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Joint Hearing of the Immigration, Citizenchip, Refugees, Border Security, and International Law and Constitution, Civil Rights, and Civil Liberties Subcommittess of the House Judiciary Committee - "H.R. 847, The James Zadroga 9/11 Health and...

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Location: Washington, DC

Joint Hearing of the Immigration, Citizenchip, Refugees, Border Security, and International Law and Constitution, Civil Rights, and Civil Liberties Subcommittess of the House Judiciary Committee - "H.R. 847, The James Zadroga 9/11 Health and Compensation Act of 2009

JOINT HEARING OF THE IMMIGRATION, CITIZENSHIP, REFUGEES, BORDER SECURITY, AND INTERNATIONAL LAW AND CONSTITUTION, CIVIL RIGHTS, AND CIVIL LIBERTIES SUBCOMMITTEES OF THE HOUSE JUDICIARY COMMITTEE

SUBJECT: "H.R. 847, THE JAMES ZADROGA 9/11 HEALTH AND COMPENSATION ACT OF 2009"

CO-CHAIRED BY: REP. JERROLD NADLER (D-NY) AND REP. ZOE LOFGREN (D-CA)

WITNESSES: KENNETH FEINBERG, FORMER SPECIAL MASTER, VICTIM COMPENSATION FUND; BARBARA BURNETTE, FORMER DETECTIVE, NEW YORK CITY POLICE DEPARTMENT; CHRISTINE LASALA, CEO, WORLD TRADE CENTER CAPTIVE INSURANCE FUND; JAMES MELIUS, M.D., ADMINISTRATOR, NEW YORK STATE LABORERS' HEALTH AND SAFETY TRUST FUND; MICHAEL CARDOZO, CORPORATION COUNSEL, CITY OF NEW YORK; TED FRANK, RESIDENT FELLOW, AMERICAN ENTERPRISE INSTITUTE; RICH WOOD, PRESIDENT, PLAZA CONSTRUCTION CORPORATION

Copyright ©2009 by Federal News Service, Inc., Ste. 500, 1000 Vermont Ave, Washington, DC 20005 USA. Federal News Service is a private firm not affiliated with the federal government. No portion of this transcript may be copied, sold or retransmitted without the written authority of Federal News Service, Inc. Copyright is not claimed as to any part of the original work prepared by a United States government officer or employee as a part of that person's official duties. For information on subscribing to the FNS Internet Service at www.fednews.com, please email Carina Nyberg at cnyberg@fednews.com or call 1-202-216-2706.

REP. NADLER: 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'll begin the proceedings by recognizing the distinguished chair of the Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law for an opening statement.

REP. LOFGREN: Thank you, Mr. Nadler. Last year, the Immigration and Constitution Subcommittees held a joint hearing on the 9/11 Victims (sic) 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 (dollars) of which was distributed to the surviving family members of the 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 overhead 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 courts. As Special Master Ken Feinberg states in his written testimony before us today, and I quote, "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 funds 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 the attacks are 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. 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 this need -- 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 the 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 but 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.

REP. NADLER: I thank the gentlelady and I'll now recognize myself for five 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 9/11 Health and Compensation Act, which I believe provides the best avenue to making our first responders, area residents, workers, students, and others whole.

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 Victim 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, six, seven years now so heroically and on -- on this problem.

We came very close to passing this bill last year, and I'm 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'd 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 -- who -- who was a victim very recently. 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 (sic) 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 Christie (sic) 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, quote, "were falsely reassuring, lacked a scientific basis, and were politically motivated," close quote.

We heard about how the White House changed the EPA press releases, quote, "to add reassuring statements and delete cautionary ones," unquote. 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, 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 (for ?) their subsequent financial losses. In 2004, Congress appropriated a billion dollars 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 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 eight 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.

REP. F. JAMES SENSENBRENNER (R-WI): 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 bloodthirsty 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 of -- 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 in 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 -- (inaudible) -- 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," unquote.

My concerns after 9/11 were confirmed by the findings of the nonpartisan Rand Institute for Civil Justice which analyzed the September 11th Victim Compensation Fund in 2004 and concluded that, quote, "pre-commitments by government programs reduce the ability of government, and society more generally, to allocate resources to meet the most pressing needs after an attack," unquote. 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," unquote.

That deficit was much lower today than for -- then than 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.

REP. NADLER: I thank the gentleman. I'll now recognize the distinguished ranking minority -- ranking member of the Immigration and Claims Subcommittee for an opening statement.

REP. STEVE KING (R-IA): Thank you, Mr. Chairman. I want to thank the witnesses also in advance. On September 11th, 2001, terrorists carried out -- 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 clean-up 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 (sic) 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 (sic) Compensation Fund as a blueprint. Now, if we're 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 -- to the U.S. Treasury to 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're 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 clean-up period. We must also require them to -- 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's 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 former special master Feinberg has pointed out -- and we'll 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 inefficient and expensive litigation they're currently pursuing, and we owe it to the contractors that rushed in to help in 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 of what it's like as a -- as a contractor having run to the sound of the guns, not in such a -- a massive way as many of the contractors did in New York on 9/11, but -- but still always deployed our -- 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's the American way. Now, that's 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 -- 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.

REP. NADLER: I thank the gentleman and I'll now recognize the distinguished chairman of the Judiciary Committee for an opening statement.

REP. JOHN CONYERS (D-MI): Thank you, Mr. Chairman. I want to welcome everybody here that's 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's too late. But those (or ?) 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's muted his normal hostility toward lawyers in a very admirable way. I -- I feel very good about this hearing. It's on the Judiciary Committee. Don't ask me why it's the lawyers that hate the lawyers' groups more than anybody else in the Congress. So I'm feeling much better about this.

Carol -- Carolyn Maloney's done a great job -- Jerry Nadler, Zoe Lofgren, Peter King. Now, I'm composing a letter to the congressman that came to this committee in 1981. His name is Chuck Schumer. And he did a brilliant job on this committee and I've watched him and all the work he's 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'm going to send the distinguished senior senator from New York is going to deal with the need for us to close ranks, resolve these differences, and get this show on the road.

