    both ends.
        Mr. King. On my side, Title I being the health care
    benefits component of this and Title II being the compensation
    beyond the health care.
        Mr. Feinberg. I will have to go back and check as to that
    distinction.
        Mr. King. Thanks for pointing that out, Mr. Chairman. And
    so I will just make this point that, if an individual opts into
    this bill in the package of the Victims Compensation Fund and
    the health care benefits, which are under Title I, I would
    think that treatment for health care may provide a presumption
    then that they could use to file suit against and opt out of
    the Title II component of this and file a suit against the
    contractors and the city and the Port Authority, et cetera.
        I am just concerned about that, that if they opt into the
    health care, they also opt in to the Victims Compensation Fund.
    That is my comment on it.
        And in the interest of time, if there is a response----
        Mr. Feinberg. No, no, again, I will check and give you my
    considered judgment reviewing the language of the bill.
        Mr. King. Thank you, Mr. Feinberg.
        Mr. Chairman, I thank you, and I yield back.
        Thank you.
        Mr. Nadler. I thank the gentleman.
        The gentleman from Virginia is recognized.
        Mr. Scott. Thank you.
        If we extended the deadline, do you have a ballpark figure
    as to how many people might be eligible and how much the
    potential liability would be?
        Mr. Feinberg. I have no idea. I don't think anybody has any
    firm idea about that.
        Mr. Scott. On firefighters and police, why was workers'
    compensation insufficient?
        Mr. Feinberg. Under the original 9/11 fund?
        Mr. Scott. Right.
        Mr. Feinberg. Congress trumped workers' compensation by
    providing a blanket opportunity for workers and others, private
    citizens not working, not rescue workers, to file with the
    fund.
        Mr. Scott. Well, I mean, just for firefighters and police
    officers, they were eligible for workers' comp.
        Mr. Feinberg. That is correct. And because they were
    eligible, we had required by law collateral offsets so that, if
    they recovered workers' compensation, pursuant to program one,
    we would deduct that compensation in netting their ultimate
    award.
        Mr. Scott. You indicated you compensated some who filed on
    time for injuries?
        Mr. Feinberg. I am sorry. I didn't hear the question.
        Mr. Scott. You compensated some for injuries. When you
    compensated them, did you require a release from future
    payments? Or did you allow sequential payments if their
    conditions got worse?
        Mr. Feinberg. No, a total release.
        Mr. Scott. Would an open-ended situation be better? Because
    with these kinds of injuries, you don't what the future may be,
    so you wouldn't know when to settle for one check.
        Mr. Feinberg. That is a very good administrative law
    question. I would just respond by saying the goal of the
    original 9/11 fund was to compensate as of the date of injury,
    get a total release, close out the cases, and bring an end to
    the possibility of litigation. That was the goal, and that is
    why we required, under the statutory mandate, a total release.
        Mr. Scott. To be eligible, do you have to prove that you
    were injured as a proximate cause of 9/11 or do you presume the
    connection? Obviously, if you have to prove it, you have some
    that can't prove it that should be eligible, if you have a
    presumption----
        Mr. Feinberg. We estimated under the 9/11 fund regulations
    presumptions of proximate cause as to geographical location and
    time to make it very, very simple to either satisfy or not
    satisfy proximate cause requirements.
        Mr. Scott. And the total compensation, what damages could
    someone recover if they filed a claim? I assume medical care,
    lost wages, pain and suffering?
        Mr. Feinberg. All of that. There was no cap on the amount
    that could be compensated. As I recall it, for a physical
    injury, the least amount that we found eligible was $500 for a
    broken finger at the World Trade Center.
        And the most that we compensated anybody was a stock broker
    who came to see me with third-degree burns over 85 percent of
    her body. She received a little over $8 million. And in between
    was the range of all the physical injury payments.
        Mr. Scott. How would the damages differ from an ordinary
    negligence case?
        Mr. Feinberg. The damages didn't differ much from ordinary
    negligence, in terms of the gross calculation, economic loss
    plus pain and suffering. We were required by Congress, however,
    unlike tort law, to deduct collateral sources of income, like
    you mentioned, Congressman, so the net award might have been
    less.
        Mr. Scott. Thank you, Mr. Chairman. I yield back. Thank
    you.
        Mr. Nadler. Mr. Feinberg, how much time do you have left?
        Mr. Feinberg. I am okay.
        Mr. Nadler. Okay.
        The gentleman from California, Mr. Lungren?
        Mr. Lungren. Thank you very much, Mr. Chairman.
        And it is good to see you, Mr. Feinberg. And thank you for
    your service as the special master. That was extraordinary
    work.
        You have indicated, I think, in your opening statement that
    the question of fairness is somewhat elusive in a situation
    like this. We are trying to do the best we can in a difficult
    circumstance, and you can't have complete fairness, because, as
    you pointed out, you have other kinds of tragedies that strike
    just as heavily on the individual as this did. And Congress
    made a specific exception to the law in this circumstance,
    because this was viewed as an act of war, an attack on the
    American people.
        And so, as we try and figure out what we are going to do
    here, one of my greatest concerns is not just this question of
    fairness, but the principle or the precedent for the future
    that, if we have a disaster of this type, we don't have people
    reluctant to respond, not just because of the obvious physical
    injuries, but when you bankrupt companies in the process, it is
    not an encouraging factor to get them to respond in future
    events. And I think we ought to keep that in mind.
        But let me ask you very specifically about a quote of yours
    in a piece you wrote in The New York Times. And this is the
    quote directly. It says, ``More than $1 billion in public funds
    is currently available for distribution as part of the initial
    Federal appropriation earmark for New York City's 9/11
    recovery. If you add financial contributions for those
    contractors and others involved in litigation, supplement that
    with funds from various city charities, a total of at least
    $500 million is available to settle the pending lawsuits, more
    than sufficient to pay all eligible claims, as well as lawyers'
    fees and costs.''
        Is that your current position? Could you elaborate on that?
    And when you refer to financial contributions from contractors
    and others involved in the litigation, are you saying that that
    would be done to the extent of their insurance coverage or are
    you saying, whatever assets they had, which would, in my case,
    in my view, be detrimental to what we are talking about, that
    is, if they ended up being out of business, we would have that
    terrible precedent for the future.
        Mr. Feinberg. Thank you. That quotation is accurate. It was
    in the context of my attempting to suggest that, if there is
    not going to be a 9/11 fund, if Congress does not reauthorize
    the 9/11 fund, surely there is a better way to resolve this
    litigation than continue to litigate ad infinitum in the courts
    in New York City.
        And what I was suggesting was--and I can just see Michael
    Cardozo starting to raise his hand--but what I was suggesting
    was that if you take the monies that were appropriated by
    Congress, perhaps voluntarily, supplement those funds with
    insurance proceeds from the contractors, you would, in my
    opinion, have a pot that would be ample to resolve the present
    litigation and set aside sufficient funds to protect against
    the possibility of future litigation arising out of latent
    physical manifestations.
        So I was using that as an example, option one, the 9/11
    fund; option two, the settlement of the litigation voluntarily;
    option three, business as usual, which I don't think anybody
    benefits from.
        Mr. Lungren. Just one other question, and that is, you have
    said regarding keeping the 9/11 fund open to the year 2031 that
    ``no latent claims need such an extended date.'' What do you
    think would be appropriate?
        Mr. Feinberg. You would have to ask--and there are experts
    at this table--you would have to ask, what is the maximum time
    that any reasonable latent physical injury would manifest
    itself from the time of exposure to toxic products down in the
    World Trade Center or the Pentagon to the time when reasonable
    medical diagnosis would say, be it be a physical manifestation.
        And that period, it seems to me, would be an appropriate
    period--5 years, 6 years, 7 years more from 9/11--I think would
    probably be an appropriate period. But there are doctors who
    would answer that question.
        Mr. Nadler. Would the gentleman yield to me for a moment?
        Mr. Lungren. I would happily yield to the Chairman.
        Mr. Nadler. Thank you. I just want to clarify one point.
        Mr. Feinberg's quote that you quoted about the billion
    dollars, there is some dispute about that. There is $1 billion
    that was appropriated to the World Trade Center Captive, headed
    by Ms. LaSala. The Captive has interpreted that as money as for
    the defense of suits against the city and contractors.
        Some people think it was for payouts. It has not been
    available for payouts. This bill would make it available for
    payouts to people who do not opt into the VCF, and it would
    make that money, along with some other parts of insurance
    money, available for settling litigation of people who do not
    opt into the VCF. Right now, it is not being used for that.
        Mr. Lungren. Right. But you are talking--well, as we often
    find in this place, money can be fungible. And maybe using----
        Mr. Nadler. Well, that is right.
        Mr. Lungren [continuing]. That for payouts rather than----
        Mr. Nadler. I just wanted to clarify the status of that
    billion dollars.
        Mr. Lungren. I appreciate it. Thank you very much for your
    indulgence.
        Mr. Nadler. The gentleman from New York, Mr. Weiner, is
    recognized.
        Mr. Weiner. Thank you, Mr. Chairman.
        Mr. Feinberg and the panel, thank you all for being here. I
    think it bears recollecting that the Victims Compensation Fund
    was a remarkable success in the face of some extraordinary
    obstacles. You know, Mr. Feinberg had to quite literally put
    the value on people's lives.
        And I think what we learned is that we had got the
    objectives that we wanted. We wanted to prevent the delays that
    went with lawsuits. We wanted to prevent the uncertainty that
    came with perhaps a generation of lawsuits against every entity
    under the sun, including the airlines, including everyone else,
    and that to a degree a lot of the very tough questions that
    have to be wrestled with now had to be wrestled with then, that
    now there are some questions that clearly have arisen, and some
    of them were just addressed by Mr. Lungren and Mr. Feinberg
    about how it is you define someone. And it is going to be a
    medical test.
        But I think that if we--the seminal question that we have
    to ask ourselves--and I think we have reached some consensus
    here--is that, if we knew in the period--when we passed the
    Victims Compensation Fund, that sitting out there in the
    audience or sitting out there beyond the TV cameras were a
    whole group of people that had a deadly seed that was born on
    September 11th within them, within their lungs, within their
    blood, there is no question that, in a bipartisan fashion, we
    would have included them in the bill.
        There really--I don't think there are too many people that
    would say, oh, no, we would have not. This is simply a matter
    of additional information that is become clear, and that is the
    fact that many people are dying to this day.
        But we have to understand the imperative here. I am open,
    frankly--and Mr. King made some good points--I am open to the
    idea of always creating alternatives to the courthouse for
    people who want to, in an expeditious way, with money on the
    barrelhead, say, in the case of a hurricane or in case of a
    natural disaster, figure out a way to make that system more
    expeditious.
        I am open to that idea. I am not wedded to the idea of
    people having to wait and slog through the justice system.
        And I think we have also learned that, unlike our tendency
    sometimes to try to constrict the outcomes when we put people
    who are well-meaning, smart, who are prepared to make some
    tough calls, like Mr. Feinberg in charge, we get the outcomes
    we want, that citizens vote with their feet and say, ``I am
    willing to put my faith in a master's hands.''
        So then the question only becomes how we define it. And I
    think that it is true--Mr. Feinberg makes a good point--there
    are people who are dying today even though they were not
    literally on top of the pile every moment. And I think we are
    going to have to ask, in my other Committee, in the Commerce
    Committee, how we define that.
        But there is no doubt that I think we have reached a
    consensus on this Committee and in this Congress that we want
    to make sure that contractors in the future, the same way
    firefighters and police officers in the future, go into these
    piles and help out. We want to make sure that we don't have a
    situation where we are facing litigation for years and years,
    that it is the grandchildren of victims who are getting
    compensated and not the victims themselves.
        So I think that that is what Ms. Maloney and Mr. Nadler's
    bill does. And I really do think that, when we look back--and
    now we have some benefit of time--when we look back at the work
    that Mr. Feinberg and the commission did in dealing with these
    very tough problems, I think we learned a valuable lesson, in
    that sometimes less is more.
        And I think that Mr. Nadler and Mrs. Maloney's bill says,
    listen, let's figure out a way to take that and replicate it.
    Maybe it isn't 22 years. Maybe it is 12 years. Maybe it is 10.
        But I think one of the lessons we did learn is, if we don't
    leave a sufficiently wide window, and we try to do medicine
    from this side of the rostrum, we make a fundamental mistake.
        And I would also have to say that if these panelists--I
    know you will be leaving, Mr. Feinberg--but in addition to
    saying thank you, I have to once again point out the uncanny
    resemblance between you and Mr. Cardozo. I am sure--I don't
    know if it is something about the legal profession or dealing
    with these issues long enough, you begin to take on--kind of
    like we in Congress take on the appearance of our pets or
    something like that.
        But I want to thank you for the service and patriotism you
    have showed and the wisdom that you have demonstrated in
    guiding this. A lot of the complaints and concerns were raised.
    You took the job anyway and did a remarkable job with it. And I
    haven't heard you volunteer to be the master for the next 22
    years, but the job is probably going to be available.
        Thank you, sir.
        Mr. Feinberg. Thank you.
        Mr. Nadler. I thank the gentleman.
        And let me express the thanks to Mr. Feinberg, both for
    coming here and for his testimony, and for the tremendous job
    you did, which everybody acknowledges was a tremendous job as
    the special master of the original bill. And if this bill
    passes, you may be drafted a second time. So thank you very
    much.
        Mr. Feinberg. Thank you very much.
        Mr. Nadler. And let me thank the witnesses, the other
    witnesses for their patience while we question Mr. Feinberg,
    who has to leave early. Mr. Feinberg is excused, and now we
    will turn to the other witnesses.
        And I recognize for 5 minutes, Ms. Burnette.

