Wednesday, September 28, 2011

Does Government Intervention Hinder Disaster Recovery?

In this recent article, Lloyd's of London's General Counsel talks about a report to be released by Lloyd's that questions whether the intervention by the federal and state governments in the US in natural disasters helps or hurts recoveries.  The article states that "the government covers too many damages. 'You have the coverage of flood risk funded by taxpayer at state and federal level,' added Mr McGovern. 'A lot of claims coming out of the national flood insurance programme are for repeat losses on homes. That’s not sustainable.'”  This raises an interesting question about the balance between private insurance and government response to natural disasters. 

The subject of natural disasters will be covered by the ABA's Tort, Trial & Insurance Practice Section at its Spring Meeting on May 17, 2012, in Charleston, North Carolina.  One of the panels will include government officials who will talk about government response to natural disasters.  For information about the ABA/TIPS Spring Meeting or any of the TIPS Disaster Initiative Programs, including past programs, please click here.

Tuesday, September 27, 2011

New Cyberattacks in Japan

According to the New York Times, the United States issued a stern warning over cyber attacks on Japan’s biggest defense contractors, including Mitsubishi Heavy Industries, which builds F-15 fighter jets and other American-designed weapons for Japan’s Self-Defense Forces. The IHI Corporation, a military contractor that supplies engine parts for fighter jets, may have also been a target, the Nikkei business daily reported. The breaches threaten to undermine any progress made by Japan, an important American ally, in bolstering cybersecurity in recent years. Mitsubishi Heavy Industries said Monday that its computer systems had been hacked and that some network information may have been compromised. According to the company, 83 computers and servers at 11 locations, including its Tokyo headquarters, factories, and a research and development center were accessed in the attack. Mitsubishi Heavy Industries has built F-15 fighter jet and missile systems, including Patriot batteries, and AIM-7 Sparrow air-to-air missiles, that were designed in the United States. The company builds some of that equipment with American contractors, including Raytheon and Lockheed Martin.

TIPS is presenting the first of the Disaster Initiative live CLE programs on October 13, 2011 from 2:00pm-5:00pm: Homeland Security – 10 Years Later. How Innovation and Technology Have Changed the Approach to Homeland Security Since the 9/11 Attack. Register today for this can't miss program that will address cyber security, transportation security, and insurance protection for cyber liability risks and security breach disasters. The cost to attend the CLE program and the Reception that will immediately follow is only $50! TIPS is also Co-Sponsoring a program with the Ports of Seattle, Tacoma and California. The Business Case for Secure Ports will discuss port security, the steps necessary to ensure regional safety and the impact a disaster would have on the business community. To register, click here.

Monday, September 12, 2011

September 11th, Ten Years Later, Where Are We In The Handling Of Mass Claims Within The Legal System?

On September 8, 2011, I had the honor of moderating a live webinar entitled September 11th, Ten Years Later, Where Are We In The Handling Of Mass Claims Within The Legal System? Participating in this fascinating panel discussion were the Honorable Alvin K. Hellerstein, Senior Judge, Southern District of New York, Kenneth Feinberg, and Shelia Birnbaum. I am pleased to provide you with some of the highlights below.

The 2001 Victim’s Compensation Fund, established by Congress within two weeks after September 11, 2001, was an unlimited fund, which distributed over $7.049 billion to survivors of 2,880 persons killed on that day and to over 2,680 persons injured in the attacks or rescue efforts thereafter. Ninety seven percent of the families of deceased victims received compensation from the Fund. The average award for families of deceased victims exceeded $2 million. The average award for injured victims was nearly $400, 000. According to Kenneth Feinberg, the Special Master who administered the Fund, the Fund and its success remains unprecedented, and is unlikely to ever be replicated again. It was the nation’s response to a horrific tragedy of our nation, like the tragedy of Pearl Harbor and the assassination of President Kennedy. The overwhelming success of the Fund would never have been possible without the cooperation of the private bar, who assisted applicants through the claims process. For victims who needed a hearing to relieve their pain and present their evidence for compensation, those hearing were held both before Ken Feinberg and before Judge Hellerstein, who handled the over 10,000 cases filed in his courtroom in the aftermath of September 11, 2001.

