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NEW YORK--WTC Captive Insurance Co. has wasted and misused its $1 billion in federal funding on legal and administrative fees instead of compensating injured Ground Zero workers, a lawsuit filed Tuesday in a New York federal court charges.
"Despite the payment of tens of millions of dollars for claim defense and administration, not one penny has been spent to compensate workers injured by exposure to toxic substances during their heroic work at Ground Zero," says the suit, which was filed on behalf of three plaintiffs. The plaintiffs are two former New York City police detectives, Frank Maisano and John Walcott, and Mary Bishop, a former health care worker assigned to the World Trade Center site following the Sept. 11, 2001, terrorist attack.
The suit, which seeks millions of dollars in damages, alleges that New York-domiciled WTC Captive has misused public funds by spending more than $74 million on legal and other fees to fight injured workers' claims.
Further, the suit alleges the captive violated the Freedom of Information Law to hide its misuse of public funds and violated its fiduciary duties to protect and dole out funds for the benefit of injured workers at the Trade Center site.
Attorneys for Ground Zero workers have long argued that the $1 billion in federal funding that was used to create WTC captive in December 2004 should be used for medical treatment and compensation of workers injured by their participation in the cleanup efforts at the World Trade Center site.
WTC Captive, meanwhile, has maintained that the mandate under which it was created requires the entity to defend its insureds--New York City and a host of contractors--against potentially improper claims.
Marc J. Bern, an attorney for the workers with the firm of Worby Groner & Napoli Bern L.L.P. in New York, said the suit needed to be filed "because the captive insurance company has been acting recklessly and failing to do what was intended of them with the billion plus dollars that was given to them by Congress...we are asking that the board of directors be replaced and the control of the captive be taken away from Mayor Bloomberg."
In addition to the WTC Captive, the suit also names as defendants New York City Mayor Michael R. Bloomberg; WTC Captive President and Chief Executive Officer Christine La Sala; Marsh Management Services Inc., the captive's manager; and GAB Robins, its third-party claims administrator.
In February, Mayor Bloomberg proposed that Congress pass legislation to liquidate WTC Captive and permit its funds to be reallocated to a victim compensation fund. Any such congressional action would also need to eliminate liability for the city and its contractors, Mr. Bloomberg said (BI, Feb. 19).
WTC Captive in a statement called the lawsuit "completely without merit," and said any suggestion that it has departed from its mandate or not faithfully performed its duties is "completely without basis in fact."
"As a matter of company policy we do not comment on litigation," a spokesman for Marsh Inc. said.