           TESTIMONY OF BARBARA BURNETTE, FORMER DETECTIVE,
                    NEW YORK CITY POLICE DEPARTMENT

        Ms. Burnette. Thank you, Chairman Nadler, Chairman Lofgren,
    Representatives Sensenbrenner and King, and Members of the
    Subcommittees for inviting me to appear before you today.
        My name is Barbara Burnette, and I live in Arverne, NY. I
    am 45 years old, a wife and a mother of three children. With me
    today are my husband, Lebro, my son, Lebro, Jr., and my
    daughter, Tara.
        I am a former New York City police detective, retired from
    the force after 18 years of service. My career ended because of
    injuries I developed from over 3 weeks of service, about 23
    days in total, at the World Trade Center Site.
        On September 11, 2001, I was assigned to the Gang
    Intelligence Division of the NYPD, working in Brooklyn, New
    York. That morning, when my fellow officers and I learned of
    the attacks, we rushed to Manhattan the fastest way we could:
    by taking boats.
        We arrived at the piers off the West Side Highway around
    the time the towers had collapsed. The air was thick and
    burning, choking dust and smoke. I had to put my hand over my
    nose and mouth to even breathe.
        I worked for about 12 hours in these difficult conditions,
    all day and into the night, evacuating people from around the
    World Trade Center site or directing them away. I frequently
    washed my eyes out with running water.
        I was not provided any respirator or any other protection
    for my lungs and throat. I had to literally wash dust and
    debris out of my eyes and mouth and throat throughout the day,
    picking up a hose and letting the dirty, muddy water run out of
    my mouth and onto the ground.
        At one point, EMS rinsed my eyes out. They were swollen and
    the color of dark red crayons. But none of the rescue workers
    could stop doing what we had to do.
        I left the site at around 10 p.m. the first day. Five hours
    later, I reported back, arriving for work at 4 in the morning
    on September 12. We were assigned directly to the debris pile
    on the second day. I worked until late afternoon, removing
    debris, by hand and using buckets and shovels, and at no time
    was I provided with respiratory protection.
        I spent my weeks at the World Trade Center site in this
    routine: shoveling; clearing away debris; searching for
    survivors; and, later, sifting for the body parts of the dead.
        Different construction companies hired by the city guided,
    as well as many other police officers and firefighters, to
    certain areas so we could search and remove debris. We did just
    that. We really worked hand in hand and side by side with
    construction and iron workers.
        Air quality was never a concern for the city and its
    contractors, all of which allowed the work to continue 24/7.
        For their part, the city and construction firms never gave
    me a respirator. I live with the consequences of their failure
    today. I have been diagnosed with interstitial lung disease,
    more specifically, hypersensitivity pneumonitis, with fibrosis
    in my lungs.
        My lungs are scarred. I cannot move around my house without
    wheezing or gasping for breath. I take large doses of steroids
    that add to my weight. And I start each morning by connecting a
    nebulizer and inhaling multiple doses of medication.
        There is serious talk of me needing a lung transplant. I
    had no history of lung disease before the World Trade Center
    service. I never smoked. And, in fact, I had a physically
    demanding lifestyle and career.
        Allow me to explain. One of the highlights of my career was
    my assignment to plainclothes narcotics unit. During my years
    in narcotics, my assignment required me to walk up to 4 miles a
    day, standing ready to make arrests in buy-and-bust operations
    and search warrants.
        Making an arrest is tough, intense, and physical. I made
    over 200 arrests. I was recognized numerous times by the
    department for excellent police duty. And I have several medals
    for meritorious police duty.
        I was born and raised in Brooklyn, NY. All my life, I have
    enjoyed being an active person, whether it was on the job or
    playing sports, especially on the basketball court. In my
    senior year at John Jay High School, I was named to the New
    York All-City Basketball Team. I then set off for college on a
    4-year basketball scholarship, although my career was
    interrupted by an orthopedic injury.
        On July 11, 1988, a date I will never forget, I joined the
    NYPD. I earned my bachelor's degree in criminal justice from
    St. John's University, working full-time. As a detective, not
    only was I able to advance my career; I was able to enjoy the
    competition of organized basketball as a guard on the police
    league women's team.
        Life is very different now. I cannot walk up a flight of
    stairs or down the street without gasping for breath, let alone
    arrest a drug dealer or do most police work. Walking, a basic
    life activity, is extremely difficult for me, because my
    illness has, at times, caused me to black out.
        In September 2004, while working full duty, I experienced a
    blackout at work. There really wasn't any explanation for this.
    I underwent many medical tests and, in May 2005, having
    discovered inflammation in my bronchial passages, doctors at
    Mt. Sinai Center performed two bronchoscopies and an open-lung
    biopsy.
        Granulomas, abnormal tissue formations, were detected in my
    lungs, and I was placed on daily dosages of Prednisone to fight
    my inflammation. My condition worsened, and I began to realize
    I would never go back to work full duty as a detective.
        The police department agreed. And on August 11, 2006, its
    doctors determined that I was permanently disabled with an
    illness resulting from the World Trade Center site.
        As you know, the Victim Compensation Fund closed to
    applicants in December 2003. There was no reason for me to have
    even considered filing a claim. I was not sick at the time the
    fund was open.
        You should know that my first concern is my health, and I
    will continue to do everything I can to get better. At the same
    time, I am seeking justice.
        Along with thousands of other rescue, recovery and
    construction workers, I have filed an individual lawsuit in the
    southern district of New York seeking redress for my
    respiratory injuries.
        Injured, years later, we now count the dead and dying among
    our ranks. My case is now in its fourth year. It has been a
    long road, and I can tell you that I can't see an end.
        I respectfully ask you to do what you can to right this
    wrong.
        Thank you. [Applause.]
        [The prepared statement of Ms. Burnette follows:]
                     Prepared Statement of Barbara Burnette
        Thank you Chairman Nadler, Chairman Lofgren, Representatives
    Sensenbrenner and King, and members of the subcommittees for inviting
    me to appear before you today. My name is Barbara Burnette, and I live
    in Arverne, New York. I am 45 years old, a wife, and mother of three
    children. With me today are my husband, Lebro, Sr., my son, Lebro, Jr.,
    and my daughter, Tara.
        I am a former New York City Police Detective, retired from the
    force after 18.5 years of service. My career ended because of injuries
    I developed from over three weeks of service, about 23 days in total,
    at the World Trade Center Site.
        On September 11, 2001, I was assigned to the Intelligence Division
    of the NYPD, working in Brooklyn, New York. That morning, when my
    fellow officers and I learned of the attacks, we rushed to Manhattan
    the fastest way we could, by taking boats. We arrived at the piers, off
    of the West Side Highway, around the time the towers had collapsed.
        The air was thick with burning, choking dust and smoke. I had to
    put my hand over my mouth and nose to even breathe. I worked for about
    twelve hours in these difficult conditions, all day and into the night,
    evacuating people from around the World Trade Center Site or directing
    them away. I frequently washed my eyes out with running water. I was
    not provided any respirator or other protection for my lungs and
    throat. I had to literally wash dust and debris out of my eyes, mouth
    and throat throughout the day, picking up a hose and letting the dirty,
    muddy water run out of my mouth onto the ground. At one point, EMS
    rinsed my eyes out. My eyes were swollen and the color of dark red
    crayons. But my fellow rescue workers and I could not stop doing what
    we had to do. I left the Site at around 10 pm that first day.
        Five hours later, I reported back, arriving for work at 4 in the
    morning on September 12th. We were assigned directly to the debris pile
    on the second day. I worked until late afternoon, removing debris, by
    hand and by using buckets and shovels. At no time was I provided with
    respiratory protection. Like the day before, I had to run water into my
    mouth and throat to wash away the dust, spitting it out. My eyes needed
    constant rinsing. If I wasn't crying over what I was seeing in the
    ruins, tears streamed down my face from the burning, irritating dust.
        I spent my weeks at the World Trade Center Site in this routine:
    shoveling; clearing away debris; searching for survivors; and, later,
    sifting for the body parts of the dead. Different construction
    companies hired by the City guided me, as well as many other police
    officers and firefighters, to certain areas so we could search and
    remove debris. We did just that. We really worked hand in hand and side
    by side with the construction and iron workers. For all of us, no
    matter what our job, each day was pretty much the same as we made our
    way across all parts of the rectangle-shaped field of debris, from
    north to south and east to west.
        People ask me now, in the legal proceedings, where exactly I was on
    the debris pile during those long weeks. Well, the answer is ``all over
    it.'' There were no landmarks or street signs there; nothing was the
    same as it had been. All I knew is that we were searching and removing
    the wreckage of the World Trade Center, and working right on top of the
    burning, smoking, hot rubble.
        Did conditions change down there during my time on the debris pile?
    No. The fires never stopped burning, and there was always dust and
    flying debris. Air quality was never a concern for the City and its
    contractors, all of which allowed the work to continue 24/7. From my
    view, the work was tough and dirty, choking and dangerous, but there
    was no way I would allow myself to stop and leave.
        I thought of the thousands of poor victims, including my fellow
    police officers, and thanked God that I was not one of them.
        For their part, the City and its construction firms never gave me a
    respirator. They sure relied on my work, though, and that of all of the
    other brave rescue and recovery personnel. We were a willing and
    courageous group.
        If our energy brought the debris removal and recovery efforts
    closer to completion, the City and construction companies should have
    taken the precautions necessary to protect all of us. We held up our
    end of the deal. The City and its contractors failed completely.
        I live with the consequences of their failure today. I have been
    diagnosed with interstitial lung disease, more specifically,
    hypersensitivity pneumonitis with fibrosis in my lungs. I fail the
    pulmonary function tests doctors give me. Inflammation in my lungs
    interferes with my breathing, and destroys the tissues that get oxygen
    to my blood.
        My lungs are scarred. I cannot move around my house without
    wheezing or gasping for breath. I take large doses of steroids that add
    to my weight. I start each morning by connecting to a nebulizer, and
    inhaling multiple doses of medications. There is serious talk of my
    needing a lung transplant.
        I had no history of lung disease before my World Trade Center
    Service. I never smoked. In fact, I had a physically demanding
    lifestyle and career. Allow me to explain.
        One of the highlights of my career was my assignment to two
    plainclothes Narcotics Units. During my five years in Narcotics, my
    assignments required me to walk up to 4 miles a day, standing ready to
    make arrests in buy and bust operations and search warrants. Making an
    arrest is tough, intense, and physical. I made over 200 arrests. I was
    recognized numerous times by the Department for Excellent Police Duty.
    In addition, I received several medals for Meritorious Police Duty.
        I was born and raised in Brooklyn, New York. All my life I have
    enjoyed being an active person, whether it was on the job or playing
    sports, especially on the basketball court. In my senior year at John
    Jay High School, I was named to the New York All City Basketball Team.
    I then set off for college on a four year basketball scholarship,
    although my college career was interrupted by an orthopedic injury. On
    July 11, 1988, a date I will never forget, I joined the NYPD. I earned
    my Bachelor's Degree in Criminal Justice from St. John's University
    while working full time. The Police Department was my second home, and
    I miss it so much. As a detective, not only was I able to advance my
    career, I was able to enjoy the competition of organized basketball as
    a guard on the Police League women's team. My squad competed across the
    United States and internationally, playing against Canada and
    Australia, and won four championships.
        Life is very different now. I cannot walk up a flight of stairs or
    down the street without gasping for breath, let alone arrest a drug
    dealer or do most police work. Walking, a basic life activity, is
    extremely difficult for me. Because my illness has, at times, caused me
    to black out, I avoid driving, and rely on my husband to get me where I
    need to go.
        In September 2004, while working full duty, I experienced a
    blackout at work. There wasn't really any explanation for this episode.
    I underwent many, many medical tests. In May 2005, having discovered
    inflammation in my bronchial passages, doctors at Mt. Sinai Medical
    Center performed two bronchoscopies and an open lung biopsy.
    Granulomas, abnormal tissue formations, were detected in my lungs, and
    I was placed on daily dosages of Prednisone to fight the inflammation.
    My condition worsened, and I began to realize that I would never go
    back to full duty as a detective.
        The Police Department agreed, and on August 11, 2006 its doctors
    determined that I was permanently disabled with an illness resulting
    from exposure at the World Trade Center Site.
        As you know, the Victim Compensation Fund closed to applicants in
    December 2003. There was no reason for me to have even considered
    filing a Fund claim. I was not sick at the time the Fund was open.
        You should know that my first concern is my health, and I will
    continue to do everything I can to get better. At the same time, I am
    seeking justice.
        Along with thousands of other rescue, recovery and construction
    workers, I have filed an individual lawsuit in the Southern District of
    New York, seeking redress for my respiratory injuries. In violation of
    New York's municipal and labor laws, the City and its construction
    companies failed to provide the World Trade Center workers with
    protective respirators. Injured, years later, we now count the dead and
    dying among our ranks. My case is now in its fourth year. It has been a
    long road, and I can't tell you that I see an end. During that time
    period, I have been questioned under oath by the City. My attorneys
    have taken dozens of depositions, briefed two appeals, and exchanged
    written responses to literally hundreds of questions about my medical
    condition and World Trade Center Service. The legal work continues
    today.
        After losing an earlier attempt, back in 2006, to dismiss all of
    the cases, the City and its contractors recently filed papers to
    dismiss the claims of police officers and firefighters, claiming that
    New York laws to protect workers do not apply to uniformed service
    personnel. My attorneys are preparing to fight that argument.
        Apart from the constant efforts by the City and its contractors to
    deprive the workers of justice, what is very frustrating to me is this:
    In February 2003, Congress approved payment of $1 billion to the City
    to insure injury claims arising from World Trade Center debris removal.
    In announcing the passage of the legislation, Mayor Bloomberg
    explained, ``This legislation is necessary for the City to expedite the
    payment of claims relating to this effort.'' To date, the City has not
    made payment to any one of the approximately 10,000 World Trade Center
    respiratory claims.
        I respectfully ask you to do what you can to right this wrong.
                                   __________
        Mr. Nadler. Thank you very much.
        The audience will please refrain from expressing applause
    or condemnation or disapproval or approval.
        I now recognize Dr. Melius for 5 minutes.

