The World Trade Center Captive Insurance Co. reasserted denials that it is misusing its funds yesterday after being hit with a multimillion-dollar lawsuit on behalf of workers injured during post-9/11 cleanup activity at the Twin Towers.

The insurer said the captive has properly fulfilled its mission to defend the city and its contractors in the event of lawsuits stemming from the cleanup at the World Trade Center site after it was destroyed.

The lawsuit, titled John R. Walcott, Frank Maisano and Mary E. Bishop v. WTC Captive Insurance Company Inc., et al., was filed in New York Supreme Court in Manhattan, a county level tribunal.

Their action names Mayor Michael Bloomberg, WTC Captive President and Chief Executive Officer Christine LaSala, Marsh Management Services Inc. and others as defendants and accuses them of misuse of a $1 billion grant from the Federal Emergency Management Association.

The prospective class action was filed by the law firm of Worby Groner & Napoli Bern, LLP on behalf of plaintiffs John R. Walcott, Frank Maisano and Mary E. Bishop, who are suing over illness they claim is due to their presence at the World Trade Center site.

The suit charges that the captive and its management have "knowingly wasted and squandered a large amount of the money and have used and expended for unauthorized and unlawful purposes a large portion of the sums received by the WTCC, at the expense of persons, who were intended to benefit from these funds, including the plaintiffs, herein."

The WTC Captive issued a statement late yesterday that: "We have reviewed the lawsuit filed today by Worby Groner & Napoli Bern against Mayor Bloomberg, the WTC Captive and various other parties and believe that it is completely without merit.

"The fact is that Captive has been and continues to faithfully fulfill the mandate set for it by the federal government at the time of its formation, which was and is to insure the City of New York and the scores of contractors and subcontractors the city engaged against claims arising from their respective roles in the rescue, recovery and debris removal work that began immediately after the collapse of the Twin Towers of the World Trade Center on Sept. 11, 2001."

The statement continued, "Any suggestion that we have departed from that mandate or have not faithfully performed our duties under it is, in our view, completely without basis in fact."

It added that the WTC Captive questioned the legal appropriateness of filing a lawsuit in Manhattan Supreme Court, which it said "seeks to circumvent consideration of important public policy issues" concerning the World Trade Center that have been appealed to the U.S. 2nd Circuit Court of Appeals in Manhattan.

According to the lawsuit, the public purpose of the WTC Captive "was to compensate Ground Zero workers for claims against the city arising out of the debris removal."

The complaint said this was even acknowledged at one of the captive's first board meetings, before the retention of litigation counsel and resulting litigation strategy.

According to the complaint, Congress directed that FEMA "provide, from funds.... up to $1,000,000,000 to establish a captive insurance company or other appropriate insurance mechanism for claims arising from debris removal, which may include claims made by city employees."

It continued, "Federal officials have subsequently confirmed that the insurance fund was intended to compensate Ground Zero workers ... for claims arising out of the debris removal process."

The WTC Captive maintained that: "As we have said on many occasions over the past year, it is within the Congressional prerogative to create a new, or to reopen the old, Victim Compensation Fund, which would make funds available on an appropriate and equitable basis to those involved in the post-9/11 rescue, recovery and debris removal process.

"As the mayor pointed out last February, the legislation forming such a fund would need both to resolve the legitimate claims of those who qualify as victims under the terms of the Fund and to protect the WTC Captive's insureds--the city and its contractors--by eliminating their liability from any current or future legal civil claims relating to their post-9/11 work.

"If such legislation were enacted and were to provide an alternative to litigation, it would presumably call for the $1 billion FEMA grant with which the WTC Captive Insurance Company was funded to be reallocated to a reinstituted Post-9/11 Victim Compensation Fund, an outcome the captive would expect to support."

The captive was also attacked in August 2006 by Howard Mills, who was then the New York insurance superintendent. Mr. Mills demanded the operation send his department a "detailed analysis of claims paid and expenses incurred" since its inception, July 2004 [NU Online News Service, Aug. 2, 2006].

He said then that "few if any claims have been paid, but substantial sums have been expended by your organization since 2004 for professional services."

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