Compensation: Average of $1.6 million in tax-free assistance will be given to families of  those killed.

By DAVID G. SAVAGE, TIMES STAFF WRITER

WASHINGTON -- The federal government, taking on the role of insurer of last resort, will offer families of people who were killed on Sept. 11 an average of $1.6 million in tax-free compensation, the program's administrator said Thursday.

Payments will range from $300,000 to more than $4 million, with families of younger or higher-income workers receiving more money. Life insurance and pension benefits will be subtracted from the total awarded.

In a key decision, Kenneth R. Feinberg, the Washington lawyer who was appointed as special master of the compensation fund, said money received from charities will not be a factor in the
awards. However, he said, "whatever we do is of small comfort" to those who lost a loved one in the terrorist attacks.

But he promised a fast, fair and reliable system for offering money to survivors' families, as well as those who were physically injured.

The program could cost the government as much as $6 billion, which Feinberg called "an unprecedented display of taxpayer generosity" on behalf of the victims.

Thursday's announcement triggers the complex process of compensating families of the thousands of people who died when hijackers crashed jetliners into the World Trade Center and the
Pentagon.

Separately, many private charities are struggling with the issue of who benefits from donations that have been pouring in since the attacks.

Congress created the Victims Compensation Fund as a fast-track alternative to slow, costly lawsuits against the airlines. Under the law, one claim can be filed on behalf of each victim of the Sept. 11
attacks.

This includes people who died in the four airplane crashes in New York, Virginia and Pennsylvania, as well as those who were killed in the twin towers and the Pentagon.

Lawmakers had two goals in mind, which conflict in some instances. They wanted to compensate victims just as though they were filing a court claim against the airlines. In litigation over airline crashes, families who lose a high earner can obtain awards
of more than $10 million.

Lawmakers also wanted to provide speedy compensation to the "neediest victims and their families," said Sen. Patrick J. Leahy (D-Vt.), a sponsor of the program, referring to the service workers and other employees in the World Trade Center who died with little in the way of assets or life insurance.

Feinberg said he would try to meet both goals, while seeking to "narrow the gap" between the richest and poorest families. "It is our view that, absent extraordinary circumstances, awards in excess of $3 million, tax free, will rarely be appropriate," he said.

In New York, some families said they were pleased and surprised by the proposed compensation.

But some survivors and aviation lawyers expressed disappointment and questioned the limits on recoveries for high-income families.
"Some families will get nothing at all. I personally will get nothing," said Steven Push, a Great Falls, Va., resident whose wife, Lisa Raines, died in the plane that crashed into the Pentagon.

Raines was a Washington lobbyist for Genzyme Corp., a Boston-based biotech firm.

"She had high income, and she also had life insurance and other benefits that will completely exceed my recovery," said Push, who has become a spokesman for families of the Sept. 11 attacks.

Money received by the family from life insurance or a pension will be subtracted from the government compensation. Lee Kriendler, a New York aviation lawyer, said the proposed payments of $1 million to $2 million may sound ample, "but they are a small fraction of what we have been recovering in recent cases. This is extremely disappointing."

Kriendler represented families of victims of the Pan Am crash in Lockerbie, Scotland, in 1988 and the TWA crash off Long Island in 1996.

Since lawmakers also limited the liability of the airlines, most survivors will have little choice but to opt for the government fund, legal experts say.

They can sue or file for compensation from the government fund, but they cannot do both.

Feinberg released the regulations on how the fund will operate, as well as charts showing the anticipated payments, which depend on the age and income of the person who died.

First, he calculated the lost earnings of a person who died.

More money will go to younger than older workers, because they had more earning years ahead.

In addition, Feinberg decided to award a flat $250,000 for pain and suffering, plus $50,000 more for each family member. As an example, a wife with one child whose husband was killed would receive $350,000 for pain and suffering.

According to the charts, the proposed payments range from a low of $300,000 for a 60-year-old who had income of $30,000 per year or less to a high of $4.3 million for a 30-year-old who was earning more than $175,000 per year and who left a spouse and two or more children.

But money received from charities will not be subtracted from the government payments, he said.

In response to questions, Feinberg said the families of non-Americans and undocumented immigrants are entitled to compensation on the same basis as U.S. citizens. And same-sex partners can apply for compensation, he said.

The Justice Department will begin accepting claims for compensation today. And Feinberg promised to act quickly. "In 120 days, we plan to get these checks out to the eligible claimants."

Also on Thursday, Congress approved a bill that would cut taxes for terrorism victims, providing refunds of at least $10,000 for victims' families not only in the Sept. 11 attacks but in the recent anthrax mailings and the Oklahoma City bombing in 1995.

The Assn. of Trial Lawyers of America, whose members earn their money by winning lawsuits, has praised the creation of the government fund and said it would advise families to file compensation claims rather than lawsuits.

"A historic national goal is realized," the group's president, Leo V. Boyle, said in reaction to Feinberg's announcement. However, he criticized the $250,000 payment for pain and suffering as "disappointingly and unrealistically low."

The Lambda Legal Defense Fund, the gay-rights group, also called Feinberg's announcement "encouraging" because he said same-sex partners are eligible to receive compensation.

But the outcome in individual cases may turn on state law, Feinberg said. States such as New York may allow gays and lesbians to claim compensation on the death of their partner, but other states may not, he said.