     TESTIMONY OF JAMES MELIUS, MD., ADMINISTRATOR, NEW YORK STATE
                 LABORERS' HEALTH AND SAFETY TRUST FUND

        Dr. Melius. Thank you, Chairman Nadler, Chairwoman Lofgren,
    other Members of the Subcommittees. I greatly appreciate the
    opportunity to appear before you this morning.
        I am an occupational physician, epidemiologist. I have been
    involved with issues at the World Trade Center since shortly
    after September 11th. Many of our union members work there. I
    have been very involved with the medical programs that have
    been developed to provide medical services to the responders
    and others and, more recently, to the community members living
    near the World Trade Center.
        We know that the exposures following the World Trade Center
    terrorist attack involved over 50,000 emergency responders,
    recovery workers, many tens of thousands of people living and
    working in the area around the World Trade Center.
        As a result of these exposures, we know through the medical
    programs and through peer-reviewed scientific studies that
    hundreds of these people have developed serious lung diseases,
    post-traumatic stress disorder, and other serious illnesses.
    Many of them have become disabled.
        We have, through Federal funding, established what I
    consider to be excellent medical programs that provide medical
    monitoring, diagnosis of World Trade Center-related conditions,
    and, for the past few years, providing outstanding medical
    treatment to people who have developed these World Trade Center
    medical conditions.
        However, these medical programs alone are not sufficient to
    address all of the harm being suffered by these workers and the
    others exposed by 9/11. Because so many of them are disabled or
    becoming disabled and are no longer able to work, they are
    suffering a great deal of economic hardship because of their
    illnesses.
        We know in looking at the records being kept by the--
    through the various medical groups and the social agencies that
    are providing assistance to these people, that there are
    hundreds of them who are disabled, unable to work, and are not
    able so far to receive any assistance from workers'
    compensation, disability, retirement, or other similar
    programs.
        We know that many of them have lost their health insurance
    and coverage for their families. We know that many of them have
    had to move out of their homes because they can no longer
    afford their mortgage payments. These are for the most blue-
    collar workers that don't have significant financial resources
    to fall back on.
        You have heard from Detective Burnette today about what
    happened to her. Another potential witness we talked to was a
    firefighter, fire officer who is not able to be here, because
    this weekend he underwent a lung transplant due to the serious
    lung disease that he suffered.
        I would like to talk about one other victim of 9/11. Leon
    Heyward was an inspector in the New York City Department of
    Consumer Affairs near the World Trade Center towers. September
    11th, he helped to evacuate disabled co-workers from Ground
    Zero. He later developed respiratory disease, something called
    sarcoidosis, which we have found through scientific studies
    that is related to 9/11 exposures.
        His disease got worse. He had to stop working. He was
    denied workers' compensation. He struggled to get by and needed
    to move to a smaller apartment. He later developed lymphoma and
    died last year.
        Even though he had been denied workers' compensation, the
    New York City medical examiner, at the request of Mr. Heyward's
    family, did an autopsy and reported a finding that his death
    was due to 9/11. Based on their findings at that autopsy, he
    was considered to be a homicide related to the 9/11 terrorist
    attack.
        So I think it is important to recognize that Mr. Heyward
    and many other people who are not receiving compensation are
    having a great deal of difficulty because of this.
        I would also add, by the way, that Mr. Heyward's sister,
    Leona Hull, is here today with us and come from New York to
    attend this hearing and is very involved in assisting him
    through the struggles and can relate firsthand all of his
    difficulties.
        I would just like to emphasize that there are many more
    people like Mr. Heyward, like Ms. Burnette, who have suffered,
    who have become ill, and that we need a system in place to
    provide not only the medical programs we have, but also the
    assistance to them, economic assistance.
        The New York Times this morning has an article on how
    difficult the New York state workers' compensation system is to
    navigate through, have long delays in that system. And I can
    tell you from some other work I have done with the Workers'
    Compensation Board in New York, it is even worse for World
    Trade Center-related illnesses.
        The difficulties there are that these are complicated
    conditions. Our knowledge of them is evolving over time. We
    don't know the prognosis for people. It is just more difficult
    to provide a proper assessment for that.
        I think of the time when the Captive Insurance Fund was set
    up. Many of us hoped that the Captive Insurance Fund would
    find--would be able to help many of these people through this.
    For various reasons which I personally fail to understand, it
    is not. It has been used --mainly to fight the litigation
    against the city of New York and against the contractors.
        I think that the legislation being introduced now provides
    the right approach. I think the Victims Compensation Fund,
    combined with the medical programs, would provide the necessary
    economic assistance to people that have been injured, developed
    illnesses as a result of 9/11.
        I think that by linking the medical programs to the Victims
    Compensation Fund, we can ensure that we can provide a fair
    assessment of people's eligibility for compensation, we can
    provide a fair and objective assessment of their medical
    conditions, and we can then, through the system that is the
    Victims Compensation Fund operated the first time, provide
    appropriate economic assistance to these people.
        It has been going on 8 years now after 9/11. Many people
    are continuing to suffer because of that, their illnesses as a
    result of that. And I think it really is time that we should be
    passing this legislation, getting what I think is excellent
    legislation in place that addresses these issues, and we will
    take care of these people for the future.
        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
    still do not know the full extent of their exposures. While we know
    much about the adverse health effects being experienced by this
    population, we remain very concerned about latent illnesses that may
    only become apparent many years after exposure, especially cancers. 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 based on research done by several
    independent research groups. Similar health problems have been
    documented among fire fighters, other responders and recovery workers,
    and WTC community residents, students, and workers.
        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 WTC related
    medical conditions are being diagnosed using standardized medical
    protocols by physicians at some of the leading medical institutions in
    the New York City metropolitan area.
        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 started some time after September 11
    have provided excellent medical care for thousands of these works.
    Initially, only medical monitoring was available. However, three years
    ago, Congress also provided funding for medical treatment programs for
    those with WTC-related medical conditions. In December 2007, Congress
    also provided funding 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 rescue
    and recovery workers and others exposed after 9/11. 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 900 fire fighters
    have received disability pensions because of health problems related to
    their 9/11 exposures. This is 100 more than when testified here a year
    ago. These are fire fighters whose illness is so severe that they are
    no longer capable of working as fire fighters. Among patients currently
    being treated at Mount Sinai Medical Center, over 1000 are currently
    out of work. Among those, less than half were receiving financial
    assistance from Workers' Compensation, Disability Retirement, or Social
    Security Disability. In other words, these ill police officers,
    construction workers, utility repair workers, and others are now
    without any 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.
        You have already heard from Ms. Burnette. Let me mention a few
    other individuals. Daniel Arrigo is a 51 year old construction laborer
    who worked at Ground Zero from September 13, 2001 until January 2002.
    At one point, he became trapped in an elevator in one of the buildings
    adjacent to the site and was overcome by smoke and fumes. Over the next
    few years, he gradually developed severe pulmonary health problems
    requiring repeated hospitalizations. In early 2008, he had to stop
    working because of his breathing difficulties. Once he stopped working,
    he could no longer afford his mortgage and is currently living with his
    wife and three children in a basement apartment in his brother's home.
    A few weeks ago, he thought that his workers compensation claim would
    finally be approved only to have the insurance company delay payments
    by filing yet another appeal.
        Leon Hayward was an inspector in the NYC Department of Consumer
    Affairs near the WTC towers. On September 11, he helped to evacuate co-
    workers from Ground Zero to their homes. This involved numerous trips
    during the time when exposures to the dust cloud were at their highest
    levels. About one year later, he developed respiratory symptoms that
    were eventually diagnosed as pulmonary sarcoidosis, an often
    progressive fibrotic disease of the lungs that has been found to be
    significantly increased in WTC rescue workers especially in the first
    year after 9/11. His disease progressed, and he had to stop working in
    2005. His workers compensation claim was contested by the NYC
    Department of Law and denied. He struggled to get by and had to move to
    a smaller apartment. His sarcoidosis was complicated by the development
    of a cancer, lymphoma (which could very well also be caused by his WTC
    exposures), and he died last year at the age of 45. At the request of
    Mr. Hayward's family, the NYC medical examiner conducted an autopsy and
    reported the death as a homicide related to the terrorist attack on 9/
    11 based on the autopsy findings of sarcoidosis caused by WTC dust
    exposures. While the NYC Medical Examiner recognized Mr. Hayward's
    illness as related to 9/11, the NYC Law Department had previously
    denied his worker's compensation claim. As a result, Mr. Hayward
    struggled to get by with little income and facing severe medical
    problems. Mr. Hayward's sister, who assisted him through his struggles,
    has come from New York City today to attend this hearing.
        These are just two of the many hundreds of WTC workers and
    community residents whose health has been seriously damaged by their
    WTC exposures, who have become disabled, and who now have to struggle
    to support themselves and their families. Many are not receiving any
    compensation from workers' compensation or other workplace disability
    programs. Based on what we have experienced to date in the medical
    programs, I expect this number to continue to gradually increase over
    the next several years.

                             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, in the NYS Workers'
    Compensation system, 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, three
    years ago New York State implemented some new programs that were
    deigned to improve coverage for WTC responders. These included an
    extension of the time to file a WTC-related 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. Most of these
    changes are just now going into effect, and it will take time to assess
    their impact.
        For the past year, I have served on a committee looking at some of
    the problems in handling of WTC claims. For various reasons, WTC claims
    are contested and appealed much more often than other claims. This
    leads to many claims being rejected and many more claims being
    significantly delayed. Although most claims that are pursued are
    ultimately approved, a disabled worker will often have spent many
    months or years without any income while waiting for their claim to be
    approved. Our committee has made a number of recommendations to
    alleviate these problems. Some of these recommendations will require
    legislative changes and will, therefore, take time to address.
        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 most 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 five years after its formation, the fund has paid
    out less than ten actual claims, all reportedly for musculoskeletal
    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 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 847 introduced by
    Representatives Maloney, Nadler, McMahon, and King provides a
    comprehensive legislative approach to accomplish that. In previous
    hearings, 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 and the Victims Compensation Fund (VCF) is the
    best mechanism for addressing economic losses. I believe that the VCF
    would provide the flexibility to properly and expeditiously 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. A number of the changes made in HR 847
    will help to ensure that sound diagnostic criteria will be used in the
    medical portion of the program and that the program will be carefully
    monitored. At the same time as the medical program will provide
    comprehensive, expert medical care for the responders and community
    residents, 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.
        I strongly urge you to pass HR 847 this year. It is over seven
    years since the 9/11 terrorist attacks. The health of the rescue and
    recovery workers and community residents was damaged as a result of
    these attacks. We should not wait any longer to implement a
    comprehensive solution to address their medical and personal needs.
        Thank you again for allowing me to testify. I would be glad to
    answer any questions.
                                   __________
        Mr. Nadler. Thank you.
        I will now recognize Ms. LaSala for 5 minutes.

     TESTIMONY OF CHRISTINE LASALA, CHIEF EXECUTIVE OFFICER, WORLD
                  TRADE CENTER CAPTIVE INSURANCE FUND

        Ms. Lasala. Chairman Nadler, Chairwoman Lofgren, Ranking
    Member Sensenbrenner and King, and Committee Members, my name
    is Christine LaSala, and I am the president and CEO of the WTC
    Captive Insurance Company.
        First, let me say that I fully support your effort in H.R.
    847 to reopen the Victims Compensation Fund and to limit the
    liability of the city of New York and its 9/11 contractors.
        As a New Yorker who lived through 9/11, I share your
    concern for the heroic Ground Zero workers.
        I also share your concern for the other heroes here today,
    the city of New York, and the private contractors who took on
    the dangerous rescue, recovery and debris removal operation.
    These private contractors ranged in size from one-man
    operations to small family-run businesses to larger companies.
        Unfortunately, these heroes are now pitted against each
    other in litigation. More than 10,800 workers have sued the
    city and its 9/11 contractors, claiming that they suffer
    respiratory and other ailments due to their work at Ground
    Zero.
        The city and the contractors have denied wrongdoing. For
    years, these lawsuits have proceeded, as they must, through the
    tort system. The tort system, however, is a costly,
    contentious, and time-consuming way to resolve disputes of such
    national significance, disputes in which only the terrorists
    are to blame.
        If Congress wants to compensate the Ground Zero workers who
    are injured, while protecting the city and contractors from
    significant financial hardship, then an alternative approach is
    needed: reopening the Victim Compensation Fund and limiting the
    liability of the city and its contractors.
        The WTC Captive was formed to address a specific problem.
    After 9/11, the city and contractors could not purchase a
    sufficient amount of insurance for the massive debris removal
    operation. Fortunately, the Federal Government stepped in to
    fill this insurance gap. Congress appropriated $1 billion to
    establish a captive insurance company for claims arising from
    debris removal. That money in turn was used by FEMA to set up
    the WTC Captive, an insurance company with a duty to defend any
    lawsuits filed against the city and its contractors.
        Recently, the Department of Homeland Security's Office of
    Inspector General concluded that the WTC Captive is operating
    in full compliance with its congressional mandate and the FEMA
    grant. Without question, acting as an insurance company for the
    city of New York and more than 100 sued contractors has cost a
    significant amount of money. But in defending this massive
    litigation, the WTC Captive has consistently sought to preserve
    taxpayer funds.
        We have insisted that the city and contractors primarily
    work through one lead law firm instead of 100 or more. In
    addition, we have obtained a judgment against other insurance
    companies for more than $100 million. With this recent victory
    added to our current assets, the total would be more than the
    initial $1 billion.
        But we cannot prevent the inevitable. The cost of these
    lawsuits will increase if these cases remain in the tort
    system. That is why the WTC Captive supports the prompt and
    reasonable solution to legitimate claims by those injured, but
    any resolution must take account of the reason that the WTC
    Captive was created, to protect the city and contractors from
    uninsured liability.
        Thus, any resolution cannot exceed our current assets and
    must also ensure that the city and contractors are protected
    from future lawsuits. The tort system does not offer any way to
    resolve future lawsuits. The WTC Captive would act contrary to
    its mandate if it distributed a disproportionate amount of its
    assets to the current plaintiffs and left the city and
    contractors to fend for themselves against the future lawsuits.
        In addition, because many serious illnesses, including most
    cancers, take years to develop, the WTC Captive cannot pay out
    all of its funds only to those who have shown signs of injury
    and leave those with latent injuries without any form of
    recovery.
        The allegations here are of a mass tort, and this mass tort
    requires a mass solution.
        By re-opening the Victims Compensation Fund and limiting
    liability for the city and its 9/11 contractors, this Congress
    will ensure that, if there is another terrorist attack, all of
    America's heroes will again respond, knowing that their Nation
    stands behind them as they rush into harm's way.
        I thank you for your time this morning and welcome your
    questions.
        [The prepared statement of Ms. LaSala follows:]

