Feds Stymie Insurers’ Claims Against Alleged Terrorists

April 27, 2004

U.S. officials and insurance companies representing Sept. 11 victims are locked in an unusual legal standoff, stemming from the government’s refusal to admit it has the alleged mastermind of the attacks in custody.

The insurance companies want the Justice Department to serve summonses and complaints on Khalid Shaikh Mohammed and other militants named as defendants in a lawsuit in federal court in New York.

But U.S. authorities claim they have never officially acknowledged holding the men. They also have argued that such a disclosure could hurt the government’s battle against terrorism.

The insurers insist the government cannot prevent them from pursuing valid claims against terrorist organizations, and have proposed a plan to keep information about them under seal. A judge has yet to rule on the plan.

Stephen A. Cozen, a Philadelphia lawyer representing the insurance companies, said that his clients “understand the government’s concerns” and hope to reach a compromise.

A spokesman for the U.S. attorney’s office declined to discuss the case.

The stalemate stems from a huge case comprising lawsuits brought by families of the victims of the attacks on the World Trade Center and the Pentagon. Joining them are subsidiaries of Chubb Corp. and other insurance companies trying to recover more than $5 billion for property damage and workers’ compensation, plus $200 billion in punitive damages.

The lawsuit seeks damages from the governments of Saudi Arabia, Iran, Iraq, Afghanistan and Sudan; al-Qaida, Egyptian Islamic Jihad and other terrorist networks; and Osama bin Laden, Saddam Hussein and Saudi royalty.

Also named as defendants are Mohammed, the suspected No. 3 al-Qaida leader arrested in Pakistan in March 2003; Ramzi Binalshibh, an alleged coordinator of the Sept. 11 attacks; and about a dozen other terror suspects believed held at Guantanamo Bay, Cuba, or other U.S. military outposts.

The government has agreed to deliver summonses to only those defendants held by the Federal Bureau of Prisons or U.S. Marshals Service. It has refused to serve papers on defendants held in secret, citing previous rulings involving demands from news organizations and public interest groups that the government disclose the names of detainees.

In one of those cases, a court agreed that identifying the suspects “could be of great use to al-Qaida in plotting future terrorist attacks or intimidating witnesses in the present investigation.”

Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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