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CNN Wolf Blitzer Reports

Is Victim's Compensation Fund Fair?; Why Are Some Families So Unhappy?

Aired February 04, 2002 - 19:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOLF BLITZER, CNN ANCHOR: Tonight on WOLF BLITZER REPORTS: "The Value of a Life."

(BEGIN VIDEO CLIP)

ROSEANNE STABILE, WIFE OF VICTIM: I think it's unfair that they want to deduct my husband's life insurance.

(END VIDEO CLIP)

BLITZER: After the September 11th terror attacks, the U.S. government set up a victim's compensation fund, unprecedented in scope, promising generous amounts tax-free, but it bars lawsuits and deducts insurance benefits.

Will relatives of a window washer or a bus boy receive more than those of a corporate executive? Is the system fair? Why are some families so unhappy? Is it a question of grief or greed?

We'll attend a town meeting of victim's families in hard hit Staten Island. I'll speak with relatives. New York Congressman Vito Fossella, who organized the meeting, and with the man in charge of the government's fund, Kenneth Feinberg, as we look at the value of a life.

Good evening. I'm Wolf Blitzer reporting tonight from Washington. Welcome to our special report. Tonight we're focusing on an idea with noble intentions that has for many different reasons now generated a great deal of controversy.

I'm talking about the Victim Compensation Fund set up by the U.S. Government to give financial help to relatives of those killed on September 11th. The final draft of guidelines for this fund hasn't even come out yet, but tonight many people will air their complaints about the plan in a town hall meeting in New York and the disputes won't stop there. It all involves a complex formula for calculating the value of a life.

(BEGIN VIDEOTAPE)

BLITZER (voice over): At first, the U.S. Government fund to compensate relatives of the victims of September 11th was widely supported, sailing through Congress. President Bush quickly signed it into law. To collect from the fund, victims' relatives have to give up their right to sue the airlines, whose planes were hijacked September 11th or anyone else.

Now some relatives say they may not go for that deal, despite the government's calculation that families could collect an average $1.65 million from the fund tax-free.

Many are outraged over a formula designed to come up with a financial value for each victim. That formula estimates how much a victim would have earned over his or her lifetime if the attacks had not occurred. On top of that, the victim's family gets a flat $250,000 plus $50,000 if the victim had a spouse and $50,000 for each child.

But from that amount, the government subtracts money relatives get from other sources, except charities. That includes life insurance payouts, Social Security death benefits, worker's compensation and possibly more.

KENNETH FEINBERG, SPECIAL MASTER, VICTIM COMPENSATION FUND: What we're trying to do is to make sure that the family survivors are compensated to the extent, either through life insurance, their own pension, their own private sources of income, or through this program.

BLITZER: Many believe this formula penalizes those whose loved ones planned for their family's future and took out insurance policies.

STABILE: If they weren't doing anything and were on workman's comp, that's government, well then deduct that because you can't get paid twice from the government. But insurance that my husband provided me for, I don't think should be deducted.

BLITZER: Since this controversy began brewing, some relatives have been getting angry correspondence, accusing them of greed. And, in a new CNN-"Time" Magazine poll, 86 percent of those questioned said all families should receive the same amount, no matter how much is coming in from other sources.

(END VIDEOTAPE)

(on camera): CNN's Hillary Lane is at that town hall meeting in New York City. She joins us now live with a look at what's going on. Hillary, give us a preview of what's happening.

HILLARY LANE, CNN CORRESPONDENT: Well, Wolf, I have to tell you that patience is running low, and I'm talking on two fronts, both among the families who are gathered here in a very hard-hit community, 245 families are estimated to have lost loved ones in the World Trade Center attacks, and also many people had other forms of economic loss.

But patience is also running low among Americans. And as you mentioned, you can see from polls, you can see from public comment, that many Americans are feeling like enough is enough. They've heard enough about the confrontation. Families should take it or leave it and make a decision.

But here tonight in Staten Island, Ken Feinberg who is the Special Master appointed to oversee the fund, is meeting with these families. He has done this ten times before. He's listening to their questions. He's trying to work out some of their complaints into this final set of rules, which should be released in the next two weeks or so.

But once it's final, it is a take it or leave it proposition, and anger is building. It is incredibly strong. I heard one woman this evening come into this hall and say "I can not sit in the front row. I think I might kill him."

