Ken Feinberg, overseer of victim funds, owes start to Chuck Hagel

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Posted: Sunday, May 12, 2013 12:00 am

Eight chemical companies offered in 1986 to pay $25,000, total to veterans who claimed injuries from Agent Orange, a defoliant used in the Vietnam War to remove the jungles that hid enemy fighters.

Lawyers for 250,000 veterans injured by the chemical wanted $1.2 billion.

“We're starting to close the gap. I'm optimistic,” Kenneth Feinberg remembers thinking. He was the lawyer assigned to resolve the dispute.

Six weeks later, the companies paid $180 million, the veterans accepted it, and Feinberg won the long-term role of bringing adversaries together and dispensing huge settlements as fairly as possible.

Over the past 27 years, Feinberg has helped dispense about $20 billion to victims of the 9/11 terrorists; shootings at Aurora, Colo., Virginia Tech and Newtown, Conn.; the BP Deepwater Horizon oil spill; the collapsed stage at the Indiana State Fair; the Penn State child sex-abuse scandal; and, next month, the Boston Marathon bombings.

The Brockton, Mass., native, 67, has Nebraskan Chuck Hagel to thank for the start of what has become a career — sometimes unpaid, as with the 33 months he worked on the 9/11 payments — and a calling to give mediation and non-adversarial settlements a bigger place in the U.S. legal system.

Hagel was an official of the Veterans Administration when the Agent Orange case arose and had known Feinberg from earlier contacts. He called then-Attorney General John Ashcroft and recommended Feinberg, who had worked for Sen. Ted Kennedy, D-Mass.

(Feinberg, in turn, spoke out in favor of Hagel earlier this year during the Senate's contentious confirmation of Hagel's appointment as secretary of defense. Given his reputation after the 9/11 payments, Feinberg's comments carried weight in Hagel's favor.)

Feinberg's bipartisan credentials and legal training at New York University panned out, and the mediation role fit his personality and interests in helping people reach mutually agreeable terms, even if neither side ends up totally satisfied.

Although the objective of paying victims is similar in each case, there are significant differences, Feinberg said in a World-Herald interview while in Omaha recently for a conference held by the McGrath North law firm.

The $7.1 billion paid to victims of 9/11 was taxpayer money appropriated by Congress, paid out to people who agreed not to file lawsuits — no suing the World Trade Center for building design, the airlines for lack of security or the aircraft makers for not having secure cockpits.

“It was a way of showing the world we take care of our country,” Feinberg said. He said the payment of public money to victims of a disaster is not likely to happen again because the 9/11 attack was unique.

The $6.5 billion paid to victims of the Gulf oil spill came from BP, not public sources, and also carried a requirement that people who accepted payments had to agree not to sue the oil company.

Feinberg also helped set compensation standards for CEOs of companies that received government bailouts in the 2008-2009 financial crisis.

Money for shooting victims and the Boston bombing came voluntarily from individual donors and with no legal strings attached. “I am amazed at the charitable impulses of people in the United States,” he said.

When it comes to settling lawsuits, Feinberg acts as a neutral party, with no interest in either side winning or losing. The idea is to show all parties that they have enough common ground to reach an agreement that, considering the risks of a trial, will be better than they might get in court.

“It's hard to teach mediation,” said Feinberg, who lectures at six law schools around the country, besides having his own law practice. Techniques for compromise and consensus can be learned, but personality and disposition can make someone a good or bad mediator.

When he completes a settlement, he said, “I like for both sides not to be pleased but to feel that they needed to do it.”

He said the U.S. legal system overemphasizes “litigious warfare and attrition,” with each side betting it will win at the expense of the other. But it's unlikely that the adversarial system will be replaced, he said. “It's so deeply ingrained in the fabric and history of our country.”

In cases like 9/11, Feinberg's tasks included assigning a dollar amount to each person's life. He doesn't examine a person's moral integrity, personality or other characteristics. “Maybe a rabbi or a priest can do that, but I can't,” he said.

But he can use well-accepted statistical tables, based on occupation, life expectancy and other factors to assign a relative amount to each victim.

“You can come up with formulas, mathematical calculations,” he said. “It's cold and unfeeling, but it's objective and it's time-honored. That's what judges and juries have always done.”

He wrote a book, “What Is Life Worth?: The Unprecedented Effort to Compensate the Victims of 9/11,” in 2005.

In such cases, people compare payments. One person gets $1 million, and another gets $1.3million. Why the $300,000 difference?

Feinberg said objective information about earning capacity provides the answer: A stockbroker earns more money than a waiter and gets a larger payment, even though both were killed in the same 9/11 attack.

Part of the process often is to hold hearings so that family members can talk about their lost loved ones. Feinberg presided over 900 of the 1,600 hearings requested by relatives of the 9/11 victims who did not agree with the initial offered payments.

“It's like letting steam out of a pressure cooker,” he said. “They need to validate the memory of their loved one. It gets very emotional.”

Hearing the stories and talking with victims and family members, he said, takes a toll on those dealing with the payments. “Unless you have a heart of stone, it leaves some impact on you.”

Yet he said he accepts the work, often without pay, because public officials ask him. The mayor of Boston and governor of Massachusetts asked him to oversee payouts of $30million donated by 50,000 Americans, including $1 million each by John Hancock Insurance, Liberty Mutual Insurance and Bain Capital of Boston.

The bombings were unusual because of the devastating injuries they caused. In the 9/11 attacks, nearly all the people in the area or on the aircraft either died or escaped with minor or no injuries. The Boston bombs killed three people and injured 264 people, including dozens who lost limbs, had brain damage, lost eyesight and suffered other permanently disabling injuries.

The costs of the serious injuries include loss of earning capacity, modification to homes for wheelchairs, lengthy therapy and huge medical bills, often for decades to come. He held two town meetings in Boston to discuss the payment process.

The Boston money will be divided among the victims in four categories, with every person in each group receiving the same amount: A, killed, double amputee, brain damage, burns and more serious injuries; B, single amputees and less serious injuries; C, hospitalized; and D, emergency room treatment.

Will that be his final disaster payment project?

“You hope it will be the last one,” Feinberg said, “but you know better.”

Contact the writer:

402-444-1080, steve.jordon@owh.com, twitter.com/buffettOWH

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