Now, I'm as sensitive to costs and budget overruns and deficit -- 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 that war that kept -- we kept hearing about, these people that attacked us.

And so I -- I want to commend all of our leaders that have pulled together a new bill that makes more sense, that's -- that has spoken to some of the problems before, but -- but we've got to move the other body. That's where the problem is. And -- and I would welcome working with the chairmen of these subcommittees and -- and others.

REP. SENSENBRENNER: Will the gentleman yield?

REP. CONYERS: Of course.

REP. SENSENBRENNER: May I make a suggestion on how to get Senator Schumer's attention?

REP. CONYERS: Please do. I'm -- I'm waiting with baited breath.

REP. SENSENBRENNER: Bring along a television camera or two. (Laughter.)

REP. CONYERS: Would -- would the -- could we instruct -- wait a minute.

Could we instruct the stenographer to strike that phrase from the --

REP. NADLER: Would the -- would the -- would the gentleman yield?

REP. CONYERS: Who seeks? Who -- who wants --

REP. NADLER: I do.

REP. CONYERS: Oh, yes. Of course, Mr. --

REP. NADLER: I -- I would simply point out that the -- the senior senator from New York has been very much involved in the -- 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 -- help with this effort in the Senate as it still proceeds.

REP. CONYERS: Well, then I --

REP. NADLER: And I -- I yield back to the gentleman.

REP. CONYERS: I thank the chairman. Then I'm going to put his response to my letter in the record just to confirm your -- your unyielding confidence in the senior senator. And I -- I thank you for allowing me to make these intemperate remarks and I return my time.

REP. NADLER: I thank the gentleman and I recognize for brief comment the -- the distinguished chair of the -- of the Immigration Subcommittee.

REP. LOFGREN: I just wanted to note that we have been joined here by the -- 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.

REP. NADLER: Thank you. And I join -- I join in those comments and those 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 five 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 subcommittee -- 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's 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 Victim Compensation Fund established by Congress after the attacks of September 11th, 2001. He's 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 -- 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 two years as an underwriter and over 25 years as an insurance broker working with corporations and public institutions to design their risk management programs. She's 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, he has worked 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 doctor -- (inaudible) -- in epidemiology from the University of Illinois School of Public Health in 1984.

Michael Cardozo has served as the corporation counsel and chief legal officer 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's 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 product 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 26 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 five minutes or less. To help you stay within that time, there's a timing light at your table. When one minute remains, the light will switch from green to yellow and then to red when the five minutes are up.

Before we begin, it's customary for the committee to swear in its witnesses. If you'd please stand and raise your right hand to take the oath. Do you swear or affirm under penalty of perjury that the testimony you're about to give is true and correct to the best of your knowledge, information, and belief?

(Witnesses are 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'm 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.

MR. FEINBERG: Thank you, Mr. Chairman. Once again, I'm honored to be here at your request. For me, it's sort of a reunion. Chairman Conyers I worked with closely 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's 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're litigating is because the 9/11 fund compensated their brethren but could not compensate them before the fund statutorily expired on December 22nd, 2003. Had these people who are now litigating manifested a physical injury within the time frame 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 a billion dollars of the 7 billion (dollars) that was spent. Had these very -- some of these very litigants today manifested respiratory illness before December 22nd, 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 under after 2003, they would have been compensated. That's 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 have 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 a -- an interesting dilemma for the Congress to consider whether it is -- (inaudible) -- to deal with this unfairness of not compensating these -- 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 five minutes. I've done so. Thank you very much.

REP. NADLER: I thank the gentleman. And as I said, we'll have questions for Mr. Feinberg now and then we'll go to the other witnesses since Mr. Feinberg has -- has to leave. And I'll -- I'll -- I recognize myself to start the questioning.

Mr. Feinberg, let me just ask you the following question. We've heard from some -- in some of the opening statements the problem that there are 11,000 tort claims pending against the city. We've heard concerns about paying too much to trial lawyers and so forth. If -- if this bill were to be enacted -- and you're familiar with the bill -- if this bill were to be enacted would it reduce the tort claims?

Would it reduce the compensation or the -- the -- the amount of money spent on trial lawyers? Would it make sure that more of the money that's paid goes to victims? What do you think the effect would be in terms of two alternatives -- adopting this or not adopting?

MR. FEINBERG: Well, I think that a fortiora (sic) 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.

REP. NADLER: Now, in the original 9/11 fund that was -- 97 percent went to the fund --

MR. FEINBERG: That's correct.

REP. NADLER: -- rather than litigate, correct?

MR. FEINBERG: Correct.

REP. 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.

REP. NADLER: Do you have any suspicion?

MR. FEINBERG: I have no idea. (Laughter.)

REP. NADLER: Okay. I'll -- I'll yield to the -- I'll yield back the balance -- actually, since we're only questioning one witness we're all going to have our five minutes. I'm sure it's a five-minute thing now but I yield to the -- the distinguished gentleman from Wisconsin is recognized.

REP. SENSENBRENNER: Thank you very much. Mr. Feinberg, welcome back.

MR. FEINBERG: Thank you.

REP. 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'll recall, Congressman, that when the 9/11 fund was enacted the overwhelming number of claimants who filed with the fund using lawyers achieved 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.

REP. SENSENBRENNER: You're 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. Unfortunately, I think that the American public has -- 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. (If ?) jawboning is good enough I guess we can leave it at that but let me say that I think that's an open question.

The other question that I have in my five 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's reestablished 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.

REP. 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 so --

REP. SENSENBRENNER: Do you think -- do you think that requirement should be maintained in this legislation?

MR. FEINBERG: If you're reauthorizing the 9/11 fund it was essential -- an essential feature of the 9/11 fund.

REP. SENSENBRENNER: 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 stockbrokers or bankers get more than busboys, waiters, firemen, soldiers, or policemen. The law was the law. I had to follow it. I've written that that's a very difficult inequitable calculation to make but it was one that was required by the Congress of the United States.

REP. SENSENBRENNER: Thank you. I think I've made my point and I yield back the balance of my time.