                     Prepared Statement of Christine LaSala

                                   __________
        Mr. Nadler. Thank you.
        I now recognize Mr. Cardozo for 5 minutes.

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

        Mr. Cardozo. Thank you.
        Thank you, Mr. Chairman, Chairwoman Lofgren, Ranking
    Members Sensenbrenner and King, Members of the Committee.
        And I particularly want to thank 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 a top
    priority.
        About 7\1/2\ years ago, over 90,000 people took part in the
    rescue and debris removal effort at Ground Zero, including
    workers and volunteers from all 50 states and the constituents
    of every Member of these Subcommittees and virtually every
    Member of the House. They were all responding to an attack on
    America.
        As I know you all know, nearly 11,000 of those heroic
    responders have sued the city and the contractors, asking for
    compensation for illnesses they say they incurred as a result
    of their efforts.
        And I want to emphasize that there is not going to be any
    winners in this litigation, which pits one set of heroes, the
    rescue workers, against another set of heroes, the city and the
    contractors who responded in a time of need without a written
    contract and without insurance.
        For the plaintiffs to prevail, they will have to prove not
    only that they are sick and that the sickness stems from the
    dust at Ground Zero, but also that the city or the contractors
    were somehow negligent and not entitled to their civil defense
    immunities.
        If the city and the contractors win these litigations,
    these people who became sick will receive nothing. And if the
    plaintiffs win, after what promises to be years and years of
    further litigation, many of the contractors may face huge
    liability and damages.
        The answer to this problem is before us. It is in this bill
    to reopen the Victims Compensation Fund, with the critical
    point that you don't need to prove fault.
        And in answer to one of the prior questions as to how many
    people will opt in to the fund rather than litigation, well, of
    course, we have no guarantee, but the difference between the
    fund and the litigation is the fact that the plaintiffs will
    not have to prove fault.
        So in my judgment, an overwhelming number of would-be
    plaintiffs would, in fact, opt in to the fund.
        I also want to add that, in the fund as it existed before
    and as would exist now, there is an offset for the so-called
    collateral source that people might receive, such as pensions,
    workers' compensation, and we also must remember that in New
    York City police and firemen do not receive workers'
    compensation.
        And I correct my colleague, Mr. Feinberg, who apparently
    looks so much like me, but it is important to note that under
    New York City law, workers' compensation is not available to
    police and firemen.
        But the critical point, as Mr. Feinberg pointed out----
        Mr. Scott. Could you say that again?
        Mr. Cardozo. Under New York law, policemen and firemen do
    not receive workers' compensation. There is a separate law that
    provides them with separate pension benefits. If they become
    injured, they get what is called accidental disability pension
    if they are out for life, but they are not covered by workers'
    compensation.
        Other city workers, sanitation, law department, various
    other people, are covered. But firefighters and police are
    specifically not included.
        The VCF, as it existed, not only had a limitation with
    respect to having to file your claim before a certain period of
    time, but also that you had to be at Ground Zero within 4 days
    of the attack. And that means that, if you were at Ground Zero
    5 or 6 days after, you were not eligible.
        Let me just add to what Ms. LaSala said and what has been
    said before, reopening the Victims Compensation Fund must have
    with it a cap on the liability, which is what this bill
    provides, so that those who do not go into the fund and
    continue the litigation, so that the contractors and others
    will know that their liability will be capped by available
    insurance.
        We hope that 9/11 never happens again, but we must assure
    the country that, if it does, people will respond and we must
    treat the people who were not eligible for the Victims
    Compensation Fund, for the limitations, we must allow those
    people to be fairly compensated and not continue the litigation
    as it exists today.
        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
    Sensenbrenner and King, and committee members. I am Michael A. Cardozo,
    and I serve as 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 with respect 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 terrorist attack.
        The federal government contributed substantially to New York City's
    economic and physical recovery from the 9/11 attack. 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
    as Mayor Bloomberg has said for many years now, what is needed is long-
    term, stable funding for these health-care programs, as well as a
    method to address overall compensation for those potentially injured.
    Several Representatives--led by Congresswoman Carolyn Maloney and
    Congressmen Jerry Nadler, Mike McMahon and Pete King--have introduced
    H.R. 847, the James Zadroga 9/11 Health and Compensation Act of 2009.
    That bill provides for reopening the Victim Compensation Fund and
    limiting liability, the provisions we are here today to discuss. The
    City of New York strongly supports those provisions. The bill also
    provides for a system of stable funding for the long-term health needs
    of those affected by the attacks of September 11. Those provisions are
    within the jurisdiction of the Energy and Commerce Committee. The City
    supports that effort, though we have concerns about the effect of that
    portion of the bill on the City's finances and on our ability to ensure
    the effective use of City funds. We are confident that these issues can
    be addressed when Congress takes up the health care portion of the
    bill.
        But I am here today to testify in support of the provisions of the
    bill that address compensation for the victims of the 9/11 terrorist
    attacks on our country. First, the bill 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 demonstrate
    that they were injured as a result of the terrorist attack. Second, the
    bill would broaden the existing limitation on liability for damages
    arising from the response to the terrorist attack, thereby protecting
    the contractors that came to the City's aid from potentially ruinous
    liability and helping to ensure that the City and other municipalities
    can get the help they need from the private sector in the event of a
    future disaster, an occasion that we hope will never, but unfortunately
    may, occur.
        Approximately seven-and-a-half years ago, over ninety thousand
    people took part in the rescue, recovery and debris removal effort at
    Ground Zero--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 that the City
    retained in the rescue, recovery and clean-up efforts in response to
    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, nearly 11,000 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--people and companies will once again quickly and selflessly 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 limitations 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.
    Almost 11,000 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, a number 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 in fact they were hurt as a result
    of their work in helping their country recover from a terrorist attack,
    or as a result of 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 from the fund, 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 in the suits now pending in the federal court in
    New York, must prove, in addition to establishing that his or her
    illness stemmed from the dust at Ground Zero:

            1.  that the City or its contractors are not entitled to the
            civil defense immunities and other defenses 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 seven-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 trials on plaintiffs'
    claims, which plaintiffs' counsel say total billions of dollars, both
    sides must engage in extensive discovery, which is still in its early
    stages. Judge Alvin Hellerstein, who is presiding over these cases, has
    established an aggressive schedule for discovery during 2009 and for
    trial of thirty selected cases beginning in May 2010. However, even if
    those first thirty cases go to trial in 2010, as scheduled, the great
    majority of the cases will still need to be addressed.
        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 legally prove
    that the City or its contractors were at fault, the lawsuit necessarily
    pits the City and the patriotic companies that rushed to the City's aid
    without a written contract or an adequate amount of insurance against
    the heroic workers, who also rushed to the scene of the devastation.
    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 have
    experienced business difficulties and, especially in these difficult
    economic times, continue to do so. The City and its contractors all
    faced very substantial potential monetary exposure. To try to 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. The $1 billion provided was used, as the
    legislation required, to set up a captive insurance company. As the
    Inspector General of DHS has confirmed in his June 2008 report on the
    Captive, this is an insurance company set up under New York State law
    and regulated by the New York State Superintendent of Insurance 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 to be used to settle the claims brought by
    the nearly 11,000 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 each of the
    plaintiffs 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
    the claims.
        Second, even if the Captive were able to settle all of the current
    claims for $1 billion, that would not protect against any claim that
    might be filed in the future. New cases are literally being filed every
    month; more than 1,000 new complaints have been filed in the last year.
    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 a limitation on liability, which I will speak about
    shortly, even 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 responders and the
    City and its contractors. And there will be no need to continue using
    the valuable and limited resources of the federal judiciary.
        Limiting Liability
        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. As was said, 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
    City and its contractors remain exposed to potential liability for
    their patriotic actions.
        The Zadroga Act would eliminate this highly undesirable outcome by
    limiting liability for any remaining claims for those who decide not to
    pursue a VCF award. Liability would be capped at the amount of
    available insurance, including the insurance provided by the WTC
    Captive, plus an additional $350 million to be paid, if necessary, by
    the City.
        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.
    Indeed, I understand that, because of the lessons the contractors
    learned from 9/11, some engineering firms were reluctant to participate
    in the recovery following Hurricane Katrina.
        The bill you are considering today will address everyone's
    concerns. Re-opening the Victim Compensation Fund will provide fast,
    fair, and certain relief to the workers and area residents. And
    limiting the liability of 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. We all know who was responsible
    for 9/11--nineteen terrorists who carried out the attacks. Responders,
    workers and residents should not have to try to prove that the City or
    the contractors are somehow responsible for their harms--which we
    think, and are obligated to prove, is not the case. This bill
    eliminates that burden, and ensures that those harmed by 9/11 get the
    compensation they are entitled to.
        I will be happy to answer any questions you may have.
                                   __________
        Mr. Nadler. Thank you.
        I now recognize Mr. Frank for 5 minutes.

                    TESTIMONY OF THEODORE H. FRANK,
                     AMERICAN ENTERPRISE INSTITUTE

        Mr. Frank. Thank you, Mr. Chairman, Chairwoman Lofgren, and
    distinguished Members of the Subcommittee for your kind
    invitation to testify today.
        I serve as a resident fellow at the American Enterprise
    Institute, but I am not testifying here on its behalf, and the
    views that I am sharing here are my own.
        The September 11th Victim Compensation Fund, or VCF, 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. 847 fails to fully protect innocent
    third parties from unfair litigation, does not have many of the
    advantages that made the fund successful, and magnifies the
    disadvantages and fairness problems of the fund.
        The original fund used a non-adversarial structure to
    compensate a limited set of claimants in time and place with
    relatively unconventional 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.
        While H.R. 847 is a substantial improvement over the
    earlier version of the bill in the last Congress, it still has
    many problems. I discussed these problems in much more detail
    in my written testimony, but let me touch on a few of them
    briefly.
        First of all, the compensation program created by H.R. 847
    is especially susceptible to error and fraud. The fund was not
    designed to resolve causation issues. Someone on the September
    11th planes or killed or injured in the towers or Pentagon was
    plainly entitled to compensation from the fund. Thus, for the
    most part, determining eligibility for compensation was largely
    a ministerial function.
        The fund's structure was not designed to vet recipients'
    claims, but it is not the case that anyone with a pulmonary or
    cancerous ailment who worked at Ground Zero 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 the claims made against it.
        This creates a ``Field of Dreams'' problem. If you build
    it, they will come. If Congress creates a system where
    geographic proximity and a diagnosis are the only prerequisites
    for a large government check and an attorney's contingent fees,
    attorneys will have every incentive to manufacture such
    diagnoses.
        The law firm behind many of the thousands of pending 9/11
    lawsuits of plaintiffs who will be eligible for reopened fund
    compensation have previously used questionable medical
    diagnoses to attain huge sums in the Fen-phen litigation.
        If the bill is passed in its current form, trial lawyers
    will steal billions from taxpayers. H.R. 847 fails to provide
    adequate protection to taxpayers that taxpayer money will be
    spent on compensation of victims rather than on attorneys'
    fees.
        And to the extent that the bill is modified to protect the
    Federal Government against fraud, the program will be unlikely
    to end the third-party litigation unless the bill is also
    amended to make the fund the exclusive remedy for September
    11th-related injuries.
        Two, the bill fails to correct the problem of the original
    stabilization act, which gave unbounded authority to the
    special master. Now, this was perhaps forgivable in the rush to
    provide compensation in September 2001. The bill was passed
    that very same month. But if a program is to be reopened for 2
    more decades, Congress has the time to define more structure
    for it.
        For example, a 2-pack-a-day smoker working 1 day as a
    construction worker directing traffic at the debris removal
    site in August 2002, long after the fires were out, may, if the
    special master's regulations and adjudications are generous
    enough, receive fund compensation for pulmonary disease.
        And as Special Master Feinberg testified, the average--we
    are talking $1 billion for 2,000 claimants the last time
    around. That is $500,000 a person.
        Even the original fund failed to stay within its original
    estimates for expense, which were $4.8 billion in 2001, but
    ended up paying out $7 billion when it closed.
        Three, the bill fails to fully protect the innocent
    subcontractors who are faced with tremendous liability simply
    for volunteering to help New York City in its hour of need,
    often without pay.
        Many of the lawsuits against contractors and subcontractors
    include claims for punitive damages, which is left out of the
    exemption in the bill, so plaintiffs' attorneys will still have
    that leverage against those innocent parties. The exception
    just about swallows the rule.
        Four, the liability limitations provisions of the bill, by
    leaving insurers of these innocent parties on the hook, fails
    to solve the problem of future subcontractors being deterred
    from volunteering to help the government, raises insurance
    costs, and creates moral hazard problems.
        Five, Section 408(a)(5)'s proposal in the bill to create
    tranches of priority for claims payments through litigation
    presents additional problems of moral hazard and risks of
    collusion that could mean that unimpaired claimants receive
    government funding while leaving true victims entirely
    uncompensated by litigation.
        My time is just about up. There are many more issues that
    outstrip the time that I have, and I welcome your questions.
        [The prepared statement of Mr. Frank follows:]

                    Prepared Statement of Theodore H. Frank

                                   __________
        Mr. Nadler. I thank the gentleman.
        And our final witness is Mr. Wood, who is recognized for 5
    minutes.

