What is the value of a human life? Kenneth Feinberg uses mediation to solve complex compensation cases like the BP oil disaster

03/30/12 Liz McKibbon
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What do the September 11th terrorist attacks, the Virginia Tech shooting and the recent Gulf oil disaster all have in common? They were all unique catastrophes at the center of national attention, which resulted in compensation to the victims. Kenneth Feinberg was in charge of distributing those funds. On Thursday, Feinberg lectured at Stetson University College of Law in Gulfport, advising future lawyers on the role of mediation.

What is the value of a human life? That decision was up to Kenneth Feinberg after the terrorist attacks on September 11. According to Feinberg, only 11 days later, Congress and President Bush passed a law establishing a special compensation program for victims of the tragedy and their families. Payouts were based on loss of salary and other factors.

“5300 people were paid. $7 billion, all taxpayer money. The average award for a death claim -- $2 million, tax free. The average award for a physical injury claim -- $400,000, tax free. 97% of all eligible claimants entered that program.”

As part of the settlement, claimants waived the right to sue the airline companies, the World Trade Center, or other involved parties. This saved a significant amount of time spent in court and money spent on litigation. Inigo Pieraz was one of the more than 100 students in attendance. He was visiting Stetson from the Philippines as part of the International Environmental Moot Court Competition.

“Even in the Philippines, dispute resolution is said to be the next wave of law, because we’re trying to move away from going to courts and things like that, so dispute resolution is supposed to be the future—and its supposed to be something that all law students should somehow be aware of, because that’s where the law is supposed to be headed.”

Feinberg is a lawyer specializing in mediation. In addition to overseeing a number of compensation funds, he was also in charge of holding accountable the institutions that received the most in the bank bailout from TARP funds.

“The top 25 officials in each of those seven companies — 175 people — your pay will be fixed by Ken Feinberg. Now they didn’t quite say it that way. They delegated that authority to the secretary of the treasury and the secretary of the treasury delegated it to me. So I ended up with the rather unique role of actually calculating what every one of those individuals, those corporate executives would get paid.”

Feinberg was most recently the administrator for the Gulf Coast Claims Facility, BP’s compensation fund established following the 2010 Deepwater Horizon explosion and consequential oil spill in the Gulf of Mexico.

“For 18 months, we received over one million claims, from 50 states and 35 foreign countries. Build it and they will come. We got claims I think 400 claims from Massachusetts, 60 claims from Alaska, claims from Norway, Sweden, Mexico, Brazil—every claim imaginable. Over 18 months, we processed all of the claims, and paid out about $6.5 billion to over 500,000 people.”

These settlements ended the litigation and Feinberg’s work on the case. Claims continue to trickle in, but will now be handled by local courts, instead of the claims facility.

“It’s up to Patrick Juneau—appointed by Judge Barbier in New Orleans—and by April 16th, that’s the date when the settlement protocol the new settlement, the terms and condition of the settlement, what the new claims will look like, what’s eligible, how much they should be paid. All of that will be presented to the judge for his approval and a new program will replace that which I was doing the last 18 months.”

Each of the cases is distinctly unique and complex, and doesn’t set a precedent for future lawsuits. Feinberg leaves students with a word of warning about these types of generous compensation funds, and the fairness and equality concerns that are raised by them. Plenty of national tragedies—Hurricane Katrina, the Oklahoma City bombings — don’t have the luxury of a victim compensation fund. He hopes there isn’t another tragedy in the future, but tasks lawyers to step up to the plate if one arises.

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