REP. NADLER: Does anyone else wish to ask questions of the -- this witness? The gentleman from Virginia -- oh, I'm sorry, the gentle -- the distinguished chairperson of the -- of the subcommittee.

REP. LOFGREN: 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 pretty much?

MR. FEINBERG: It addresses some of them. It doesn't address others. It's a good-faith effort. Understand, this bill addresses some of the immediate cost concerns.

REP. LOFGREN: Right.

MR. FEINBERG: At the same time, it broadens the eligibility requirements so that more people would be compensated under this fund, if it was reenacted, than under the original 9/11 fund.

REP. LOFGREN: (From ?) time but not the nature of the illnesses --

MR. FEINBERG: Oh, there's geographical expansion. There's geographical -- that this fund would not only compensate people at the World Trade Center --

REP. LOFGREN: Right.

MR. FEINBERG: -- it would compensate those claiming injury transporting material all the way out to Fresh Kills.

REP. LOFGREN: But the -- the theory is that if you were -- I mean, whether you were transporting the material, whether you were in the pit, you were still responding to this disaster.

MR. FEINBERG: Correct. That's correct.

REP. LOFGREN: All right.

MR. FEINBERG: That's the -- (inaudible).

REP. LOFGREN: That's the goal. All right. I -- I -- I yield back, Mr. Chairman. Thank you.

REP. NADLER: I thank -- I thank the -- I thank the gentlelady. The -- I now recognize the gentleman from Iowa.

REP. KING: Thank you, Mr. Chairman. Thank you, Mr. Feinberg, for your testimony again. Just a -- 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'd be comfortable with it now. It wasn't a formal regulation. It was an -- sort of an -- a legislative history we recommended, and for all intents and purposes it worked. So I'd be comfortable with whatever is decided.

REP. KING: Thank you. And -- and you've looked this bill over, I take by your testimony. So I would ask you if you have an opinion on it 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's a fair comment.

REP. KING: And as you analyze the -- the language that's in the bill is there any -- 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.

REP. KING: (For damages ?)?

MR. FEINBERG: Whether or not -- whether or not it would provide blanket immunity and protection, again, I'm not sure of that. But clearly, there's an attempt to do just that.

REP. KING: Okay. Let me -- let me just say that I think it's 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 that I want to protect the contractors on the other end of this. I'm concerned about that.

MR. FEINBERG: I'll look it over and respond directly to your staff.

REP. 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 so. I'll check. I think if -- if an individual opts into Title I they've made the decision to avoid any debate over liability in terms of favoring a no-fault compensation system.

REP. KING: (Do you think they'd know what to waive? I do ?).

REP. NADLER: I think there's a bit of confusion here as to which is Title I and Title II. You might want to specify at both ends.

REP. 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'll have to go back and check as to -- to that distinction.

REP. KING: Thanks for pointing that out, Mr. Chairman. So I'll just -- I'll just make this point that if a -- if an individual opts into this bill in the -- in the package of the Victims (sic) 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 -- that they could use to file suit against and then 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'm just concerned about that that if -- I think if they opt into the health care, they also opt in to the Victims (sic) Compensation Fund. That's my -- that's my comment on it. And in the interest of time, if there's a response --

MR. FEINBERG: No, no. Again, I'll check and give you my considered judgment reviewing the language of the bill.

REP. KING: Thank you, Mr. Feinberg. Mr. Chairman, I thank you and I yield back. Thank you.

REP. NADLER: I thank the gentleman. The gentleman from Virginia is recognized.

REP. BOBBY SCOTT (D-VA): 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.

REP. SCOTT: On firefighters and police (employees ?), why was workers' compensation insufficient?

MR. FEINBERG: Under the original 9/11 fund?

REP. SCOTT: Right.

MR. FEINBERG: Congress trumped workers' compensation by -- by providing a blanket opportunity for workers and others, private citizens not working, not rescue workers, to file with the fund.

REP. SCOTT: Well, I mean, just for firefighters and police officers they -- they were -- 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 I, we would deduct that compensation in netting their ultimate award.

REP. SCOTT: You indicated you compensated some who filed on time for injuries?

MR. FEINBERG: I'm sorry. I didn't hear the question.

REP. 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.

REP. SCOTT: Would a open-ended situation be better? Because with these kinds of injuries you don't know what the future may be so you wouldn't know how to settle for one check.

MR. FEINBERG: That -- 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's why we required under the statutory mandate a total release.

REP. 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 -- if you have to prove it you've got some that can't prove it that should be eligible if you have a presumption.

MR. FEINBERG: We established under the 9/11 fund regulations presumptions of proximate cause as to -- as to geographical location and time to -- to make it very, very simple to either satisfy or not satisfy proximate cause requirements.

REP. SCOTT: And the total compensation, what damages could someone recover if they -- if they filed a claim? I assume medical care, lost wages, pain, and suffering.

MR. FEINBERG: All of that. The -- the -- 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 stockbroker 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.

REP. 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.

REP. SCOTT: Thank you, Mr. Chairman. I yield back. Thank you.

REP. NADLER: Mr. Feinberg, how much time do you have left?

MR. FEINBERG: I'm okay.

REP. NADLER: Okay. The gentleman from California, Mr. Lungren.

REP. DAN LUNGREN (R-CA): Thank you very much, Mr. Chairman, and it's 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 -- in a situation like this. We're 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 a act of war, an attack on the American people.

And so as we try and -- and figure out what we're 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 because -- not just because of the obvious physical injuries but when you bankrupt companies in the process, it's 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 a billion dollars 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 (one-half billion ?) 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 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're 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 -- that quotation is accurate.

It was in the context of my attempting to suggest that if there's not going to be a 9/11 fund, if Congress does not reauthorize the 9/11 fund, surely there's 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.

REP. LUNGREN: Just one other question, and that is you've said regarding keeping the 9/11 fund open to the year 2031 that, quote, "No latent claims need such an extended date," end quote. What do you think would be appropriate?

MR. FEINBERG: You'd have to ask -- and there are experts at this table -- you'd 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 it be a physical manifestation.