                 TESTIMONY OF RICHARD WOOD, PRESIDENT,
                     PLAZA CONSTRUCTION CORPORATION

        Mr. Wood. Madam Chairwoman, Mr. Chairman, distinguished
    Members, good morning. My name is Richard Wood, and I am
    president of Plaza Construction Corporation.
        My company is one of the five major contractors that
    responded immediately after our country was attacked by
    terrorists in New York City on September 11, 2001.
        I am here representing Plaza, but I am speaking on behalf
    of all the prime contractors--Bovis Lend Lease, LMB; Turner
    Construction; Tully Construction; AMEC Construction
    Management--in offering our full support and endorsement of
    H.R. 847, the bill before you today.
        Thanks to the steadfast work of Representatives Maloney,
    Peter King, and Nadler, as well as the tremendous efforts of
    Speaker Pelosi, you are considering this bipartisan bill. This
    bill comprehensively addresses the basic needs and concerns of
    those who immediately responded to the attack on our Nation and
    our great city.
        We urge your Committee, as well as the Energy and Commerce
    Committee, to act quickly to pass this desperately needed bill.
    We urge Speaker Pelosi, who has been extraordinarily sensitive
    to our plight, to schedule this bill for a vote as soon as
    possible.
        In my mind, our Federal Government has the responsibility
    to do so. The attacks on September 11th were attacks on our
    country. The companies and individuals who responded
    immediately did so because we were attacked and because our
    first concern was that of everyone, to save lives and to rescue
    people from the unprecedented and massive destruction caused by
    the foreign enemy attack.
        Thousands of people showed up to help as they could. Our
    companies showed up because we had access to the equipment, the
    trained manpower, and the expertise to best negotiate the
    rescue and then recovery efforts at the 14-story-high pile of
    burning wreckage where the Twin Towers once stood.
        I was one of those people who rushed out to help on
    September 11th. I worked at the site, side by side with our
    city's uniformed and emergency workers, construction workers,
    and all of the other volunteers, every day for the first month.
        I came home to eat, shower, and rest for a few hours when I
    was able to, and then I went right back. I believed this was my
    duty as an American. After this time, I was down at the site
    nearly every day for the next few months, and all of the
    contractors acted similarly and did so at the expense of
    running their companies and businesses.
        You have my written testimony, but I would like to talk to
    you about my personal experience. I was in a meeting at the
    Fisher Brothers offices, the parent company of Plaza
    Construction, when Arnold Fisher's assistant whispered in his
    ear that a second plane had hit the buildings. He immediately
    canceled the meeting, and we went in front of the TV to see the
    news coverage to find out what was happening.
        As we were there watching the towers burn, having seen a
    fire in an office building before, we knew that there was
    devastating damage occurring to those buildings, but nobody
    knew exactly what could happen to those buildings.
        I received a call from my office and was told to get right
    back to the office. I walked up Madison Avenue about a 10-block
    walk, and there were people from the first tower already
    streaming up Madison Avenue. We knew that something dramatic
    had happened, but I really didn't know exactly what it was.
        I got back to my office. My reception area was filled with
    100 people, and they were very upset, and some of them were
    crying. I immediately said to them, ``Everybody, go home to
    your families. Make sure they are safe. Take care of them, but
    get back to work tomorrow. Get on your buses and trains. Do not
    let whoever did this to us affect our lives.''
        As I was talking, somebody mentioned to me that I needed to
    get to my office right away to speak to Chris Mills. Chris
    Mills is a young man that worked for me. Chris had his head in
    his hands, saying, ``What happened? What happened?'' His
    girlfriend, soon-to-be-fiancee Danielle was in one of the
    towers on the 104th floor, and he was on the phone with her as
    the towers collapsed.
        At that moment, I asked Chris what he wanted to do. I said,
    ``Would you like to go down and look for her?'' And he said,
    ``Yes.''
        I went back into the reception area, and I told everybody
    in the reception area that we are a construction company. There
    is mass devastation downtown. They could use our expertise. I
    said, ``Anybody who wants to go down there with me to try to
    help, please join me. And those of you that will remain behind,
    please call our subcontractors, the unions, and mobilize as
    many people and as much equipment as you possibly can.''
        Getting down to the site, you couldn't imagine the
    devastation that was in front of you. TV and pictures could not
    describe the massive destruction and the smoke clouds and fires
    that existed downtown.
        We met up with other contractors and immediately formed a
    bond that we were going to work together not as competitors,
    but as one large unit to make sure that we mobilize this place
    and assist the emergency workers as much as we possibly can.
        The Department of Design and Construction, DDC, was the
    lead agency and ultimately was the group that hired us. We
    worked under their direction. We were directed to work with
    emergency personnel and were directed to different quadrants.
    Each one of us had a quadrant.
        There was a lead fire department person and police
    department person in each one of the quadrants. I recall seeing
    the bridge that led from the towers to the world financial
    center collapsed on top of two fire trucks that were completely
    obliterated and stood there as a fire captain watched those two
    fire trucks, wondering what happened to his people.
        While we are sitting there and as equipment is arriving and
    people are showing up and burning equipment is there, we are
    trying to figure out how to move these massive members that are
    disorganized in a way that wouldn't damage people, were they
    still to be alive.
        Much to our dismay, there were not many people alive. But
    we worked together as a group.
        I recall the first meeting that we had. It was in a
    kindergarten class in a school just south of Stuyvesant High
    School. It was quite a scene to see the largest contractors in
    the city and some in the country sitting in kindergarten
    chairs, figuring out how to solve the problems that we had down
    there.
        After the first couple of days, I realized what a soldier
    feels like at war. My second day down there, I was walking past
    an area, and I saw what appeared to be the trunk of a body with
    the head still attached. A fireman standing next to me said,
    ``She was a woman.'' Immediately, I felt what happened to her
    family? What is her family going to think? What was this
    person's life like?
        We were very committed. It was a very serious place. This
    was not something to be taken lightly.
        For months, we worked down there. And this was an emergency
    for months. The fires burned in the quadrant I was at for many
    months. We used steel from the center of the pile long after 9/
    11 to keep our hands warm when it started getting cold later
    into the fall.
        This was never a cleanup. It was an emergency, and it was a
    recovery. The entire time we were there, I had FBI agents, CIA
    agents, and Secret Service agents standing by my side. The
    quadrant we were assigned to clean up was 7 World Trade; 7
    World Trade had the offices of those groups in it.
        We responded to this attack. This was an attack on our
    country. This was an attack by foreign terrorists. We
    completely support this bill. And I appreciate the opportunity
    to address you today.
        In closing, let me say that support for this bill should be
    universal. There should be no divide along party lines. I
    submit to you that this bill protects Americans, both
    individuals and companies, who serve their country in a time of
    crisis. And this bill also protects America.
        In the event some future attack or disaster should occur,
    people and companies need to know that their country they are
    striving to protect will do the right thing and protect them in
    return. The injured need care and support, and the companies
    upon which people rely for their livelihoods and support for
    their families need to know that the next time they are needed,
    they can again respond without a moment's hesitation.
        I ask all of you and all the Members of Congress to
    appreciate both the importance of this bill, as well as the
    need to move it quickly to passage. The situation of protracted
    litigation in which we now find ourselves is wasteful and
    protects no one. Our resources are better spent caring for the
    sick and protecting those who deserve our protection.
        Ladies and gentlemen, if this happens again, I assure you,
    as an individual, I will show up to the next disaster that
    occurs in this country, and I can assure you there will be many
    volunteers from my company. But I will have to think twice
    about dedicating the resources of my company and putting it at
    risk for fear of the litigation that may ensue.
        I appreciate your time listening to us today, and thank you
    for your efforts.
        [The prepared statement of Mr. Wood follows:]

