* Fund established but guidelines remain unclear
* Insurance may apply if gov't confirms terrorism
* Past disasters show funds can get stuck in limbo
By Ben Berkowitz
BOSTON, April 17 Victims of the Boston Marathon
bombings will eventually win some kind of compensation, but it
is far too early to know how much money there will be, whether
private donors or insurers will provide most of it, and how long
it might take to distribute.
Late on Tuesday, state and city officials said they had
established One Fund Boston, designed as a central source of
compensation for victims. John Hancock, a Boston-based insurer
owned by Manulife Financial Corp, has contributed $1 million in
seed money. Boston law firm Goodwin Procter will run it.
What happens next will depend in part on whether individual
victims choose to hire lawyers to press their own claims.
Judging from previous catastrophes, experts say victims have an
easier path if they settle with a central relief fund, rather
than pursue lawsuits against governments, race sponsors or
A fund is "the easiest, the fairest and the quickest way to
go," said Marc Bern, a lawyer who represented thousands of
workers at the World Trade Center site in litigation over
illnesses related to the 9/11 attacks.
"The most important thing for the victims of these kinds of
tragedies is a quick solution," he said, even if that means
surrendering the right to sue others for even more compensation
Monday's attack killed three and wounded more than 170. Many
of the survivors suffered amputations that will require
prolonged medical treatment and rehabilitation.
The parameters of the One Fund Boston are still unclear and
may not be known for days or weeks. A spokesman for Goodwin
Procter could not immediately comment on when victims or their
families could start filing claims, and whether the fund would
handle claims on a case-by-case basis or in groups.
Such questions will have to be answered before anyone can
get paid, according to Kenneth Feinberg, the Washington attorney
who administered funds set up after 9/11 and the 2007 Virginia
"If you take the money, do you give up your right to
litigate against the city of Boston or the marathon association?
Who's eligible?" said Feinberg, considered the world's foremost
expert on disaster compensation.
The 9/11 fund - a rare example of the federal government,
rather than the private sector, taking the lead on disaster
compensation - provided money for people with injuries provided
they surrendered their rights to sue.
MONEY GETS STUCK
In December's Newtown school shooting in Connecticut, no
central authority was appointed. That appears to have slowed the
distribution of funds raised for victims and their families.
"These kinds of tragedies really generate an entirely
different kind of charitable giving than is normal. It's
emotional, it's chaotic and people are driven to want to help in
some way," William Rubenstein, commissioner of the Connecticut
Department of Consumer Protection, said.
Disputes can arise even when there is a central authority.
Victims from the 1995 Oklahoma City bombing, according to the
NBC television network, are still fighting over claims with the
Oklahoma City Community Foundation, which oversees a relief
fund. (The fund has defended its distribution practices).
There are also fraud risks to consider. Massachusetts
Attorney General Martha Coakley warned on Wednesday that within
four hours of the bombing, more than 125 websites had been
registered purportedly to collect money for victims.
Regardless of who is giving out the money, calculating how
much each victim should receive promises to be a painstaking
process. It will depend in part on whether the fund
administrator decides to lump people together into categories.
The 9/11 fund considers each case individually, calculating
economic loss (medical costs, lost earnings etc) plus
non-economic loss (pain and suffering) and then subtracting any
other money earmarked for the victim. Payments have ranged from
$10,000 to $1.5 million.
Some funds group victims by category and pay accordingly.
The fund set up for victims of the 2012 Aurora theater shootings
paid $220,000 to families of the dead and those who suffered
brain damage or paralysis. Survivors who stayed in hospital
longer than 20 days received $160,000. There were other lower
brackets as well, depending on the length of hospitalization.
After some past disasters, such as Aurora, hospitals waived
or limited bills for those who did not have private insurance.
Boston-area hospitals are still addressing that question.
Massachusetts General Hospital said on Wednesday that it would
expect patients' insurers to be billed first, though it would
take all bills on a case-by-case basis.
INSURANCE MAY APPLY
In theory, victims also have the right to pursue litigation
against the Boston Athletic Association (BAA), which has
organized the 26.2-mile race since 1897, or the perpetrators,
assuming authorities eventually arrest and convict them.
But it is far from clear whether either of those parties
will have sufficient funds to pay off any claims, or how long it
would take to reach a settlement.
Bob Murphy, global sports and events practice leader for
insurance brokerage Marsh, said he had fielded well over 100
calls since Monday from clients and underwriters asking about
potential claims related to the bombings.
"We're talking about somebody injured or a fatality as a
result of a terrorist event. Could liability come out of this?
Absolutely," he said. "Are most of these events covered for
The BAA's ability to pay any settlements likely will depend
on its insurance coverage. It may have a specific policy to
cover terrorism-related incidents or a special clause in its
regular liability policy to cover such acts.
The BAA declined to comment on what type of policy it had.
"The organizers of larger events tend to be more risk-aware
and do contemplate acts of terror as a possibility under the
terms of the coverage as a matter of course," said Ian Barnes, a
member of the terrorism and political risk team at Cooper Gay, a
British insurance broker.
Assuming the BAA has terror coverage, it probably will not
kick in unless there is an official designation by U.S. Attorney
General Eric Holder and Treasury Secretary Jack Lew that the
bombing was an act of terrorism.
President Barack Obama on Tuesday called the bombings an
"act of terror." Under the federal government's Terrorism Risk
Insurance Program, the attorney general and treasury secretary
must officially certify an event as an act of terrorism before
that government program can be activated.
Even if activated, though, it would not start paying until
claims have reached $100 million.