And that period, it seems to me, would be an appropriate period -- five years, six years, seven years more from 9/11 I think would probably be an appropriate period. But there are -- there are doctors who would answer that question.

REP. NADLER: Would the gentleman yield to me for a moment?

REP. LUNGREN: I would happily yield to the chairman.

REP. NADLER: Thank you. I just want to clarify one point. Mr. Feinberg's quote that you quoted about the billion dollars, there's some dispute about that. There's a billion dollars that was appropriated to the New York City Captive -- the World Trade Center Captive headed by Ms. LaSala. The Captive has interpreted that as money -- as -- 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 -- for settling litigation of people who do not opt into the VCF. Right now, it's not being used for that.

REP. LUNGREN: Right. But -- but you're talk -- well, as we often find in this place, money can be fungible and may be -- (cross talk) --

REP. NADLER: Well, that's right.

REP. LUNGREN: -- for payouts rather than --

REP. NADLER: I just -- I just wanted to clarify the status of that billion dollars.

REP. LUNGREN: I appreciate it. Thank you very much for your indulgence.

REP. NADLER: Gentleman from New York, Mr. Weiner, is recognized.

REP. ANTHONY WEINER (D-NY): Thank you, Mr. Chairman. Mr. Feinberg and the panel, thank you all for being here. I think it bears recollecting that the Victim Compensation Fund was a remarkable success in the face of some extraordinary obstacles, and 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 -- with perhaps a generation of lawsuits against every -- 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 -- some questions that clearly have arisen and some of them were just addressed by -- by Mr. Lungren and Mr. Feinberg about how it is you define someone and -- 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've reached some consensus here -- that if we knew in the period -- when we passed the Victim 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's no question that in a bipartisan fashion we would have included that in the bill. There really -- I don't think there's too many people that would say, oh, no, we would have not. This is simply a matter of additional information that has become clear and that is a 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'm 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'm open to that idea. I'm not wedded to the idea of people having to wait and slog through the justice system. And I think we've 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 -- that citizens vote with their feet and say, "I'm willing to put my fate in a master's hands."

So then the question only becomes how we define it, and I think that it's 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's no doubt that I think we've 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 -- 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're 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's what Ms. Maloney and Mr. Nadler's bill does and I -- I really do think that when we -- when we look back -- and now we have some benefit of time -- when we look back at the work that Mr. Feinberg and the -- and the -- 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 Ms. 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's 12 years. Maybe it's 10. But I think one of the lessons we did learn is if we don't leave a sufficiently wide window and we want -- and we try to do medicine from this side of the rostrum, we -- we make a fundamental mistake.

And I'd also have to say that if these panelists -- I know you'll 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'm sure -- I don't know if it's 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 -- the service and the patriotism you've shown and the wisdom that you've 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.

REP. 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.

REP. NADLER: And let me thank the witnesses -- the other witnesses -- for their patience while we questioned Mr. Feinberg, who had to leave early. Now we'll turn to the -- and Mr. Feinberg is excused, of course -- and now we'll turn to the other witnesses, and I recognize for five minutes for a statement, Ms. Burnette.

MS. BURNETTE: Thank you, Chairman Nadler, Chairman Lofgren, Representatives Sensenbrenner and King, and members of the subcommittee for inviting me to appear before you today. My name is Barbara Burnette and I live in Arverne, New York. I'm 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 three weeks of service, about 23 days in total, at the World Trade Center site. On September 11th, 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 around 10:00 p.m. the first day. Five hours later, I reported back, arriving for work at 4:00 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 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 the plainclothes Narcotics Unit. During my years in Narcotics, my assignment required me to walk up to four miles a day, standing and 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, New York. All my life, I have enjoyed being an active person, whether it was on a job or playing sports, especially on a basketball court. In my senior year at John Jay High School, I was named New York All-City Basketball Team.

I then set off for college on a four-year basketball scholarship, although my career was interrupted by an orthopedic injury. On July 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's 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 passage, 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 doses 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 -- (inaudible) -- 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 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.

REP. NADLER: Thank you very much. (Applause.) The -- the audience, please, on subsequent witnesses will refrain from expressing applause or condemnation or disapproval or approval. I now recognize Dr. Melius for five minutes.

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'm an occupational physician, epidemiologist. I've been involved with the issues at the World Trade Center since shortly after September 11th. Many of our union members work there.

I've 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 -- 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 -- their illnesses.

We know in looking at the -- 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 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 -- mortgage payments.

These are for the most part blue collar workers that don't have significant financial resources to -- to fall back on. You've heard from Detective Burnette today about what happened to her. Another potential witness we talked to was a firefighter -- fire officer -- who this weekend -- he's not able to be here because this weekend he underwent a lung transplant due to the serious lung disease that he suffered.

I'd 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 the 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.

The 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 the finding that his death was due to 9/11. He had had -- based on their findings at that autopsy he -- his was a -- considered to be a homicide related to the 9/11 terrorist attack. So I think it's 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 -- in assisting him through the struggles and can relate firsthand all of his difficulties. I'd just like to emphasize that there are many more people like Mr. Heyward, like Ms. Burnette, who have suffered or 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, (the ?) long delays in that system. And I can tell you from some other work I've done with the Workers' Compensation Board in New York it's even worse for World Trade Center-related illnesses. The difficulties there are that these are complicated conditions. They're -- our knowledge of them is evolving over time. We don't know the prognosis for people. It's just more difficult to provide a proper assessment for that.

I think at the time that 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 -- these people through this. For various reasons which I -- I personally fail to understand, it does not. It's been used as a -- simply to -- mainly to fight the -- the litigation against the -- the city of New York and against the contractors.

I think that the -- the legislation being introduced now provides the right approach. I think the Victims (sic) 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 (sic) 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 (sic) Compensation Fund (operated ?) the first time, provide appropriate economic assistance to these people.

It's been going on eight 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 really -- we should be passing this legislation, getting what I think is excellent legislation in place that addresses these issues, and we'll take care of these people for the future. Thank you.

REP. NADLER: Thank you. We'll now recognize Ms. LaSala for five minutes.