The success, in terms of the 97% participation rate, was due in large part also to the fact that Judge Hellerstein suspended his docket for two years, to enable the Fund, for its 33 month time limit, to process its claims. A litigant would need to dismiss their lawsuit to participate in the Fund. Since collateral source payments were deducted from fund compensation, litigants with large life insurance policies opted for the litigation route which did not include deductions for collateral source payments. Special Master Sheila Birnbaum was appointed by Judge Hellerstein to mediate 92 cases in his courtroom, which she did successfully. Judge Hellerstein organized the cases by grouping them into master dockets, 4 of them, organized by subject matter. Legal challenges to jurisdiction and other issues like governmental immunity and dealing with the thicket of security issues made the litigation quite challenging. Special Masters were appointed, who created an electronic database to track each and every plaintiff as well as each and every defendant. Bellwethers were selected from the large mass of cases and discovery commenced on this select group of cases. According to Judge Hellerstein, it was only after the terrorist cases of Zahawari proceeded to trial in Northern Virginia and some of the sensitive security information became public, that the litigants before Judge Hellerstein had access to that SSI information. The cases were bifurcated and Judge Hellerstein set a trial date for a damages only trial. After discovery and before trial, the parties entered into a mass settlement for $712.5 million. Ultimately most of the onsite lawsuits have settled, even after an initial settlement was rejected because some lawyers were for demanding too much money in attorneys’ fees. Judge Hellerstein was committed to making sure that the persons settling early in the litigation did not receive less money than those who settled on the eve of trial. He worked very hard to ensure that the early and late settlers received approximately the same amounts and no one was disadvantaged by the timing of settlement. As of today, one death case remains, the Bavis lawsuit, and only 65 other case from the onsite group remain from the initial over 10,000 cases. A November trial date is set for the Bavis case. The offsite cases remain. Judge Hellerstein expects those cases will be impacted by the Zadroga Act. He does expect his caseload to diminish once the Zadroga act is up and running and litigants choose to dismiss their cases and file claims under the Act.

Neither Feinberg nor Hellerstein thought the Zadroga Act would passed and were initially opposed to it. But, it did pass and no one better could have been appointed to administer it, according to both, than Sheila Birnbaum. The Act is divided into two parts: Part I(medical) and Part II (compensation). Unlike the original Fund, the $2.8 billion reconstituted Fund is limited with administrative expenses deducted from the Fund. Hence, administration will be a challenge. The Fund encompasses a broader geographic area than the original Fund, so potentially more people will be claimants. Dismissal of pending litigation, like the original Fund, is a requirement for participation. Collateral source payments, like the original Fund, will be deducted from the final award. Like the original Fund, the methodology for calculating awards will be published so that a claimant will be able to gauge their expected payment. But, unlike the original Fund, payments will be made not all at once, because the Zadroga Act permits distribution of only $875 million in the first five years, leaving the remaining amount to be paid in the program’s sixth year. The awards will be pro-rated and received in two parts over a period of six years.

The panel discussion could have continued with these well respected panelists who enjoy their work and enjoyed working together to resolve the legal aftermath of this horrific tragedy in our nations history. Judge Hellerstein explained his thoughts about whether he will allow the request for “terror damages” in the Bavis lawsuit headed toward trial this November. He has not made up his mind about whether to permit such damages, but appears to be leaning in that direction, sharing his though process with us. Sheila Birnbaum discussed her thoughts about whether cancer will ever be compensated under the Zadroga Act, and if so, when. Judge Hellerstein lamented that cancer claims did not receive enough compensation in his courtroom, some did, but the emphasis was on respiratory illnesses due to the latency factor. Sheila Birnbaum also discussed the treatment of PTSD and physiological injuries under Part I of the new Fund, although compensation for those injuries is not allowed under Part II of the Fund. Ken Feinberg discussed the challenges he currently faces in administering the BP Fund, which has many many more claimants from all 50 states. As of August 23, 2011, over $5 billion has been distributed to 204,434 claimants, with approved payments by the GCCF of 359,441 claims. While there are no bodily injury or death claims, to all the families facing economic displacement and loss, it was a personal disaster.

