Fairness Where There Is None

Coming up with ways to compensate the victims of 9/11 is creating painful conflicts between victims, and setting a precedent for the future. In his latest Against the Grain commentary, CBSNews.com's Dick Meyer sorts through the issues.

There are no good answers.

But the people who administer private charities and federal compensation funds must come up with some anyway. And that process is already generating painful, irreconcilable conflicts between groups of victims, not just of 9/11, but of other crimes and calamities as well. Most importantly, these answers will set precedents for compensating victims, all types of victims, from here on in.

The traditional, all-American way of settling these matters is a kind of free-market in the courts approach. Compensation claims are adjudicated case by case, may the best litigator win. While there are, of course, laws that govern the process and precedents that guide the outcomes, a grand theory of just compensation for victims of, say, terrorism, hasn't been necessary. It is now, for two reasons.

First, the massive amount of money given to charities for 9/11 has to be distributed, based on some principles of fairness. There are estimates that some 70 percent of all Americans made donations related to 9/11. With such immense participation, it is important for future philanthropy that the money be distributed in ways perceived to be fair.

Second, Congress established a federal, taxpayer-funded Victims Compensation Fund. There has never been anything like it before. The awards it shells out will not be determined by judges and juries, but by principles and formulas developed by Kenneth Feinberg, the fund's special master. It is highly likely that victims of terrorism in the future will expect, even feel entitled to similar benefits. So Feinberg's philosophy will have long-lasting effects.

Yet the first thing to note about the Victims Compensation Fund is that it was not created because Congress wanted to do the right thing, but because Congress wanted to protect the domestic airline industry. Fearing that 9/11 could ruin U.S. carriers, Congress approved a $15 billion industry bailout, capped liability for each of the four 9/11 crashes at $1.5 billion and created the Fund.

Here's the rub: victims can only receive awards from the Fund if they agree not to file other lawsuits.

Feinberg devised a formula to calculate the specific awards and relied heavily on what the courts have done. The guiding philosophical principle is that differences in payouts should be based on the deceased's earning power and number of dependents so that victims' families can maintain their status as much as possible. Victims with more dependents and bigger salaries get more.

The Feinberg formula has three parts. Pain and suffering: this is the same for all victims, $50,000. Economic award: this is calculated differently based on this deceased's age, earnings and number of dependents. Finally, subtract life insurance and pension benefits from the above (but not payments from charities). So the family of a 45-year-old with two dependents earning $45,000 would get $905,063, less pension and insurance. The widow of a 35-year-old with one dependent earning $200,000 would get $2,865,908, less other benefits.

Some ghoulish and unsolvable ethical dilemmas emerge quickly. First, why should victims of the terrorism of 9/11 be given benefits from taxpayer funds when victims of other recent acts of terror are not? As my colleagues Jim Stewart and Mark Katkov have reported on The CBS Evening News, some victims of the USS Cole and the Nairobi Embassy bombings, both bin Laden attacks, are considering challenging this. Some victims of Timothy McVeigh in Oklahoma City are distraught at what they see as the unfairness. So are the victims of Columbine, and anthrax. So you can be sure that victims of terror in the future be making the same claims.

And what about victims of non-terror crime? Listen to Susan Herman of the National Center for Victims of Crime: "There are battered women, rape victims, victims of stalking, victims of identity theft, people who have been traumatized in ways very similar to the trauma that the victims of September 11th are experiencing. Should we be doing all we can, though, for people who have experienced some kind of intentional cruelty? Yes. As a society we should."

What about victims of unintentional cruelty? Of acts of nature? Talk about opening the floodgates.

Another problem: the genesis of the Victims Compensation Fund compromises its legitimacy. A central element of our notions of justice involves fairness; fair rules and processes, that disinterested parties could agree on ahead of time, lead to results that we feel are just. Outcomes are not guaranteed, but fair processes are. That's a part of justice. And bailing out the airline industry has nothing to do with devising a fair process to compensate 9/11 victims. Yet it was a determining factor. It's not fair.

Then there are the paradoxes and conflicts within the Feinberg formula. Many people believe it is simply unjust to base awards on earning power, on the market value of the deceased. Is it fair that the family of a custodian making $25,000 get a fraction of the family of a bond trader earning $250,000? If we have equal rights, if we're created equal, shouldn't compensation be equal?

Similar conundrums plague private charities. Since so much money was donated to the firemen and police who died, there is more money to give them than the other victims. Is that fair? Should charities steer money to victims of other calamities or other people in need?

In the end, mirror-image philosophies may well guide the dispersal of the private and public funds. The public funds according the earning abilities of the deeased, the private funds according the needs of the surviving families. That may have to suffice for fairness in these cruel circumstances that are the epitome of unfairness.

E-mail your questions and comments to Against the Grain

Dick Meyer, a veteran political and investigative producer for CBS News, is the Editoral Director of CBSNews.com, based in Washington.

By Dick Meyer By Dick Meyer