MS. LASALA: Thank you, Chairman Nadler, Chairwoman Lofgren -- oh, I'm sorry -- Ranking Members Sensenbrenner and King. I'm sorry. Chairman Nadler -- well, both lights are on. I'm sorry. Chairman Nadler -- sorry -- 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 Victim 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 court 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 will 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 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 reopening the Victim 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.

REP. NADLER: Thank you. I now recognize Mr. Cardozo for five minutes.

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 seven and a half years ago, over 90,000 people took part in the rescue and debris recovery removal effort at Ground Zero, including workers and volunteers from all 50 states and the constituents of every single 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's 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 immunity.

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's in this bill to reopen the Victims (sic) 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 -- would- be plaintiffs would in fact opt into the fund. I also want to add that in the fund as it existed before and as would exist now there is a 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.

I correct my colleague, Mr. Feinberg, who apparently looks so much like me, but it is important to note that under New York State law -- New York City law, workers' compensation is not available to police and firemen. But the critical point, as Mr. Feinberg pointed out --

MR. SPEAKER: Could you say that again?

MR. CARDOZO: Under New York law, policemen and firemen are not -- do not receive workers' compensation. There's a separate law that provides them with separate pension benefits. If they become injured, they get what's called accidental disability pension if they're out for life. But they are not covered by workers' compensation. Other city workers, sanitation -- I'm not -- excuse me -- the law department, various other people are covered but firefighters and police are specifically not included.

The VCF, as it presently -- 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 four days of the attack, and that means that if you were at Ground Zero five or six days before, you were not eligible. Let me just add to what Ms. LaSala said and what's been said before -- (inaudible) -- reopening the Victims (sic) 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 they -- 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 (sic) Compensation Fund but for the minor -- (inaudible) -- the limitations we must allow those people to be fairly compensated and not continue the litigation as it exists today. Thank you very much.

REP. NADLER: Thank you. I now recognize Mr. Frank for five minutes.

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. 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 uncontroversial claims. This structure will not work for a longer-term compensation scheme involving a substantially larger set of potential claimants with injuries with much more ambiguous causation.

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 discuss 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 fee, 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 has 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 with 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 the program is to be reopened for two more decades, Congress has the time to define more structure for it.

For example, a two-pack-a-day smoker working one 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 -- receive fund compensation for pulmonary disease. And as Special Master Feinberg testified, the average -- we're talking a billion dollars for 2,000 claimants the last time around. That's a half a million dollars a person.

Even a program as well as that 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. The bill fails -- three, the bill fails to fully protect the innocent subcontractors who (were failed ?) with tremendous liability simply for volunteering to help New York City in its hours of -- 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, fail 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.

REP. NADLER: I thank the gentleman. And our final witness is Mr. Wood, who is recognized for five minutes.

MR. WOOD: Madame Chairwoman, Mr. Chairman, distinguished members, good morning. My name is Richard Wood and I'm 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 11th, 2001.

I'm 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 -- (inaudible) -- as they could. Our company 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 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'd 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 -- 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're 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 works 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're a construction company.

There's 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 get as -- 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 -- 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 collapse on top of two fire trucks that were completely obliterated, and stood there as the fire captain watched those two fire trucks, wondering what happened to his people. While we're sitting there and as equipment's arriving and people are showing up and burning equipment is there, we're 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, you know, what happened to her family? What's 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 clean-up. 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. Seven 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 -- 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're 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 face -- 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.

REP. NADLER: Thank you. I'll now recognize myself for five minutes to begin the questioning. My first questions will be to everybody, and they 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?

MR. SPEAKER: No.

MS. LASALA: No.

REP. NADLER: Does everyone agree that we need to do something different?

MS. LASALA: Yes.

MR. SPEAKER: Yes.

REP. 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?

MR. SPEAKER: Yes.

MS. LASALA: Yes.

REP. NADLER: No one disagrees with that? Maybe? Mr. Frank says maybe. Okay. Does everyone agree the current bill is better than the previous bills?

MR. SPEAKER: Yes.

MS. LASALA: Yes.

REP. NADLER: And I think we can all acknowledge that the bill can stand to be improved and that's what this hearing is about, and I want to hear your comments and suggestions on the bill. Now I have a number of specific questions.

Dr. Melius, Mr. Frank said that it's not the case that every -- 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 -- who among those who present with all these symptoms -- the sarcoidosis or whatever -- are victims of 9/11. Could you comment on -- and therefore to be compensated -- could you comment on that, please?

DR. MELIUS: Yes, I can. First of all, I think Mr. -- well, made one sort of misstate -- 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. SPEAKER: Thank you.

DR. MELIUS: I've evaluated what he's done and it's in some of the reports, and I think he did an excellent job that -- taking the --

REP. NADLER: Thank you. Could you answer the -- about what Mr. Frank said about --

DR. MELIUS: Frank -- (cross talk).

REP. NADLER: -- we don't know who the -- we don't know who's 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 that should not be a great -- 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 --

REP. NADLER: Then it's not a great problem?

DR. MELIUS: It's not a great problem.

REP. NADLER: Thank you. Mr. Frank, you said a number of things which were interesting. H.R. 847 fails to fully protect the innocent subcontractors. It -- it -- the liability provisions -- (inaudible) -- leave some insurers of innocent parties on the hook, fails to solve the problem of future subcontractors.

The program is unlikely to end the third-party litigation.

It -- 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 -- on -- on the existing situation?

MR. FRANK: Not necessarily. It depends on the regulations that the special master passes, and that's a complete unknown because they're not defined here. They will be promulgated by the special master, and the special master has tremendous discretion to do that. So he could create a program that wastes tens of billions of dollars -- excuse me. He could create a program that wastes tens of billions of dollars of taxpayer money, make matters much worse, or he could create a very wise program --

REP. NADLER: I'll come back to my question of you in a moment. Ms. Lofgren has to leave, so let me recognize Ms. Lofgren.

REP. LOFGREN: Thank you for yielding, Mr. Chairman. I would just --

REP. NADLER: I'm not yielding. I'm -- I'm -- well --

REP. LOFGREN: -- take 30 seconds to thank this panel. Mr. Wood, your description actually brought me back to -- 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 -- and I thank you, Mr. Chairman, and yield back.