                       Prepared Statement of Richard Wood

        Madam Chairwoman, Mr. Chairman: Good morning. My name is Richard
    Wood, and I am the President of Plaza Construction Corporation. My
    company is one of the five major construction contractors that
    responded immediately after our country was attacked by Al-Qaida
    terrorists in New York City on September 11, 2001.
        I am here representing Plaza. But I am speaking on behalf of all of
    the prime contractors--Bovis Lend Lease, LMB, Turner Construction,
    Tully Construction, and AMEC Construction Management--in offering our
    full support and endorsement of H.R. 847, the bill before you today.
        Thanks to the steadfast work of Representatives Maloney, Peter King
    and Nadler--as well as the tremendous efforts of Speaker Pelosi--you
    are considering this bipartisan bill. This bill comprehensively
    addresses the basic needs and concerns of those who immediately
    responded to the attack on our nation and our great city.
        We urge your committee, as well as the Energy and Commerce
    Committee, to act quickly to pass this desperately needed bill. We urge
    Speaker Pelosi, who has been extraordinarily sensitive to our plight,
    to schedule this bill for a vote as soon as possible. In my mind, our
    federal government has the responsibility to do so. The attacks on
    September 11th were attacks on our country. The companies and
    individuals who responded immediately did so because we were attacked,
    and because their first concern was that of everyone: To save lives and
    to rescue people from the unprecedented and massive destruction caused
    by a foreign enemy attack.
        Thousands of people showed up to help in any way they could. Our
    companies showed up because we had access to the equipment, the trained
    manpower and the expertise to best negotiate the rescue and then
    recovery efforts at the 14-story high pile of burning wreckage where
    the twin towers once stood.
        I was one of those people who rushed down to help on September
    11th. I worked at the site, side by side with our city's uniformed and
    emergency workers, construction workers, and all of the other
    volunteers, every day for at least a month. I came home to eat, shower
    and rest for a few hours when I was able to, and then I went right
    back. I believe this was my duty as an American. After this time, I was
    down at the site just about every day for the next few months laboring
    and organizing the clean up efforts. All of the contractors--our
    executives, engineers, and workers--did so at the expense of running
    our companies' businesses.
        On the morning of September 11th, I was in a meeting at the offices
    of Fisher Brothers on Park Avenue and 49th Street. As many of you know,
    the Fisher family lends tremendous support to our nation's military and
    their families. At the time of the first strike, we all thought that a
    small plane had crashed into the side of one of the World Trade Center
    buildings. When we learned that the second tower had been hit, Mr.
    Arnold Fisher ended the meeting and we turned on the television to
    watch the coverage. We knew immediately that our country was under
    attack by terrorists.
        While construction is my business and I knew that the fires would
    have a dramatic impact on steel structure of the towers, I did not
    imagine that the towers were going to fall as they did. I received an
    urgent call from Plaza's offices and I returned there immediately. When
    I arrived, I addressed a group of nearly 100 people gathered in our
    reception area, many of whom were crying. I told them to go home to
    their families and to make sure everyone is safe--and then to return
    here to work the next day. I told them that we could not and would not
    let those who attacked us win by allowing their actions to alter our
    lives. Someone came up to me and said ``Go see Mills,'' referring to
    Chris Mills, a colleague and a friend.
        Chris was sitting in my office with his head in his hands. ``She's
    gone,'' he said. ``She's gone.'' He told me that he had been speaking
    on the phone with his girlfriend, Danielle, who was on the 104th floor
    of the North Tower, just before it collapsed. Chris said he didn't know
    what to do. I went back out to the reception area and told people about
    Chris and Danielle. I told them that I was going downtown to help, and
    that anyone who wanted to should come with me. A number of us headed
    down to the site. I told those remaining at our offices to call the
    unions and tell them to mobilize and start sending people down. I knew
    we needed to assist in what was sure to be a massive rescue operation.
        I attended meetings downtown with the other prime contractors and
    the City's Department of Design and Construction (DDC). The contractors
    assisted the DDC and emergency services personnel to get as close to
    the epicenter as possible to join the rescue effort. We also met with
    city officials, including officials from the Mayor's office. The
    contractors there--Bovis, Tully, AMEC, and the Turner and Plaza joint
    venture--were each assigned an area to organize at the direction of the
    DDC. We were working under the direction of the FDNY and NYPD and our
    focus was to rescue any survivors.
        I did not for a moment think of this tragedy, this attack on our
    country, as an opportunity to make money. We were there, as were the
    other contractors, because we were attacked and because there was work
    that needed to be done that we were in the best position to do. We were
    there because it was the right thing to do.
        I can best describe what we found as a war zone. I now believe I
    know how a soldier must feel who has witnessed death and must continue
    to go on. I saw maimed bodies. I saw the torso of what I was told was a
    woman's body with no limbs. I saw a body with his or her face burnt
    off. I felt paralyzed that day.
        The next day was more of the same, though the horrors were no
    longer new to me. Every once in a while a horn would go off, signaling
    an emergency. We were all supposed to run up West Street when we heard
    it. Hordes of people would run, and then come back. There were rumors
    that there were terrorists ``in the wire,'' meaning inside the area and
    on ``the pile.'' We had no feeling of security. We believed we were
    still under attack.
        My company was operating under emergency conditions the entire time
    we were there. I worked alongside FBI, CIA and Secret Service agents.
    We were told that sensitive information may be in the pile and that it
    needed to be retrieved. Building #7 came down because of a massive
    internal fire. Steel that was cherry red from the heat was still being
    pulled from the pile long after September 11th. We would sometimes use
    it to keep ourselves, particularly our hands, warm. At one point in the
    fall, before our work was completed, we asked the city if we should
    start to work eight to twelve hour days. We were directed by the DDC to
    continue working 24 hours a day.
        We felt like we were doing something for our country. I still know
    that we were, and that we stood tall at a time when our nation and the
    world were watching. We are proud of our accomplishments. We performed
    the work more safely and efficiently than anyone expected. In fact,
    there was not a single fatality at the site during the entire clean
    up--a tremendous accomplishment given the dangerous conditions at the
    site. And we did not do the work to make a profit. We were there
    because thousands of people needed to be organized and the city needed
    our companies and our expertise to help do that. We were there because
    the people of our city and our country needed us to be there.
        What happened on September 11th was unprecedented. The immediate
    mobilization of forces from both the public and private sectors in the
    aftermath, however, is something from which we need to learn. When our
    companies, our people, our equipment and our expertise were needed, we
    were there. Now, as we face thousands of lawsuits that could
    potentially bankrupt our businesses, we need and ask for your help and
    support today. We all want to be in a position to help our country
    again if called upon to do so.
        Litigation is simply not the solution to the position we all find
    ourselves in. The World Trade Center Captive Insurance Company, which
    was created by Congress, is defending our companies and the City of New
    York in the thousands of individual lawsuits that have been brought
    against us. Nonetheless, we have all been forced to hire lawyers and
    expend our corporate assets in these troubled economic times to defend
    ourselves, despite the fact that we dropped everything to answer the
    call for help. We came to the aid of our country, our city and its
    people immediately after we were attacked. And now we are being forced
    to defend ourselves and our companies' very existences in court.
        Our companies believe that anyone who may have been injured as a
    result of their work on the pile--anyone who came to help others at the
    expense of their own health--deserves to be taken care of medically and
    to be fairly compensated for their injuries. These people should not be
    forced into the legal system to be treated fairly any more than our
    companies should be forced to litigate against them. Collectively, we
    were the ones who showed up on September 11th and beyond. Any injuries
    sustained were directly caused by the terrorists, and it would be an
    injustice to hold our companies responsible in their place.
        These are some of the reasons why we support the reopening of the
    Victim Compensation Fund in Title II of this Bill. The Victim
    Compensation Fund will provide, as it did for those killed or injured
    on September 11th, fair compensation for the injured without raising
    issues of fault and liability. We can and should all agree that the
    fault lies with the terrorists. We may offer some technical suggestions
    on the provision in Title II which limits the liability of the
    companies, but we believe that it largely hits the mark. We want to
    ensure that the final language of the bill is fair and achieves the
    goal of fully protecting our companies as well as the injured.
        We also fully support the concept of a medical program in Title I
    of the bill for people who were injured at the site. Ironically, I may
    be one who might someday qualify for that program.
        I appreciate the opportunity to address you today. In closing, let
    me say that support for this bill should be universal. There should be
    no divide along party lines. I submit to you that this bill protects
    Americans, both individuals and companies, who served their country in
    a time of crisis. And this bill also protects America. In the event
    that some future attack or disaster should occur, people and companies
    need to know that their country, which they are striving to protect,
    will do the right thing and protect them in return. The injured need
    care and support, and the companies--upon which so many people rely for
    their livelihoods and support for their families--need to know that the
    next time they are needed they can again respond without a moment's
    hesitation.
        I ask all of you, and all members of Congress, to appreciate both
    the substantive importance of this bill as well as the need to move it
    quickly to passage. The situation of protracted litigation in which we
    now find ourselves is wasteful and protects no one. Our resources are
    better spent caring for the sick and protecting those who deserve our
    protection.
        Thank you.
                                   __________
        Mr. Nadler. Thank you.
        I will now recognize myself for 5 minutes to begin the
    questioning. My first questions will be to everybody, and I
    would just ask for a yes-or-no answer. Does anyone think that
    the current situation is working well, with 11,000 lawsuits and
    victims not being compensated?
        [Witnesses jointly respond, ``No.'']
        Mr. Nadler. Does everyone agree that we need to do
    something different?
        [Witnesses jointly respond, ``Yes.'']
        Mr. Nadler. Does everyone agree that the current bill is an
    improvement to the current situation, that by reopening the VCF
    we can reduce the number of lawsuits and ensure a speedy
    payment to those in need?
        [Witnesses jointly respond, ``Yes.'']
        Mr. Nadler. No one disagrees with that? Maybe?
        Mr. Frank. Maybe.
        Mr. Nadler. Mr. Frank says, ``Maybe.'' Okay. Does everyone
    agree the current bill is better than the previous bills?
        [Witnesses jointly respond, ``Yes.'']
        Mr. Nadler. And I think we can all acknowledge that the
    bill can stand to be improved, and that is what this hearing is
    about, and I want to hear your comments and suggestions on the
    bills, but now I have a number of specific questions.
        Dr. Melius, Mr. Frank said that it is not the case that
    anyone involved in debris removal with a pulmonary ailment is
    an appropriate claim, and lung disease is common without
    exposure to Ground Zero. And, in fact, he said we can't tell
    who among those who present all the symptoms, the sarcoidosis
    or whatever, are victims of 9/11.
        Could you comment on that? And, therefore, it would be
    compensated. Could you comment on that, please?
        Dr. Melius. Yes, I can. First of all, I think--well, made
    one sort of misstatement, mischaracterization. The original VCF
    actually did compensate a significant number of people with
    illnesses. I think Mr. Feinberg said that. I think it was about
    2,500 people that were ill.
        Mr. Nadler. Thank you.
        Dr. Melius. I have evaluated what he has done, and it has
    been in some of the reports, and I think he did an excellent
    job taking the----
        Mr. Nadler. Thank you. Could you answer about what Mr.
    Franks said about----
        Dr. Melius. Frank, excuse me, yes.
        Mr. Nadler [continuing]. We don't know who the--we don't
    know who is a victim.
        Dr. Melius. Right. And I think that, with the current
    protocols that are in place, medical protocols, the current
    ways for ascertaining whether people were working there and
    were exposed, I think that there should not be a great deal of
    difficulty determining whether or not people's health problems
    were related to their exposures at 9/11, as opposed to
    cigarette smoking or some other----
        Mr. Nadler. It is not a great problem?
        Dr. Melius. It is not a great problem.
        Mr. Nadler. Thank you.
        Mr. Frank, you said a number of things which were
    interesting. H.R. 847 fails to fully protect the innocent
    subcontractors. The liability provisions leave some insurers of
    innocent parties on the hook, and fails to solve the problem of
    future subcontractors. The program is unlikely to end the
    third-party litigation. It fails to provide adequate protection
    to taxpayers that taxpayer money will be spent on compensation
    of victims, rather than attorneys' fees.
        Wouldn't you agree that, even though it doesn't do enough
    or might not do enough, in each of these situations, it
    improves on the existing situation?
        Mr. Frank. Not necessarily. It depends on the regulation
    that the special master passes. And that is a complete unknown,
    because they are not defined here. They will be promulgated by
    the special master, and the special master has tremendous
    discretion to do that.
        He could create a program that wastes tens of billions of
    dollars of taxpayer money, makes matter much worse, or you
    could create a very wise program----
        Mr. Nadler. I will come back to my questioning of you in a
    moment.
        Ms. Lofgren has to leave, so let me recognize Ms. Lofgren.
        Ms. Lofgren. Thank you for yielding, Mr. Chairman.
        I would just----
        Mr. Nadler. I am not yielding. I am--well----
        Ms. Lofgren [continuing]. Take 30 seconds to thank this
    panel. Mr. Wood, your description actually brought me back to
    that scene so vividly. And I think all the testimony here has
    been enormously valuable and compelling.
        And I was supportive of this bill when I walked in. I now
    am more than supportive. I just want to thank the witnesses for
    an excellent job.
        And I thank you, Mr. Chairman, and yield back.
        Mr. Nadler. Well, I thank you for all your work on this and
    for your support of this. Let me resume my questioning.
        Mr. Frank, you are saying that this might not necessarily
    be an improvement, even though the alternative is unlimited
    tort liability lawsuits, as we see now, by 10,000 people or
    11,000 people?
        Mr. Frank. It is entirely possible the southern district in
    New York gets it right and finds the city and the contractors--
    --
        Mr. Nadler. Okay. May I ask Mr. Wood, how would you respond
    to Mr. Frank's argument that this bill is not good for the 9/11
    contractors, that it doesn't sufficiently protect you, that it
    wouldn't help?
        Mr. Wood. As I understand the bill, it would limit the
    liability to what is left in the Captive. And the Victims
    Compensation Fund would take a lot of the litigants away,
    leaving the Captive available for those who opted out, to
    continue with and pursue legal means, and therefore the Captive
    still in place would be what would defend us in the future. And
    we would be capped at the value left in the Captive.
        So, therefore, I do believe, from my understanding, that it
    would defend us.
        Mr. Nadler. Thank you very much.
        And I would like to make, before my time expires, just one
    comment, because I think that Mr. Frank didn't quite understand
    one provision of the bill, perhaps.
        He says in his testimony Section 408 does not sufficiently
    change the dynamic of punishing the subcontractors by
    subjecting them to lawsuits. Trial lawyers will still be able
    to use the threat of decades of endless litigation against
    contractors and subcontractors. The liability limits will be
    illusory. The liability limits in the bill would be illusory.
    Once they are reached, contractors will face crippling legal
    expenses when insurers no longer have a duty to defend.
        Well, the fact is, in this bill, once the legal liability
    limits are reached, there is no further possibility of
    lawsuits. There is complete indemnity at that point. So this
    should put your mind at ease, sir.
        Mr. Frank. Well, there is an exception in the bill for
    punitive damages. And most of----
        Mr. Nadler. All right. Punitive damages for deliberate--or
    for deliberate tort, yes, but nobody is talking about that. No
    one is aware of that.
        Mr. Frank. The bill doesn't say----
        Mr. Nadler. I see my time has expired.
        I now recognize the distinguished Ranking minority Member
    of the Immigration Subcommittee, Mr. King.
        Mr. King. Thank you, Mr. Chairman.
        And I think to start this out, I would like to turn to Mr.
    Frank and ask him, would you like to explain your concern about
    the gross negligence provisions in the bill?
        Mr. Frank. Certainly. The Chair seems to think that the
    exception only applies to intentional torts, but the exception
    explicitly states that it includes acts of gross negligence.
        And as I discussed in my written testimony, New York
    state's definition of gross negligence is relatively broad and
    could arguably--and certainly the plaintiffs are claiming--
    includes what the contractors and subcontractors did on the
    site.
        Mr. King. If I might follow up on that, Mr. Frank, also
    looking at language under the exception language you are
    referring to that accepts acts of gross negligence. And then
    here is an even broader one, ``or other such acts to the extent
    to which punitive damages are awarded.'' Could it be more
    broad?
        Mr. Frank. Well, it could be more broad, but it is
    certainly an exception that comes close to swallowing the rule.
    There will be additional indemnity. It is an improvement. But
    because it is very likely that the limits of liability will be
    reached, and there will be likely thousands and thousands more
    claims as the years go on, the exception is enough that
    subcontractors and contractors still face danger of liability.
        Mr. King. And that being my concern--and I think about
    this. Let's just say there are 11,000 cases, and perhaps this
    legislation passes, and all but one of them would go into the
    fund and opt into the fund that is established under the bill.
    The other one might sue Mr. Wood.
        And might appear through the insurance protection that is
    there, under these open--under gross negligence or other such
    acts, to the extent to which punitive damages are awarded, then
    it would be such that one individual out of 11,000 could get
    grossly rich, to use a term, while the others opt for a far
    more modest compensation.
        Is that a possibility, to make it an extreme case so that
    we can talk about the----
        Mr. Frank. That is an extreme case, certainly. What is more
    likely is, because the bill is structured to incentivize people
    to go into the fund by giving them sort of a free bite at the
    fund--they can go into the fund. And if the fund denies their
    claim, they can reinstitute the litigation. And that is the
    most likely source of additional litigation.
        Mr. King. And I hope to work with some of the protections
    that I think we need, because I am concerned about Mr. Wood. I
    am impressed by everybody's testimony, and service here. I
    think Mr. Wood brought out what I see as the events and the
    emotion of the time.
        And having run to the sound of the guns as you did, as the
    other contractors did, and being faced with this, it is got to
    be a weight on you every day. And you know where I stand on
    wanting to protect the contractors in particular.
        And, Mr. Wood, I would ask you: Have you looked at this
    language that we are talking about that allows for punitive
    damages that could potentially still be your liability if this
    bill passes?
        Mr. Wood. I have not looked at it. I have not read that
    particular provision, but I share with you the long-term
    concerns. It has been 7\1/2\ years now that we have had this
    weighing on it, and, you know, we do want to see people who are
    sick taken care of, and we think that should be done right
    away.
        And we want to be able to respond in the future. And having
    this hang over our head, if there is a loophole in the bill, I
    would like to see it closed.
        Mr. King. Thank you. It looks to me like there is, and I
    don't think it is intentional at all, and that is what happens
    around here, unintended consequences.
        But I think it will be a particular nightmare to go through
    7\1/2\ years of this liability hanging over your head, finally
    get a bill passed, breathe a sigh of relief, and find out the
    litigation is coming at you again.
        Mr. Wood. We are very happy that we are finally having the
    chance to figure out how to protect people and protect
    ourselves. And we are here sitting very happy that we have a
    bill in front of you. And if it can be improved, great, but we
    are still very, very pleased that there is a bill out there.
        Mr. King. And I thank you, Mr. Wood.
        And is there anyone in the panel that would object to
    capping attorney fees under the fund at 5 percent?
        Hearing no response, let the record reflect that no one
    volunteered to take up that issue.
        And so I would just conclude, there are some things that I
    am looking at. One of them is the gross negligence provision
    and the broader language that is part of the bill and then my
    concern that we don't have protection that if one receives
    medical care until Title I of the bill that they--I would want
    them to automatically then opt into Title II of the bill,
    rather than be able to litigate.
        And the limit to economic damages would be another piece
    that I would want to stand, cap the attorney fees, and I have a
    couple other ideas, but that gives you a sense of what I pull
    out of here as I listen to the witnesses.
        If the Chairman is all right, I would be happy to recognize
    Mr. Cardozo for his response.
        Mr. Cardozo. I just wanted to make one point. I think, if
    you study the bill carefully, the concern you expressed before,
    that if you opt into Title I that somehow you have, in effect,
    have admitted or not admitted in Title II, the standards in
    those sections are very different, so that if you have opt into
    Title I for health care purposes, I don't think that has any
    effect at all, if you read the fine print of the bill, at least
    as I have read it.
        I don't think that has an impact one way or the other. The
    standards are different. The presumptions are different. So I
    don't think that that concern--I think, as drafted, that is not
    a problem.
        I would also like to point out to you that, in the
    regulations that Mr. Feinberg had--I don't remember if it was
    in the bill or not--once you opted into the fund, before you
    knew what your award would be, you made an unequivocal choice.
    You could not say, ``Oh, I only got $100. I am going to forget
    it and sue.'' You cannot--as structured, once you went into the
    fund, you made an unequivocal choice.
        So I don't think the other concern that--the concern you
    expressed in that regard is one that need concern you.
        Mr. King. Thank you, Mr. Cardozo.
        And in response, I will say that I think the statutory
    construction on it, you are correct. I think there would still
    be a de facto presumption that may exist in the litigation.
        I thank you, Mr. Chairman, and I yield back.
        Mr. Nadler. I thank the gentleman.
        Who is next?
        The gentleman from Virginia is recognized for 5 minutes.
        Mr. Scott. Thank you. Thank you, Mr. Chairman.
        Mr. Cardozo, you indicated that police officers and firemen
    were not covered by workers' comp. They are, in fact, covered
    by another plan----
        Mr. Cardozo. Yes.
        Mr. Scott [continuing]. That is actually more generous
    than----
        Mr. Cardozo. Yes, that is what I was trying to intimate.
        Mr. Scott. So they are not--we don't want to leave the
    impression that they are out in the cold.
        Mr. Cardozo. No, I just wanted to suggest to you, because
    it was a collateral source offset issue that you had raised.
        Mr. Scott. But it was--it would be the same--it is workers'
    comp-like. If they are on the job, injured on the job, they get
    coverage?
        Mr. Cardozo. That is correct.
        Mr. Scott. Okay.
        Mr. Wood, you responded, your company responded and many
    employees responded to this situation. Would you have responded
    and sent your workers into the World Trade Center area if you
    had been told accurately of the danger rather than being told
    by Federal officials that it was okay for employees to be in
    that area?
        Mr. Wood. I personally would have responded regardless.
        Mr. Scott. Would you have sent your employees knowing that
    it was a present danger to their health?
        Mr. Wood. When we went down there, I requested volunteers.
        Mr. Scott. Would you have----
        Mr. Wood. I didn't direct anybody to go down.
        Mr. Scott. Okay. Would you have better protected your
    employees had you known what the danger was?
        Mr. Wood. I would have protected my employees with whatever
    means possible. There were 50,000 people down at the site, you
    know, and, you know, we were there responding to emergencies
    and making sure people were trying to be saved.
        Mr. Scott. Now, a lot of companies in your position are
    being sued. Have there been any plaintiffs' verdicts against
    companies like yours?
        Mr. Wood. No.
        Mr. Scott. Are these class actions or individual lawsuits?
        Mr. Wood. I wouldn't know how to classify, you know,
    whether it is a class action or not. We know there are over
    10,000 litigants.
        Mr. Scott. Mr. Cardozo?
        Mr. Cardozo. These are all individual cases, since it is a
    tort case and you have to analyze each person's individual
    problems. Judge Hellerstein has ruled that it could not be
    brought as a class action, but they are all consolidated cases
    before him that are presently in----
        Mr. Scott. Have they consolidated on the issue of
    liability?
        Mr. Cardozo. Well, the liability issues, of course, will
    depend--and that is one of the basic problems we have--among
    the many issues are, when did someone work? When was he
    exposed? Was he or she given a mask? At what point in time? So
    to make general determinations about liability is simply not
    feasible.
        Mr. Scott. Okay. Were all of those who were actually
    working that day covered by workers' comp?