Feinberg would let the politicians decide if and when circumstances are suitable to enact another Fund for handling mass torts. Although he is exceptionally experienced in administering these funds, having administered some of the largest funds in our legal history, he is not a proponent of the establishment of funds for the handling of mass disasters, nor of a separate court for handling mass disasters, which Judge Weinstein once espoused. Feinberg will not go out and seek creation of a fund to solve a national tragedy, he would rather let the politicians/Congress decide whether or not to create a fund in response to a national tragedy. He does think the Fund established in response to September 11th was right thing to do. He applauded judges like Judge Hellerstein in administering cases and accepting the challenges of handling 10, 000 cases within the traditional litigation system and making our system work. He stated that there are other judges, state and federal, doing the same in our complex litigation courts across the country. Ironically, Judge Hellerstein appeared a proponent of the fund approach, stating that funds do have its place in our legal system, using the original Fund’s success as an example. Sheila Birnbaum will face challenges in administering the new limited fund which is capped and includes more people, but no one finer is up to the task than Ms. Birnbaum, according to both panelists and this author who moderated this panel.

Should you wish to learn more about the claims and litigation filed as a result of September 11, 2001, the recent live broadcast of September 11th, Ten Years Later: Where Are We In the Handling of Mass Claims Within the Legal System? is now available on demand at West LegalEdcenter. If you missed any of the ten programs in the September “Disaster Preparedness and Response” series, each program is now available on demand. West LegalEdcenter, part of Thomson Reuters, has dedicated a landing page specific to this ABA-TIPS series. Click here to view all available programs and have the opportunity to register for this impactful and timely series through a promotional bundle and applicable discounts for TIPS members.

Friday, September 9, 2011

TIPS Chair Randy Aliment Remembers Those Lost on September 11th

 Ten years ago we woke up, readied ourselves for work, and went about our business on a beautiful Tuesday morning. Little did we know that a new kind of war, a 21st century war, would soon begin when foreign terrorists turned four U.S. commercial aircraft into weapons of mass murder and destruction. We knew then, and it has proven true, that things would never again be quite the same. But Americans have demonstrated that we are, as a people and a nation, both strong and resilient. And although we dearly miss, and will never forget, our friends and family who were lost on that fateful September day, we must carry on with our lives in the spirit of their memory. Please take a moment to reflect upon their smiles and laughter, and the good times we shared.

Tuesday, September 6, 2011

Aviation Teleconference Takes Center Stage


We had the pleasure of listening to the first of 10 Teleconferences in commemoration of the 10th Anniversary of September 11th being put on by the American Bar Association’s Tort, Trial & Insurance Section’s Disaster Preparedness and Response Initiative in conjunction with the West LegalEd Center. Today’s panel, focused the audience on where we are today in preparations for aviation disasters. The panel kicked off with Steven Predmore, Vice President & Chief Safety Officer of JetBlue Airways discussing how Jet Blue trains its employees for handling any type of disaster, be it natural or man made. Out of Jet Blue’s approximately 13000 employees, approximately 1200 employees are trained to play some role in disaster response. These employees conduct monthly notification drills, “table top” exercises and a full scale drill every two years, inviting insurers, NTSB officials, FAA officials, outside counsel and airline partners and manufacturers to observe and comment. Because there are so few airline crashes, JetBlue uses other emergencies, such as natural disasters, to stay fresh and current on the drills. Ellyn Slow, Senior Vice President-Risk Manager of NetJets, Inc., discussed the challenges the challenges faced in implementing disaster preparedness programs for corporate clients and the importance of disaster preparedness. Like Jet Blue, NetJets developed a formal emergency response in the aftermath of September 11th. That response included establishing three command centers with dataports, as well as retaining media consultants to train key executives in learning how to prepare for the media frenzy following any disaster. Net Jets has 25 personnel trained on notification teams, as well as 100 personnel trained on family assistance teams, and has retained an NTSB inspector as part of its response team. Like Jet Blue, Net Jets conducts annual full fledged drills involving media consultants, underwriters, etc., as well as table top drills.