So as you can imagine, anger really is building, but as I mentioned, public opinion turning as well. If you take a look at the Web site, at the Department of Justice, you see some of this public comment coming in, calling these families greedy, saying they should be thankful that there is a fund here for similar instances. Other types of terrorist attacks, there weren't funds like this available.

Let me bring in now Cheri Sparacio who lost her husband Tom. He worked at Fiduciary Trust -- I meant Euro Brokers. I'm sorry, Sherry. How do you feel about public opinion? How do you feel about people saying that you and others like you, who suffered such a loss, are greedy?

CHERI SPARACIO, WIFE OF VICTIM: It's been very hurtful. The American public was very generous and still are generous, but the public opinion at this point is very hurtful, and one of the reasons that the families are fighting for this fund is that if anyone has taken the time to read many of the articles that have come out since September 11th, the government is liable for what happened.

There were warnings. There were notices. They were ignored by our government. The airlines were supposed to have tightened up security after a previous incident, and that never occurred. And we're looking at this more like an out of court settlement.

The government had also, in the very early days of September when we were still looking for our loved ones, had taken our rights away, as the airlines lobbied for their own rights, and they cut the amount that we could sue for. And at this point, if we sue, families get nothing.

LANE: OK, Cheri, you told me earlier that you do not plan on taking this package. I should explain you were due to receive $1.5 million once you took out life insurance, Social Security benefits for your two children and one on the way, you're only going to come out with $137,800, so, quite a difference from $1.5 million.

Wolf, that is the situation here. That is why families are angry. Ken Feinberg is listening but there may not be any sort of a compromise that's going to make everybody happy. Back to you.

BLITZER: All right, Hillary Lane, we'll be back to you later in this program. Thank you very much. Coming up with a formula to compensate victims of the mass tragedy is of course not an exact science. Ken Feinberg is the Special Master, the man in charge of the government's September 11th Victim Compensation Fund, and only a few moments ago, I spoke with him from New York.

(BEGIN VIDEOTAPE)

Ken Feinberg, thanks once again for joining us. You're about to get an earful from some angry family members who don't like this tentative formula you've come up with on the value of a life. What are you going to say to them?

FEINBERG: I'm going to say what I've been saying to families for the past few weeks all over the entire area, from Boston to Washington, and even California, which is that the formula is fair. It can be improved. We will be improving it over the next few weeks, but we are getting close to the issuance of the final regulations governing the program.

BLITZER: Based on what you've been hearing, are you likely to still make any significant changes in those guidelines?

FEINBERG: Oh, I think we'll continue to take a hard look at some of the 8,000 comments that have been submitted to my office over the past few weeks, and we will be looking at the computation of the formula. What can we do about undocumented aliens? What can we be doing about making sure that people understand what they're buying into in this program? We still have some improvements to make, but we're comfortable with where we are.

BLITZER: Some of the critics have said that you have considerable leeway in coming up with the formula, that not everything was mandated when Congress passed the legislation and the President signed it into law.

FEINBERG: That's clearly correct. There are certain restrictions on my discretion, enacted by Congress. But in individual cases, based on the individual need of the family member, I do indeed have wide discretion and I plan to exercise it in appropriate cases.

BLITZER: You probably saw that CNN-Time Magazine poll, which showed that a vast majority of the American public believes that everyone should get basically the same amount, no matter is someone was a dishwasher or a high corporate executive. What do you say to those people?

FEINBERG: I say two things to those people. First, Congress thought otherwise. Congress spelled out in the statute that economic loss, based on the income of the victim, must be factored into the final formula. I have no control over that. That guarantees, Wolf, that there will be variations in the amounts awarded to families.

On the other hand, when it comes to non-economic loss, pain and suffering, emotional distress, loss of spousal consortium, I plan to treat everybody, whether it be the dishwasher or the stock broker, exactly the same. BLITZER: And what about the people who didn't have papers, the illegal workers for example, or those who had homosexual partners? What do you do with them?

FEINBERG: Well, as to the undocumented alien, I'm working closely with INS, the Immigration and Naturalization Service. They have been fabulous. I met with Mr. Ziegler the other day. They have been absolutely cooperative in trying to come up with a fair way to permit me to treat undocumented aliens who died in the World Trade Center exactly the same as anybody else.