REP. NADLER: I thank you for -- for all your work on this and for your -- for your support of this. Let me resume my questioning. Mr. Frank, you're 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's entirely possible the Southern District in New York gets it right and -- and finds that the city and the contractors -- (off mike).

REP. NADLER: 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, doesn't sufficiently protect you, wouldn't help?

MR. WOOD: The -- as I understand the bill would limit the liability to what's left in the Captive and through the Victims (sic) 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.

REP. NADLER: Thank you very much. And I'd like to make, before my time expires, just one -- 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's an exception in the bill for punitive damages and most of -- (inaudible).

REP. NADLER: All right. Punitive damages for deliberate -- are for (deliberate tort ?), yes, but nobody's talking about that. No one's aware of that.

MR. FRANK: The bill doesn't say -- (cross talk).

REP. NADLER: My time has expired. I now recognize the distinguished ranking minority member of the -- of the Immigration Subcommittee, Mr. King.

REP. KING: Thank you, Mr. Chairman, and I think to start this out I'd 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 -- includes acts of gross negligence. And as I discuss in my written testimony, New York State's definition of gross negligence is -- is relatively broad and could arguably -- and certainly the plaintiffs are claiming includes what the contractors and subcontractors did on the site.

REP. KING: If I might follow up on that, Mr. Frank, also looking at language under the exception language you're referring to that -- that accepts acts of gross negligence. And then here's 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's certainly an exception that -- that comes close to swallowing the rule. There -- there will be additional indemnity. It is an improvement. But because it's very likely that the limits of liability will be reached and -- and there will be likely thousands and thousands more claims as the years go on, the -- the exception is enough that the subcontractors and contractors still face danger of liability.

REP. KING: And -- and that being my concern, and I -- and then 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 -- into the fund that's established under the bill. The other one might sue Mr. Wood and might pierce through the insurance protection that's 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, (so making an extreme case ?) so that we can talk about the --

MR. FRANK: That -- that's an extreme case, certainly. What's 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 -- and that's the most likely source of additional litigation.

REP. KING: And I hope to work with some of the protections that I think we need because I'm concerned about Mr. Wood, and I particularly am impressed by everybody's testimony and -- and service here. I think Mr. Wood brought out what I see as the -- 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's 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'd ask you -- have you looked at this language that we're 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's been seven and a half years now that we've had this weighing on us and -- 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 this -- in the bill, I would like to see it closed.

REP. KING: Thank you. Because that -- it looks to me like there is and I don't think it's intentional at all. And that's what happens around here, unintended consequences. But I think it'll be a particular nightmare to go through seven and a half 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're very happy that, you know, we're finally having -- you know, having a 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're still very, very pleased that there's a bill out there.

REP. KING: I thank you, Mr. Wood. And is there anyone in the panel that would -- would object to capping attorney fees under the fund at 5 percent? I -- hearing no response, let the record -- let the record reflect then no one volunteered to take up that issue. And so I would just conclude there are some things that I'm looking at.

One of them is the gross negligence provision and the -- and the broader language that's part of the bill, and then my concern that -- 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 on -- limit to economic damages would be another piece that I'd want to stand -- cap the attorney fees -- and I've got 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'd be happy to recognize Mr. Cardozo for his response.

MR. CARDOZO: I want 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, in effect, have admitted or not admitted in Title II. The standards in those sections are very different so that if you opt into Title I for health care purposes I don't think that has any effect at all, if you read the -- the fine print of the -- of the bill, at least as I've 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 -- I don't think that that concern -- I think as drafted that's not a problem.

I'd 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'm 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 concerns that -- concern you expressed in that regard is one that need concern you.

REP. KING: Thank you, Mr. Cardozo. And in response I'll say that I think the statutory construction on it -- you're 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.

REP. NADLER: I thank the gentleman. The gentleman from Virginia is recognized for five minutes.

REP. SCOTT: Thank -- 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.

REP. SCOTT: -- that is actually more generous.

MR. CARDOZO: Yes, I -- I -- that's what I was trying to -- (cross talk).

REP. SCOTT: So they're not -- we don't want to leave the impression that they're out in the cold.

MR. CARDOZO: No, I would just -- wanted to suggest to you because it was a collateral source offset issue that you had raised.

REP. SCOTT: But it -- but it was -- it would be the same -- it's workers' comp-like. It's -- if they're on the job, injured on the job, they get coverage?

MR. CARDOZO: That's correct.

REP. SCOTT: Okay. And Mr. Wood, you responded -- your company respond -- 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 -- federal officials that it was okay for employees to be in that area?

MR. WOOD: I personally would have responded regardless.

REP. SCOTT: If -- would you have sent your employees knowing the -- knowing that it was a present danger to their health?

MR. WOOD: We went down there. I requested volunteers.

REP. SCOTT: Would you have --

MR. WOOD: I didn't direct anybody to go down.

REP. 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 -- and, you know, we were there responding to emergencies and making sure people were trying to be saved.

REP. SCOTT: There are a lot of companies in your position (are ?) being sued. Have any -- have there been any plaintiffs' verdicts against companies like yours?

MR. WOOD: No.

REP. SCOTT: What's the status -- are there any -- are these class actions or individual lawsuits?

MR. WOOD: I wouldn't know how to classify, you know, whether it's a class action or not. We know there's over 10,000 litigants.

REP. SCOTT: Mr. Cardozo?

MR. CARDOZO: These are all individual cases. Since it is a tort case you have to analyze each person's individual problems. Judge Hellerstein has ruled that -- that it could not be brought as a class action, but if they're all consolidated cases before him that are presently in --

REP. SCOTT: Are they consolidated on the issue of liability?

MR. CARDOZO: Well, the liability issues, of course, will depend. That is one of the basic problems we have because the -- 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.

REP. SCOTT: Okay. Were all of those who were actually working that day covered by workers' comp?

