The World Trade Center Captive Insurance Co. (WTCC) is seeking to dismiss a federal lawsuit filed last month on behalf of Ground Zero workers accusing the captive operation of misusing a $1 billion grant from the Federal Emergency Management Association (FEMA).

WTCC argues in the motion that most of the named defendants in the lawsuit are, under statute, granted immunity from personal liability. The captive also contends it has no fiduciary duty to the plaintiffs–Ground Zero workers who were injured during the post-9/11 cleanup.

The suit, titled John R. Walcott, Frank Maisano and Mary E. Bishop v. WTC Captive Insurance Company Inc., et al., was filed in July at U.S. District Court in Manhattan by the law firm Worby Groner & Napoli Bern, LLP.

Named as defendants in the action are New York City Mayor Michael Bloomberg, WTC Captive President and Chief Executive Officer Christine LaSala, Marsh Management Services Inc., and others.

According to the complaint, the captive has used public funds, intended to compensate Ground Zero workers for claims arising out of the debris removal process, for “unauthorized and unlawful” purposes.

Marc Jay Bern, an attorney with Worby Groner & Napoli Bern who is representing the plaintiffs, said in a statement that the captive spent over $74 million dollars of Ground Zero workers' money “on so-called 'loss adjustment fees,' including over $45 million in legal fees, to fight the Ground Zero workers' claims, but they have not paid a single dollar to a Ground Zero worker who has become ill from exposure to toxic substances at the WTC and related sites.”

In its recent motion, WTCC states the plaintiffs' lawsuit is invalid because a section in the New York Insurance Law that pertains to the formation of the WTC Captive grants immunity from personal liability to virtually all of the named defendants, including WTCC board members and officers, and Mr. Bloomberg.

The motion states: “In short, each and every defendant to this action, except for the WTCC, is immune from any personal liability resulting from their activities in support of the WTCC's purposes.”

Additionally, the motion argues that WTCC has no fiduciary duty to the plaintiffs, and instead has an obligation under its mandate from Congress to defend the city and its contractors.

Plaintiffs have asserted that Congress and FEMA funded the WTCC “for the purpose of operating a claims processing facility to unconditionally pay plaintiffs' claims.”

However, the motion contends that in creating the WTCC, Congress and FEMA have actually established “an insurance company with the ordinary duties of an insurance company to its insureds: the duties to defend and, if necessary, indemnify those insureds in connection with the very tort suits that plaintiffs assert.”

Responding to the motion to dismiss, Mr. Bern disputed WTCC's interpretation of its responsibilities to the injured Ground Zero workers. “The legislators–the congressmen and the senators who are mainly responsible for setting up this $1 billion to go into the captive fund…have all said that the congressional intent was to pay these workers. That's why they set this $1 billion aside,” said Mr. Bern.

He questioned the defendants' claim to immunity. “I don't think [the defendants] are entitled to immunity at all. There are several arguments which preclude their ability to maintain a position of immunity in this instance.”

Denise A. Rubin, an associate attorney at Worby Groner & Napoli Bern, LLP, said the plaintiffs will also attempt to have the case moved back to state jurisdiction. She explained that the defense had the case moved to federal jurisdiction based on language in the Air Transportation Safety and System Stabilization Act that calls for all 9/11-related lawsuits to be handled by the United States District Court for the Southern District of New York.

Ms. Rubin said, “We believe that this case was properly brought in the state court.” In support of her assertion, she noted that WTCC is governed by the New York State Insurance Department superintendent and the state's insurance laws, and that the claims that have been filed are state law claims.

This article originally appeared in The National Underwriter P&C. For the complete article, please click here.

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Trade Center Captive Asks Dismissal of Suit

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