On the same sex partners, I must say, I will look to state law. I will see what New York says about that subject. I will look at what New Jersey says, what Connecticut says, what Vermont says, and I will simply be guided by state law governing treatment of same sex partners, fiancees, or others as well.

BLITZER: Ken Feinberg, you have you work cut out in front of you. Thanks so much for joining us. Good luck to you.

FEINBERG: And thank you very much for the opportunity to be on.

(END VIDEOTAPE)

BLITZER (on camera): The areas of Staten Island and Brooklyn, served by the New York Congressman Vito Fossella were hit especially hard in the September 11th attacks. He's been active in promoting assistance to victim's families and he's criticized the payout restrictions of the government's compensation fund.

He's now speaking, as you can see, at the podium at this town meeting in Staten Island. Let's listen in.

UNIDENTIFIED MALE: I'm going to turn the podium over now to Mr. Feinberg and the panelists of (UNINTELLIGIBLE).

BLITZER: Congressman Facella has obviously just wrapped up his remarks. We're hoping he'll come to the microphone and speak to us shortly. But let's listen in briefly as Ken Feinberg begins his address to these people.

FEINBERG: Let me just before I welcome questions, let me just say a couple of quick comments. This program right now is evaluating over 8,000 comments that were sent in to this office by the Congress and others, by family members, over the past four or five, six weeks.

The final regulations will be promulgated sometime later this month. We are evaluating the comments. Comments are still coming in. I want to say, notwithstanding the constructive comments by the Borough President and the Congressman, the program is fair. It is just. It can be made better. It can be made better.

The program is vastly preferable to any type of litigation alternative, and I hope to, not convince people tonight maybe, but to -- I'll be satisfied if at the end of the evening everybody comes out of here at least thinking about what I have to say tonight, because I am a firm believer that the program ultimately will be the fairest, best way to go, in comparison to any type of litigation against the airlines and the World Trade Center and the Pentagon and the United States.

So with that sort of -- and one final point. Over the past three months, I have listened to elected officials, appointed officials, members of charity. The best input I've received is from the families themselves. These meetings are very important to you. They are extremely important to me, because as some of you know, I see some familiar faces.

I don't say friendly faces, but familiar faces, and there's no better way I gauge family sentiment than coming to places, meetings like this in Connecticut, in New York, in New Jersey, in Boston, next week in California, and to hear what people have to say and I offer also some suggestions on how the program should work.

So I like the format. I'm glad to be here.

BLITZER: That's Ken Feinberg, the man in charge of the federal government's compensation fund for the families of the victims of September 11th, beginning to take some questions from people at a town meeting in Staten Island. We'll be following what's happening at that town meeting as this special report continues.

But when we come back, I'll speak with three people who lost loved ones on September 11th and ask them how the government should value a life.

(COMMERCIAL BREAK)

BLITZER: Welcome back. What is the value of a life? How does one put a price on a loved one? How should the government handle the issue of compensating families of the September 11th victims?

Joining me here in Washington, Diane Simpson who lost her husband in the attack on the World Trade Center, and Steve Push whose wife was killed in the attack on the Pentagon.

From Houston, H.G. Whittington, his daughter, son-in-law, and two young granddaughters were all on the plane, which crashed into the Pentagon. And from that town hall meeting in Staten Island, Congressman Vito Fossella. He represents many victims' relatives in his district.

Let me begin with you Congressman. You've been quite critical of the fund so far. What's your main criticism?

REP. VITO FOSSELLA (R), NEW YORK: The purpose of the fund was really to provide an expeditious alternative to litigation, for so many of the families who lost loved ones on September 11th, in Staten Island, we lost more than 200 alone, as well as providing a degree of certainty to those families.

And as the regulations are currently issued, we don't believe it feeds that, because in one part many people have not decided to participate in this fund. In some instances, people will get nothing when you start factoring offsets and some of the offsets that the Special Master has at least imposed temporarily.

It's our focus, it's our intent to get the Special Master to try to modify these rules to make it attractive, which can then carry out the intent of what Congress really wanted to do.

BLITZER: I want to bring in some family members Congressman, stand by. Diane Simpson, she's here in Washington with me. You're not going to accept this money from the Federal Government. Please tell us why.