MR. CARDOZO: Well, the city --

REP. SCOTT: Is the -- is the 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 the statutory time limit was then subsequently extended, they would have been entitled to what is relatively modest benefits of the workers' comp.

REP. SCOTT: But they would be covered by workers' comp. Have any insurance companies been unable to pay because of the catastrophic nature of this event?

MR. CARDOZO: I'm not familiar with that.

REP. SCOTT: I mean -- I mean, everybody who worked with workers' comp at least got those benefits.

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 statistics in a moment -- there have been workers' comp claims that have been made and paid out that total about $9 million in -- in total. But there's severe statutory limitations as to how much each individual's workers' comp can be.

REP. SCOTT: (Off mike.) I'm sorry. I will yield to the gentleman from New York.

REP. NADLER: Thank you. I just wanted to suggest that Dr. Melius might want to answer the question about workers' comp.

DR. MELIUS: Yes. Sorry. There are -- as 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 -- various statutory issues. There are various issues with the private insurance companies, the city of New York contesting those claims.

Mr. Heyward, who I talk about in my testimony, has been -- his claim was denied. I'm not sure the exact reasons for that. But there are many people that -- 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's -- it's an ongoing problem. It's complicated by the -- some of the timing issues and complicated by the nature of the -- these illnesses that -- that don't quite fit the normal system.

REP. SCOTT: Chairman, are you going to have another round?

REP. NADLER: No. Without objection, I'll grant the gentleman an additional two minutes.

REP. 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. The -- we cannot. But through the medical monitoring programs we can carefully track people --

REP. SCOTT: Okay.

DR. MELIUS: -- and follow what happens to them. But predicting who is going to go into a more serious decline in their pulmonary function is difficult.

REP. SCOTT: And for smokers subjected to asbestos, the problem -- you may be -- you're 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.

REP. SCOTT: And one of the problems with dealing with this because you can't predict who's going to be who is the requirement that somebody sign a release as a condition of getting any payment. I mean, that's the normal practice in most lawsuits, but it certainly creates a hardship on the plaintiff if you can't calculate who's 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 -- as the patients actually need it?

MR. CARDOZO: Well, you're -- I'm not sure you're ending the constant litigation problem that you have, as Mr. Feinberg said, and any -- really, even in a tort case you -- you do try to make judgments as to what's going to happen down -- down the road. You can't --

REP. 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's another thing to keep in mind is the other part of this bill dealing with the whole health benefits. If -- if in fact that part of the bill is enacted -- (inaudible) -- assurance of -- 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.

REP. SCOTT: And that wouldn't be part of the relief?

MR. CARDOZO: Pardon me?

REP. SCOTT: That would not be part of the relief?

MR. CARDOZO: I don't believe so, no.

REP. SCOTT: Thank you, Mr. Chairman.

REP. NADLER: Without objection, the gentleman's extended one additional minute. Would the gentleman yield to me?

REP. SCOTT: I yield.

REP. NADLER: Thank you. Ms. LaSala, I have three quick questions for you. How much have you paid -- has the -- has the Captive paid out in recoveries?

MS. LASALA: It has paid a modest amount, Congressman Nadler -- about $350,000.

REP. NADLER: Three hundred fifty thousand dollars. And is it correct you've spent in legal defense defending against claims about $260 million?

MS. LASALA: I think that's a slight --

REP. NADLER: Over 200 million (dollars)?

MS. LASALA: Nearly 200 million (dollars) is the accurate -- (cross talk).

REP. NADLER: Okay. And would you agree that 200 million (dollars) is more than 5 percent of 300,000 (dollars)?

MS. LASALA: Whatever math is, I would agree. Yes.

REP. NADLER: Thank you very much.

REP. LUNGREN: Thank you very much, Mr. Chairman. Mr. Wood, as -- as I suggested earlier in my question to Mr. Feinberg, there's no perfect solution here, but we want to see how we can compensate people in a reasonable manner but at the same time do 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's been some discussion here about, you know, have you been sued, have there been plaintiffs' that -- 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's correct.

REP. LUNGREN: -- in your testimony. I mean, 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're 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.

REP. LUNGREN: But -- but -- (cross talk).

MR. WOOD: I'm here -- I'm here -- you know, just the fact that -- that I'm here today, you know, takes away from our ability to do business and this has been ongoing for seven and a half years, and all the contractors are -- are living a similar fate.

I know right after Katrina one of the contractors that -- that's -- that I'm speaking for today was questioning -- they had a local office near -- near New Orleans -- and they had to question themselves about whether or not to go into help, you know, 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.

I -- I'm concerned about -- many -- 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'm concerned that -- 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're 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. And, you know, looking to find blame at this point is -- is really counter to -- to what we did and I'm very pleased that this -- this opportunity for this bill is out there. Did I answer your question?

REP. LUNGREN: I think -- 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's almost perfect -- that somehow we can figure out exactly what a individual has suffered, what they're 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, and 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's an extremely difficult thing. Why -- why do we say that somebody gets a bigger -- a bigger settlement or a bigger judgment because they happen to have a job that has a greater income than somebody else? Because we're -- we're trying to give people recompense for the lost earnings and -- and, you know, 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 -- we don't know those things so we do the best we can.

And here we -- 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're attempting to do. At least that's the way I see why we're here doing this. So I'd 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 the special master tremendous leeway over an extended period of time. It's tremendous power. And I just wonder if anybody would have any comments on that from the panel.

MR. CARDOZO: Well, we're 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. I think he -- after he did promulgate regulations that were -- that had been preceded by some hearings, he did an extraordinary job. If we continue down this front, that's going to be up to Judge Hellerstein and the jury, assuming that they (have ?) -- proving that someone did something wrong, is going to have to do exactly the same thing. They're going to have to on 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's 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 -- can I just add that you -- from a medical perspective, given the uncertainties about what the medical -- what's going to happen in the future with the illnesses and how people will -- 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. So I think it -- 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's one thing when you're trying to quickly pass legislation within a couple of weeks of 9/11, but we're talking here about a 22-year program, and Congress should take the time to -- to get some of these details right.

REP. NADLER: The time of the gentleman has expired. I now recognize the gentlelady from Texas for five minutes.