        Mr. Cardozo. Well, the city----
        Mr. Scott [continuing]. Collapse of the building something
    that arises out of or in the course of employment?
        Mr. Cardozo. From the city--those who were city employees,
    if they had filed a workers' comp claim within the statutory
    time limits and a statutory time limit was then subsequently
    extended, they would have been entitled to what is relatively
    modest benefits of the workers' comp.
        Mr. Scott. But they would be covered by workers' comp? Now,
    have any insurance companies been unable to pay because of the
    catastrophic nature of this event?
        Mr. Cardozo. I am not familiar with that.
        Mr. Scott. I mean, everybody who worked with workers' comp
    at least got those benefits? No?
        Mr. Cardozo. Well, the workers' comp--of course, people had
    to recognize that, in fact, they had been ill. And that was, of
    course, one of the problems that we have.
        There have been--I can get you the statistics in a moment--
    there have been workers' comp claims that have been made and
    paid out that total in about $9 million in total. But there are
    severe statutory limitations as to how much each individual's
    workers' comp can be.
        Mr. Scott. Say again? I am sorry?
        I will yield to the gentleman from New York.
        Mr. Nadler. Thank you. I just wanted to suggest that Dr.
    Melius might want to answer the question about workers' comp.
        Dr. Melius. Yes, sorry. I said in my testimony and the
    experience that there are literally thousands of people who
    have not been able to get their workers' comp claims recognized
    in the system. There are various statutory issues. There are
    various issues with the private insurance companies, the city
    of New York contesting those claims.
        Mr. Hayward, who I talk about in my testimony, his claim
    was denied. I am not sure the exact reasons for that. But there
    are many that have been unable to get the workers' compensation
    system to recognize their claim.
        There are also people within the police, fire and
    sanitation departments who have had difficulty with their line-
    of-duty disability pension claims being recognized. So it is an
    ongoing problem. It is complicated by some of the timing issues
    and complicated by the nature of these illnesses that don't
    quite fit the normal system.
        Mr. Scott. Mr. Chairman, are you going to have another
    round?
        Mr. Nadler. No. Without objection, I will grant the
    gentleman an additional 2 minutes.
        Mr. Scott. Thank you.
        Doctor, as I understand the progression of the respiratory
    diseases, you start with non-symptomatic changes in your lungs
    and progress gradually into symptoms and more and more
    problems.
        Can you accurately predict who will progress from one stage
    to another?
        Dr. Melius. No. We cannot. Through the medical monitoring
    programs, we can carefully track people----
        Mr. Scott. Okay.
        Dr. Melius [continuing]. And follow what happens to them.
    But predicting who is going to go into a more serious decline
    in their pulmonary function is different.
        Mr. Scott. And for smokers subjected to asbestos, the
    problem may be that you are not compensating them for smoking,
    because asbestosis for a smoker does a lot more damage than the
    smoking would have done. Is that right?
        Dr. Melius. Correct.
        Mr. Scott. And one of the problems with dealing with this--
    because you can't predict who is going to be who--is the
    requirement that somebody sign a release as a condition of
    getting any payment. I mean, that is a normal practice in most
    lawsuits, but it certainly creates a hardship on the plaintiff
    if you can't calculate who is going to need the payments in the
    future.
        So, Mr. Cardozo, let me ask you. Would it be more desirable
    in this to allow partial payments as you go along, as the
    patients actually need it?
        Mr. Cardozo. Well, I am not sure you are ending the
    constant litigation problem that you have. As Mr. Feinberg
    said, you--any, really, even in a tort case, you do try to make
    judgments as to what is going to happen down the road.
        Mr. Scott. But if you have 100 plaintiffs and some are
    going to get a lot sicker and some aren't, how do you fairly
    compensate them without overcompensating everybody or
    undercompensating everybody?
        Mr. Cardozo. I think you have to rely upon the best medical
    evidence that is available to you at the time. But it is
    another thing to keep in mind is the other part of this bill
    dealing with the whole health benefits. If, in fact, that part
    of the bill is enacted, that with an assurance of the ability
    for Congress and the city jointly to be funding the health part
    of this, there will also be an assurance that, to the extent
    that people need future health care, that that would be
    available.
        Mr. Scott. And that wouldn't be part of the relief?
        Mr. Cardozo. Pardon me? I don't believe so, no.
        Mr. Scott. That would not be part of the relief?
        Thank you, Mr. Chairman.
        Mr. Nadler. Without objection, the gentleman's extended 1
    additional minute. Would the gentleman yield to me?
        Mr. Scott. I yield.
        Mr. Nadler. Thank you.
        Ms. LaSala, I have three quick questions for you. How much
    have you paid--has the Captive paid out in recoveries?
        Ms. Lasala. It has paid a modest amount, Congressman
    Nadler, about $350,000.
        Mr. Nadler. Three hundred and fifty thousand dollars. And
    is it correct you have spent in legal defense defending against
    claims about $260 million?
        Ms. Lasala. I think that is a slight----
        Mr. Nadler. Over $200 million?
        Ms. Lasala. Nearly $200 million is the accurate number.
        Mr. Nadler. Okay. And would you agree that $200 million is
    more than 5 percent of $300,000?
        Ms. Lasala. Whatever the math is, I would agree, yes.
        Mr. Nadler. Thank you very much.
        Mr. Lungren. Thank you very much, Mr. Chairman.
        Mr. Wood, as I suggested earlier in my question to Mr.
    Feinberg, there is no perfect solution here, but we want to see
    how we can compensate people in a reasonable manner, but at the
    same time due it in such a way that does not bankrupt companies
    that assisted, as your company did and as you did.
        So, Mr. Wood, could you actually give us some details about
    what the continuing threat of litigation truly means to you?
    There has been some discussion here about, have you been sued?
    Have there been plaintiffs claims against you, et cetera?
        But just in terms of somebody who wants to keep a company
    together, number one, and as I understand it, you represent
    other companies here, not just your own company----
        Mr. Wood. That is correct.
        Mr. Lungren, What is the reality of the situation that
    faces you now with respect to this continuing uncertainty with
    respect to litigation, both in terms of keeping the company
    together and other companies that you represent here, and also
    in terms of the ability to respond to emergency requests such
    as this?
        I hope we are not going to get in a situation where next
    time we have a disaster the first thing you do is call up your
    attorney, rather than calling your people together to try and
    respond.
        Mr. Wood. Unfortunately, we may have to. You know, just the
    fact that I am here today, you know, takes away from our
    ability to do business. And this has been ongoing for 7\1/2\
    years. And all the contractors are living a similar fate.
        I know, right after Katrina, one of the contractors that I
    am speaking for today had a local office near New Orleans. And
    they had to question themselves about whether or not to go in
    to help in the aftermath of Katrina. They made a decision to
    take care of their own people and make sure that they properly
    got evacuated and didn't run in to help after Katrina because
    of their experiences at 9/11.
        Many of the companies that are represented here are also
    national companies. And we have offices in other places in the
    country. And I am concerned that a mass mobilization of this
    kind, where tens of thousands of workers and hundreds or
    thousands of pieces of equipment showed up immediately, which
    was really the--us being the only resource that could properly
    provide that in a massive disaster, whether it be natural or
    another terrorist attack. I am concerned that it may not be
    there.
        I truly believe that every major contractor in the country
    is waiting to see what happens here today. And, you know, like
    I said to you, I will be there myself, and I know thousands
    will come as volunteers, but we are not going to dedicate the
    resources of our company until we know that the Federal
    Government is going to stand behind us.
        This was a massive attack by a foreign entity. It was an
    act of war. And we responded to an act of war. Looking to find
    blame at this point is really counter to what we did. I am very
    pleased for this opportunity for this bill is out there.
        Did I answer your question?
        Mr. Lungren. I think you did. In another life, I did tort
    litigation, both plaintiff and defendant. And from the outside
    looking in, I think some people get the idea that the system is
    set up so that it is almost perfect, that somehow we can figure
    out exactly what an individual has suffered, what they are
    going to suffer in the future, what the loss of income is going
    to be, and somehow we come to this judgment.
        But having been a part of it, I realize that you have a
    plaintiff, you have a defendant, you have lawyers, you have
    juries, you have a judge. You do the best you can. Our system
    is set up to try and do rough justice, if you will, but it is
    an extremely difficult thing.
        Why do we say that somebody gets a bigger settlement or a
    bigger judgment because they happen to have a job that has a
    greater income than somebody else? Because we are trying to
    give people recompense for the lost earnings and we do the best
    job we can.
        Who knows? Maybe that person would have changed their job.
    Maybe they would have invented something. Maybe they would have
    made more--we don't know those things, so we do the best we
    can.
        And here we have the same sort of situation, except it
    appears that everybody believes that extended litigation over a
    long period of time defeats the very purposes of what we are
    attempting to do. At least that is the way I see why we are
    here doing this.
        So I would like to ask the panelists this: Is there any
    concern any of you have that this bill, as we attempt to do
    that, gives too great a discretion to the special master? Or
    should we in Congress do more of a job of trying to fill in the
    detail?
        This is giving a special master tremendous leeway over an
    extended period of time. It is a tremendous power. And I just
    wonder if anybody would have any comments on that from the
    panel.
        Mr. Cardozo. Well, we are going to give the discretion to
    somebody. And we have, I think, a very positive experience with
    Mr. Feinberg, who dealt in an extraordinarily difficult case
    and different situation. And as he pointed out, about 2,700 of
    the people who he made awards to were people who were injured
    at Ground Zero.
        Yes, he had enormous discretion. After he did promulgate
    regulations that had been preceded by some hearings, he did an
    extraordinary job.
        If we continue down this front, that is going to be up to
    Judge Hellerstein and the jury, assuming that they are--proving
    that someone did something wrong, is going to have to do
    exactly the same thing. They are going to have to, when the--
    under the limits of the tort system, make the same kind of
    judgment.
        So I think your question really is, yes, you could perhaps
    write in more safeguards in this legislation. I think we could
    be having a debate for years of each particular potential
    safeguard, which is why you have regulations.
        So, yes, there is going to be discretion to the special
    master, but I think it is an infinitely more preferable
    approach than what we have now.
        Dr. Melius. Can I just add that, from a medical
    perspective, given the uncertainties about what is going to
    happen in the future with the illnesses and how these illnesses
    may develop over time, may get better, may get worse, and so
    forth, I think having this type of system is preferable to
    other, more static compensation systems.
        For this particular situation, it can work. And you need
    the discretion and the flexibility to be able to respond.
        Mr. Frank. I would say that there is a happy medium between
    what Congress should be doing and what the regulators should be
    doing. And in particular, the special master here is outside
    many of the protections of the Administrative Procedure Act, so
    even as a regulator, there is unusual discretion being vested
    in the special master by the original stabilization act.
        And as I discuss in my written testimony, that is one thing
    when you are trying to quickly pass legislation, within a
    couple of weeks of 9/11, but we are talking here about a 22-
    year program. And Congress should take the time to get some of
    the details right.
        Mr. Nadler. The time of the gentleman has expired.
        I now recognize the gentlelady from Texas for 5 minutes.
        Ms. Jackson Lee. Mr. Chairman, let me thank you very much
    for what I think is a very instructive hearing, and also
    Chairwoman Lofgren, as well, both Committees I serve as a
    Member on both Subcommittees
        Call me a soft sap, but I will stand alongside a suffering
    people any day against tall buildings and, if you will,
    corporate blockades. I do recall that this bill was sent in or
    introduced some years ago, and we look forward to the
    bipartisan assistance of our good friends on the other side of
    the aisle.
        But I recall the testimony of the special master that
    indicated that most of the early practitioners who helped did
    it pro bono. And he felt very comfortable in working through
    not only through his process, but I believe state law may, in
    fact, govern compensation. And I am understanding that New York
    state law in tort actions is not, if you will, a softie.
        So I would like to move on to the human suffering. Mr.
    Wood, I really believe that Mr. Scott's question was not a
    fault question. It was simply a question saying or asking--and
    I had just wanted to make sure you understood it was not blame.
        It was that, if you had been notified, you might have
    stopped at the local hardware store or wherever you might stop,
    might have had a mask or otherwise, you would have gone because
    of your patriotism.
        But what we are asking is, if you had any notice--we are
    trying to suggest--or let me not put words in your mouth--that
    you are not to blame. You came down as a volunteer, and so did
    your workers, because you were called. If you had a big red
    sign or a SOS that said, ``On the way down, get a mask, it is
    absolutely imperative,'' you might have done that. Is that my
    understanding, sir?
        Mr. Wood. I would have offered that to anybody else who was
    a volunteer. I would have kept going. It truly was an act of
    war, ma'am.
        Ms. Jackson Lee. And I don't take that away from you. Thank
    you so very much, sir. I just wanted to make sure that, if you
    had that notice, you would have provided for others, maybe not
    yourself. And we do appreciate it.
        Let me ask--to just give me that number again so that I
    could hear it clearly. And then--I think it is Ms. LaSala? Ms.
    LaSala?
        Ms. Lasala. Yes, LaSala.
        Ms. Jackson Lee. Yes. Could you give me--you paid how much,
    please?
        Ms. Lasala. In claims?
        Ms. Jackson Lee. Yes.
        Ms. Lasala. We have paid approximately $350,000.
        Ms. Jackson Lee. And then what did you utilize for defense
    fees or lawyers that were involved in the matter?
        Ms. Lasala. In the management of this company since its
    inception, we have spent close to $200 million both in defense
    of the litigation, understanding the nature of the injuries,
    the management of the company, the preservation of the corpus
    that was entrusted to us.
        Ms. Jackson Lee. And, Ms. LaSala, I never attempt to
    reproach anyone personally. I will not ask you any more
    questions. I will just editorialize as I ask Ms. Barbara
    Burnette questions about the human suffering.
        But right now, my stomach is churning. If I was not
    appropriate and respectful of my Chairman, I might run out of
    the room. My hair is on fire. And that would be very disastrous
    for this. I have indigestion. I can't even speak. Three hundred
    thousand dollars?
        [Applause.]
        Three hundred thousand dollars and $200 million plus for
    defense and understanding someone's pain and suffering is
    obscene. And so I am hoping we can work across the aisle on
    this legislation.
        Let me quickly go to Ms. Burnette, who played basketball,
    played on behalf of the New York City Police Department. When
    you went there, were you told or did you see other people
    wearing respirators, Ms. Burnette? And thank you for being
    here.
        Ms. Burnette. No, I didn't. I was just concerned with
    rescue and recovery.
        Ms. Jackson Lee. And you got right in the middle of it?
        Ms. Burnette. Yes.
        Ms. Jackson Lee. And you are now--are you retired? Are you
    still working for the----
        Ms. Burnette. Retired.
        Ms. Jackson Lee. You are now retired. Would you have
    retired this early in life? Obviously, you look like a very
    young woman, but----
        Ms. Burnette. No.
        Ms. Jackson Lee. You would not have retired. Were you used
    to looking out the window at the crime or the criminal or were
    you used to tracking him down, running him down, and getting
    him?
        Ms. Burnette. Running him down and getting him.
        Ms. Jackson Lee. And in terms of the impact on your family
    and the kind of medication that you are taking, do you see your
    life being changed, between night and day, pre-9/11, which I
    want you to get on the record that you would have, if 9/11 came
    again, God forbid, you were in that capacity as a detective,
    you would go down there again. I want that to be on the record.
    I don't want to put words in your mouth.
        Ms. Burnette. Yes, I would go down there.
        Ms. Jackson Lee. You would go down again. But do you see a
    difference between your life pre-9/11, your physical condition,
    and where you are today?
        Ms. Burnette. Yes, I do. I can't do anything I did pre-9/
    11.
        Ms. Jackson Lee. Why don't you tell us?
        Ms. Burnette. Pre-9/11, I still played basketball. I was
    able to play with my kids and my grandkids. Now, the most I do
    is cough. I am taking my medications. I don't breathe well. I
    am suffering because I am still in denial that I am sick. I
    know that there is talk of me needing a double lung transplant,
    because I am scarred--three-quarters scarred on both lungs.
        Ms. Jackson Lee. Your family is impacted?
        Ms. Burnette. Yes, they are.
        Ms. Jackson Lee. And my last--you understand the bill that
    is before us?
        Ms. Burnette. Yes.
        Ms. Jackson Lee. And would this legislation going through
    the Congress, signed by the President of the United States,
    would this, you believe, help you and your fellow victims who
    are now still in pain after 9/11?
        Ms. Burnette. Yes.
        Ms. Jackson Lee. Mr. Chairman, let me indicate, as
    indicated, that I think Ms. Burnette and, obviously, Mr. Wood
    have spoken for thousands who cannot be here.
        But I would think, in the cost analysis that we in Congress
    have to do, to juxtapose going forward and helping victims
    versus a past history of $200 million for lawyers' fees and
    only $300,000 for victims, I think we would be in good stead
    for any decision made on this particular legislation.
        And I want to offer my enthusiast support for H.R. 847. I
    yield back to the gentleman.
        Mr. Nadler. I thank the gentlelady for her support and for
    yielding back.
        The gentleman from New York, Mr. Weiner, is recognized.
        Mr. Weiner. Thank you, Mr. Chairman.
        And I think that the gentlelady from Texas I think launched
    a good way for us to wrap up this hearing, and that is by
    focusing on the victims. You know, we are going to have a
    chance to vet the legislation here, but, you know, when the
    financial markets had a heart attack, we responded in about 72
    hours with about $700 billion of funds.
        We have a situation where thousands of our neighbors, 70
    percent of the first responders, have some form of respiratory
    ailment. And we seem to want to delay and delay and delay.
        This is an acknowledgement--this hearing is an
    acknowledgement that the delay has to come to an end, that this
    is a question of whether or not we are going to help people who
    are being slowly, but surely killed by the events of September
    11th.
        We have to make sure that, in the future, Mr. Wood and his
    colleagues are protected. There is no doubt about that. I would
    love to be in the room as we are making an emergency response
    plan that involves private contractors and see how many times
    someone asks, ``Well, are we going to be covered if we do A, B
    and C?''
        But there is also an imperative to take care of the victims
    today. And we have the benefit that we rarely have with
    legislation, in that we have a sample of model that worked. And
    I think we have to move quickly to replicate it.
        Detective Burnette, you, I think, are on this panel not
    just for yourself, but for hundreds, if not thousands of your
    fellow first responders, of people who did their job.
        Ms. Burnette. Yes.
        Mr. Weiner. You know, you expressed in your testimony, you
    know, having dirt come out of your lungs--well, not all of it
    came out, I think you are learning. I think a lot of it is
    still in there.
        You know, it takes scientists months to figure out what was
    in the dust at Ground Zero. Well, now they can go back and find
    thousands of firefighters, police officers, of contractors, of
    volunteers who were in that same situation.
        You were given on your best day, probably a paper mask, the
    kind of which they give out at Home Depot for when you are
    painting at home. We know that the Environmental Protection
    Agency didn't protect citizens from the environment during
    those periods, in fact, went on television and said quite the
    opposite, ``Everyone is safe. You can go ahead and go down
    there.''
        I think the fact is that we have let you down. I think
    there is no other way to say it, except that we have let you
    and the other victims down for too long. And while we stroke
    our beards and think about the legislation and make sure every
    word is right, I think the first imperative we have to take
    care of is to make sure that the victims are made whole to the
    best extent that we can.
        You are a hero, Detective Burnette. The many people who are
    here in this audience and those that you represent are heroes,
    the people that worked for the city and people that volunteered
    in their off-hours and people who worked for Mr. Wood. You are
    a hero.
        And we are not treating you that way right now. We are
    treating you like cogs in a legislative machine that turns ever
    so slowly, so slowly, so slowly. And I think that Congressman
    Nadler and Congresswoman Maloney, Congressman Fossella, who
    used to serve here, Congressman King, I think all of us--Mayor
    Bloomberg, Mr. Cardozo, all of us are at the point where we
    have to now push it into the end zone.
        We have been, in a football metaphor, playing in the red
    zone for the last 5 years. It is enough already. Let's just get
    this bill out, get it to the floor. Let's put smart people in
    charge. Let's get people--you know, we can do oversight, I say
    to my colleagues, and I want to thank Congressman King and
    Congressman Lungren, who have expressed the right tone.
        We want to get this right, but let's get it done already.
    And I yield back, Mr. Chairman.
        Mr. Nadler. I thank the gentleman for his questions and for
    his comments.
        I certainly want to express my hope--we have been working
    on this legislation and on this problem with the fact that so
    many of the heroes of 9/11 have gone through so much suffering
    unnecessarily and without the help that they are entitled to
    get from their government----
        Ms. Jackson Lee. Mr. Chairman? Mr. Chairman?
        Mr. Nadler. Yes?
        Ms. Jackson Lee. May I have unanimous consent to make an
    inquiry of you for clarification on the record, please, that I
    did not----
        Mr. Nadler. Without objection.
        Ms. Jackson Lee. I understand, on the Captive fund, there
    was an expenditure of $300,000--I am seeking a clarification--
    that the lawyers' fees might have been utilized out of
    interest, which means there is still $1 billion left. Maybe I
    can have a clarification. This is a question that I posed that
    said there was $200 million in lawyers' fees, but it almost
    seems to me that the fund is not barely touched.
        Can I have a clarification on that, Mr. Chairman, or----
        Mr. Nadler. Well, for clarification for the record, Ms.
    LaSala, how much is left now?
        Ms. Lasala. There is approximately $940 million in the
    fund.
        Mr. Nadler. Of the original billion, there is $940 million
    left, minus the $200 million--minus the payouts and plus the
    interest?
        Ms. Jackson Lee. And, Mr. Chairman, if I can further----
        Ms. Lasala. And, Congressman Nadler, if I could just add
    one point, that we are the beneficiaries of a significant
    ruling in favor of the Captive of $100 million, a judgment from
    other insurance companies. That judgment is on appeal, but with
    it added to the current assets of the company, we will be in
    excess of the billion dollars we were initially entrusted with.
        Mr. Nadler. Thank you.
        Ms. Jackson Lee. Mr. Chairman, further clarifying. That
    means that we have at least $1 billion still sitting? Is that
    right?
        Mr. Nadler. There is about $1 billion still sitting, $900
    million or $1 billion, depending on the outcome of that
    litigation. In the legislation, it provides that that $1
    billion, plus some other pots, would be used in an ordered way,
    without being the first, for compensation of the victims who do
    not go into the VCF, but elect to maintain litigation.
        Ms. Jackson Lee. Well, I----
        Mr. Nadler. And the liability of the contractors and the
    city is capped at the amount in those pots, the $1 billion,
    plus a few other pots.
        Ms. Jackson Lee. Well, concluding and yielding back, I
    think what that notes is that the victims who are in this
    audience and these sponsors, yourselves, Ms. Maloney and I
    think Mr. King, are----
        Mr. Nadler. You are talking about Peter King, not----
        Ms. Jackson Lee. He is standing here with a green tie on.
        Mr. Nadler. Oh.
        Ms. Jackson Lee. But Mr. King----
        Mr. Nadler. Let the record reflect that our colleague from
    New York, Representative Peter King, who is a sponsor of the
    legislation, is standing over there.
        [Applause.]
        Ms. Jackson Lee. That you are also being responsible in the
    approach that is being taken through this legislation. I just
    wanted to make sure that was on the record----
        Mr. Nadler. Thank you.
        Ms. Jackson Lee [continuing]. And wanted to clarify the
    amount of money that is still remaining that is available in
    certain instances.
        I thank you. And I yield back. Thank you, Mr. Chairman.
        Mr. Nadler. I thank the gentlelady.
        And, again, I would hope that this hearing has been
    productive and conducive to passing this legislation so that
    both the victims, the heroes of 9/11, and the contractors, who
    were also both heroes and victims, can be dealt with fairly and
    decently, as this society should.
        Without objection, all Members have 5 legislative days to
    submit to the Chair additional written questions for the
    witnesses, which we will forward, and ask the witnesses to
    respond as promptly as they can, so that their answers may be
    made part of the record.
        Without objection, all Members will have 5 legislative days
    to submit any additional materials for inclusion in the record.
        And with that--and, again, thanking our witnesses and
    thanking the people, the 9/11 workers and others who have come
    here to witness this hearing--this hearing is adjourned.
        [Whereupon, at 12:38 p.m., the Subcommittees were
    adjourned.]

