Breach of Trust: the impact of the WTC disaster on workers compensation

October 9th, 2007 by Julie Ferguson

Our colleague Peter Rousmaniere is writing an important 4-part series on the World Trade Center and workers compensation that is being featured in Risk and Insurance. These articles are part of the publication’s in-depth focus on how Sept. 11 forever altered the workers’ comp landscape and eroded the trust implicit between employer and employee. The first two issues have been published and the remaining articles will be published in upcoming issues. The series should be mandatory reading for anyone involved in any aspect of workers comp. The first two articles in the series demonstrate how the magnitude of the disaster and its aftermath have exposed innumerable fault lines in the century-old insurance institution.
In Part 1: Up in Smoke, Rousmaniere discusses the appalling lack of any attention to safety in the mammoth WTC cleanup. As a work-related insurance event, the unprecedented number of deaths that occurred may represent the tip of the iceberg as the health problems of some 10,000 to 20,000 recovery workers are now beginning to emerge. Some of the problems in evidence include disabling and chronic rhinitis, “RADS,” or Reactive Airways Dysfunction Syndrome, and post traumatic stress disorder. (And this says nothing about the potential ill health effects on the nearly 250,000 local residents, workers and students.)
The workers – both on-the-clock employees and volunteers – labored daily in a highly toxic stew with a stunning lack of attention to the barest minimum of health and safety standards. Rousmaniere describes the abject failure on the part of environmental safety agencies to enforce any safety codes and offers some theories for why safety was so overlooked:

One theory is that assurances to the public about the absence of environmental hazards lulled workers and employers into indifference. Days after the attack, EPA and OSHA issued press releases saying Lower Manhattan was safe to enter.
New York City’s Department of Design and Construction personnel “are not being exposed to unhealthy levels of chemicals and that air quality around the WTC is generally good,” read an Oct. 17, 2001, OSHA communique.
Another theory is that the World Trade Center collapse decapitated the work safety leadership inside New York City’s government.
“In the collapse of the towers, essentially the whole emergency response command structure of the FDNY was lost, as well as a majority of the department’s (hazardous materials) instructors, technicians and specialists,” wrote NIEHS consultants Moran and Elisburg.

In Part 2: The Disease Within, Rousmaniere examines the insurance challenges that were faced in the immediate aftermath of the WTC event. In a single event, the death tally equaled 10 years of “normal” or expected work-related fatalities. He looks at some of the decisions that were made and some of the ongoing repercussions of those decisions, painting a portrait of a total collapse of the system as various weaknesses and flaws were exposed.
Rousmaniere calls this collapse “the dead elephant in the room no one wants to mention” and points to several root causes for the collapse:

  • Agonizingly slow administration of claims.
  • Barriers for disease claims–the very claims that disasters will create.
  • The proclivity for people to seek financial relief for work-related conditions through tort litigation and federal assistance.

He traces one disease claim to point out the complexities and the 3-year labyrinthine process that it has taken to come to any resolution. This does not bode well for the estimated 5,500 workers who will need ongoing care for respiratory diseases and the nearly 14,000 workers who need care for mental conditions.
In discussing these articles with Rousmaniere, he notes that while federal intervention in state workers compensation benefit structures has traditionally been very low, it may well take a big leap after the debacle of the World Trade Center aftermath is better understood. His series provides one of the most comprehensive examinations of the event to date. And we can see many of the same issues, such as the lack of attention to safety and prevention, in the aftermath of Katrina.
The final two parts in the Rousmaniere series will appear in Risk and Insurance in the October 15 and November 1 issues. We will be sure to bring them to your attention.