REP. SHEILA JACKSON LEE (D-TX): 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. 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 -- I'm understanding that New York State law in tort actions is -- is not, if you will, a softie. So I'd like to -- 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 just want 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're asking is if you had any notice -- we're trying to suggest, or let me not put words in your mouth, that you're 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's 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.

REP. JACKSON LEE: And I -- and I don't -- 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 Ms. -- just give me that number again so that I can hear it clearly, and that, I think, is Ms. LaSala.

Ms. LaSala?

MS. LASALA: Yes?

REP. JACKSON LEE: Yes. Could you give me -- you paid out how much -- (inaudible)?

MS. LASALA: In claims?

REP. JACKSON LEE: Yes.

MS. LASALA: We have paid approximately $350,000.

REP. JACKSON LEE: And then -- and then what did you utilize for defense fees or lawyers that were involved in the -- 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 (purpose ?) that was entrusted to us.

REP. JACKSON LEE: And Ms. LaSala, I never attempt to approach 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 turning. 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 (dollars) plus for defense and (understanding ?) someone's pain and suffering is obscene. And so I'm hoping we can work across the aisle on this legislation. Let me quickly go to Ms. Burnette, who played basketball, played on behalf of New York City Police Department. When you went down 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.

REP. JACKSON LEE: And you got right in the middle of it?

MS. BURNETTE: Yes.

REP. JACKSON LEE: And you are now -- are you retired? Are you still working for the --

MS. BURNETTE: Retired.

REP. 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.

REP. 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.

REP. JACKSON LEE: And in terms of the impact on your family and the kind of medication that you're taking, do you see your life being changed between night and day pre-9/11, which I -- 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.

REP. 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.

REP. 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'm taking my medication. I don't breathe well. I'm suffering because I'm still in denial that I'm sick. I know that there's talk of me needing a double lung transplant because I'm scarred -- three- quarters scarred on both lungs.

REP. JACKSON LEE: Your family is impacted?

MS. BURNETTE: Yes, it -- yes, they are.

REP. JACKSON LEE: And my last -- you understand the bill that is before us?

MS. BURNETTE: Yes.

REP. JACKSON LEE: You have -- 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.

REP. JACKSON LEE: Mr. Chairman, let me indicate as -- 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 enthusiastic support for H.R. 847. I yield back to the gentleman.

REP. NADLER: I thank the gentlelady for her support and for yielding back. The gentleman from New York, Mr. Weiner, is recognized.

REP. WEINER: Thank you, Mr. Chairman, and I think 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 in 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're 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's no doubt about that. I would love to be in the room as we're 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's 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.

REP. 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're 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 and contractors and volunteers who were in that same situation.

You were given on a -- on your best day probably a paper mask, the kind of which they give out at Home Depot for when you're 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've let you down. I think there's no other way to say it except that we've 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. So 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're heroes, and we're not treating you that way right now. We're 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've been, in a football metaphor, playing in the red zone for the last five years. 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 -- 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.

REP. NADLER: I thank the -- we can't do that. I thank the gentleman for his questions and -- and for his comments. I certainly want to express my hope -- we've 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 -- and without the help that they're entitled to get from -- from their government -- (cross talk) --

REP. JACKSON LEE: Mr. Chairman? Chairman?

REP. NADLER: Yes?

REP. JACKSON LEE: May I have unanimous consent to make an inquiry of you for clarification on the record, please, that I did not --

REP. NADLER: Without objection.

REP. JACKSON LEE: I understand on the Captive fund there was an expenditure of $300,000 -- I'm seeking a clarification -- that the lawyers' fees might have been utilized out of interest, which means there is still a billion dollars left. Maybe I can have a clarification. This is the question that I posed that said there was 200 million (dollars) 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 --

REP. NADLER: Well, for clarification for the record, Ms. LaSala, how much is left now?

MS. LASALA: There is approximately $940 million in the fund.

REP. NADLER: Of the original billion there's 940 million (dollars) left, minus the 200 million (dollars) -- minus the payouts and plus the interest?

REP. JACKSON LEE: And, Mr. Chairman, if I could further --

MS. LASALA: And -- and Mr. 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.

REP. NADLER: Thank you.

REP. JACKSON LEE: Mr. Chairman, further clarifying -- that means that we have at least a billion dollars still sitting. Is that right?

REP. NADLER: There -- there is about a billion dollars still sitting -- 900 million (dollars) or a billion (dollars), depending on the outcome of that litigation. In the legislation, it provides that that billion dollars, plus some other (pots ?), would be used in an ordered way without being first for compensation of victims who do not go into the VCF but elect to maintain litigation.

REP. JACKSON LEE: Well, I --

REP. NADLER: And -- and the -- and the liability of the contractors and the city is capped at the amount in those (pots ?), the billion dollars plus a few other (pots ?).

REP. JACKSON LEE: Well, concluding and -- and yielding back, I think what that notes is that the victims who are in this audience and the sponsors -- yourself, Ms. Maloney -- Ms. Maloney and I think Mr. King, are --

REP. NADLER: You're talking about Peter King, not -- (off mike)?

REP. JACKSON LEE: He's standing here with the green tie on.

REP. NADLER: Oh.

REP. JACKSON LEE: But Mr. King --

REP. NADLER: Let the record reflect that our colleague from New York, Representative Peter King, who's a sponsor of the legislation, is standing over there.

REP. JACKSON LEE: That you are also being responsible in the approach that's being taken through this legislation. I just wanted to make sure that was on the record --

REP. NADLER: Thank you.

REP. JACKSON LEE: -- 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.

REP. NADLER: I thank the gentlelady, and again, I -- I would hope that this hearing has been productive and conducive to passing this legislation so that the -- both the victims, the heroes of 9/11, and the contractors, who were also both heroes and victims, can -- can be dealt with fairly and decently, as this society should. Without objection, all members have five 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 five legislative days to submit any additional materials for inclusion in the record, and with that -- and again, thanking our witnesses and thanking the -- the people -- the 9/11 workers and others who've come here to witness this hearing -- this hearing is adjourned.


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