                                A P P E N D I X

                                  ----------

                   Material Submitted for the Hearing Record

        Prepared Statement of Prepared Statement of Christine C. Quinn,
                         Speaker, New York City Council

        I write today to express the City Council's support for HR 847, the
    9/11 Health and Compensation Act, and more specifically the portion of
    it that would reopen the 9/11 Victims Compensation Fund. I first must
    applaud the tireless advocacy of the main sponsors of this bill,
    Congress Members Carolyn Maloney and Jerrold Nadler.
        This bill must pass for a variety of reasons. First and foremost,
    it is quite simply a moral imperative that our government takes care of
    those from around the country who risked their lives and have become
    ill as a result of their efforts to recover bodies and remains and to
    help put out the fires.
        Secondly, this bill must pass so that there may be a comprehensive
    revenue stream to provide for those who have been made sick as a result
    of their efforts on 9/11 and the recovery and cleanup efforts that
    followed. Our members of Congress who advocate for such funding should
    not be required to come hat in hand every year to try to obtain funding
    for First Responders, construction workers, volunteers, and others who
    have become ill as a result of 9/11 and its aftermath. The bill that
    you are considering would recognize that there will be ongoing needs
    for funding for many years to come and will provide for those needs.
        Third, the bill provides for science to take priority in
    determining the best action to take. The events of 9/11 and the toxins
    released were unprecedented. There must be continuing research to deal
    with the scientific challenges that have occurred as a result of this
    event.
        Fourth, the re-opening of the 9/11 Victims Compensation fund is
    necessary. Presently, the City of New York is involved in litigating
    claims brought by First Responders and others who have become ill after
    9/11. Re-opening the Victims Compensation Fund is necessary to put the
    adversarial nature of these proceedings to an end, and finally provide
    compensation for those who are becoming sick and will become sick in
    the future.
        Finally I must note that the issue of First Responders becoming ill
    as a result of 9/11 is not just a New York issue, but a national one.
    People from around the nation responded to this crisis by coming here
    to help and as a result, are now sick and are in need of our
    government's assistance. In fact, enrollment in the WTC Health Registry
    spans all 50 states.
        I urge you to support the 9/11 Health and Compensation and pass it
    as quickly as possible. Thank you.

        Prepared Statement of Associated Builders and Contractors (ABC)