Matt Barkett, a PR consultant to the airlines, echoed the theme of emergency preparedness stating it is critical for a PR consultant to be part of the emergency preparedness drill, be it table top drills or otherwise, because communication is so important in a crisis. Mr. Barkett, leader of Dix and Eatton’s Crisis Communications practice, participates in disaster drills with his corporate clients and finds that preparation for a crisis definitely improves your ability to respond should a crisis occur. You do not want to encounter the unexpected in a crisis; you want to have prepared for it. The NTSB limitations on communications to the media was discussed, as well as the fact that should any criminal act be suspected, the NTSB will turn its investigation over to the FBI. Erik Grosof, assistant to the Director of Operations of NTSB, discussed what NTSB has been doing in terms of disaster preparedness since September 11, 2001. According to Mr. Grosof, the relations that NTSB had in place with the airlines before September 11th were definitely helpful in managing the disaster following September 11th. After every accident NTSB investigates, the NTSB calls representatives from that industry together to roundtable what were the causes, what the industry could do better to prevent similar accidents from occurring in the future, etc. NTSB is not regulatory, per Mr. Grosof, “we are here to make it better.” As for drills, Mr. Grosof cautioned that you need to make the mistakes in your drills so you know how to solve those mistakes and move forward, “ Don’t say we had a drill and it was perfect, it’s more effective for disaster preparedness if it wasn’t perfect.” Marc Moller, partner in the law firm of Kreindler & Kreindler LLP spoke of his 40 years of experience in representing the families of airline disasters and commented on the September 11th Victim’s Compensation Fund established by Congress in the aftermath of September 11, 2001.

David Nelson, Assistant Vice President of Global Aerospace, discussed the role of insurance in disaster planning. According to Mr. Nelson, Global Aerospace, which insures a a number of airlines and has substantial claim experience, can assist the airlines in preparing for a disaster in terms of insurance. The biggest challenge companies face in responding to a disaster, Mr. Nelson said, is the lack of an emergency plan in place to do so. Many companies just have no emergency response plan in place at all, and if they do, they do not have an aviation disaster response plan in place. The time to practice an emergency response plan is not during the disaster. We thank our charming and very experienced moderator, Desmond Barry of Condon & Forsyth for a very interesting panel and invite all of you to join us for the nine additional programs in the TIPS Disaster Preparedness and Response Teleconference Series in commemoration of the 10th Anniversary of September 11th by registering here today. The series continues tomorrow and runs daily through September 19, 2011.

Today's the Day - TIPS Disaster Initiative Teleconference Series Starts

Today starts the 10-part Teleconference Series presented by the American Bar Association's Tort Trial & Insurance Practice Section in conjunction with the West LegalEd Center.  This Teleconference Series commemorates the 10th Anniversary of September 11th and focuses on lessons learned in how to prepare for and respond to disasters of all kinds.  The Teleconference series is being featured on the ABA's home page as well.

If you have not registered for the series, you still have time to do so.  Please visit the TIPS Disaster Initiative page or click here.  You can register for the entire series at a discount or individual programs.  There are also discounts for multiple registrants from a single organization.

The first program focuses on aviation disasters and crisis management.  This program starts at 2:00 p.m. EDT today. 

With the various disasters hitting the world today, participating in the TIPS year-long Disaster Initiative is a great way to learn about all aspects of disaster preparedness and response.