DIANE SIMPSON, WIFE OF VICTIM: The way that the fund is set up right now, they give you the different formulas to find out what your number is going to be, and I am a textbook middle-class person. My husband and I were just so textbook middle-class, and the way it's working out for me is I will end up with zero to nothing.

BLITZER: Because of the insurance he had planned for?

SIMPSON: Right.

BLITZER: And you want to leave your option open to sue an airline or sue someone to try to get some money as a result of this?

SIMPSON: Well, I feel like what option do you have when you're down to zero? And, I have seven-year-old triplets and they want to offset all of their Social Security money, my Social Security money, all the collateral offsets that you start minusing down the line. I end up with nothing, so why would I accept nothing. It's a very difficult decision to make, but there's no alternative at this point until the final rule comes out if there's some changes.

BLITZER: You'll be looking for that. Steve, you lost your wife at the Pentagon.

STEVE PUSH, HUSBAND OF VICTIM: Yes, I did.

BLITZER: What is your attitude toward what's being offered by this Federal Victim Compensation Fund?

PUSH: Our concern is that Mr. Feinberg is not following the law. The law said that we should get -- we should start with full compensation for economic and non-economic damages, such as pain and suffering, and then they should deduct the insurance and other things.

But Mr. Feinberg and certain people in the Bush Administration are using the families as political pawns to try to get a tort reform precedent set. So they've set the initial awards very low, and that's why people like Diane will end up with nothing, because when the initial award is so low, when you take away the statutory deductions, there's nothing left.

BLITZER: Let's bring in H.G. Whittington in Houston. Where do you come out on this very difficult decision, Mr. Whittington? DR. H.G. WHITTINGTON, RELATIVE OF VICTIMS: I'm not interested in applying for the fund. I think it's essentially hush money to be quiet about the airlines, and to let them once again walk away after they haven't paid sufficient attention to safety. My interest is in trying to do whatever I can to do to bring pressure to prevent this sort of thing happening to other families.

BLITZER: And it's your sense that if you were to sign away your right to sue, it would largely be a benefit for the airline industry and that's why this compensation fund was created to begin with?

WHITTINGTON: It would be a benefit to the airline companies, and obviously they lobbied very hard beginning the afternoon of September the 11th to get this legislation passed.

I don't believe the Congressmen who passed it, the majority of them, were really mindful of doing that to help the airlines. I think that is at least the untoward effect of it. Basically the airlines are told well, we're sorry this happened but you can go on your way as usual and as usual in the past after other fatal accidents, has been that they do not really change their safety practices.

BLITZER: The other point, Diane, is that if you sign away your right to sue, is anyone held accountable as far as your concern for what happened to your husband?

SIMPSON: No. I feel -- I just feel like there were lack -- there was a lack of security and I'm fine with there being a compensation fund not to go through all the litigation. I really don't know anybody who wants to do that, who wants to go through litigation, but I just want something to be fair.

BLITZER: And ten seconds.

PUSH: This is an issue for all Americans, because if they're allowed to lower the value of a life when they do cost benefit analyses for future aviation security measures, this lower value of a life is going to end up with fewer, not more, security procedures and we need more.

BLITZER: Steve Push, Diane Simpson, Mr. Whittington in Houston, Congressman Fossella, thanks to all of you for joining us, and those of you who lost loved ones, thank you so much and our deepest condolences of course to you. This issue is not going away.

Just ahead, Senator John McCain of Arizona faces some new health problems, and he's getting ready for surgery, that and other top stories when we come back.

(COMMERCIAL BREAK)

BLITZER: Checking these stories making our "News Alert": Senator John McCain of Arizona faces surgery this evening to remove a skin lesion from his nose. The lesion is said to be consistent with an earlier form of cancer called melanoma. And the subject of our special tonight at a town meeting that's going on right now in New York's Staten Island. Families of some of the victims of the September 11th terrorist attacks are speaking their minds.

At issue, the Federal Victims Compensation Fund. Some families are outraged over the compensation formula. They say it will penalize them because the government will deduct life insurance money and other forms of revenue from their compensation package.

Ken Feinberg, the fund's Special Master, is attending the meeting and he's answering questions right now that you're seeing in this live picture from the town meeting.

And that's all the time we have tonight. Please join me again tomorrow twice at both 5:00 and 7:00 p.m. Eastern. Until then, thanks very much for watching. I'm Wolf Blitzer in Washington. "CROSSFIRE" begins right now.

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