‘Phantom Rule’ May Have Limited Holocaust-Era Awards To Claimants


When a commission investigating Holocaust-era life insurance policies ended its work in March after nine years, it boasted that it had awarded more than $300 million to survivors and their heirs.

Now, a former commission arbitrator is criticizing the group’s work, alleging that a “phantom rule” was used by some of the dozens of arbitrators, accounting in part for the denial of 84 percent of all claims filed. The arbitrator, Albert B. Lewis, who is also a former New York State insurance superintendent, is calling for a reopening of these cases.

The “phantom rule,” as Lewis described it, was that without an actual insurance policy in hand, either from the company or the claimant, the onus was on the claimant in seeking financial redress.

In fact, though, when the commission was established, the actual rules called for a more sympathetic stance toward the survivors and their heirs, specifying that there would be “relaxed standards of proof” favoring the claimant in determining the awards.

Lewis’s comments follow that of other critics of the International Commission on Holocaust-Era Insurance Claims (ICHEIC), who have pointed out the wording of the 1998 memorandum of understanding signed by the six major European insurance companies that provided the money. The memorandum said the commission “shall establish ‘relaxed standards of proof’ that acknowledged the passage of time and the practical difficulties of the survivors, their beneficiaries and heirs, in locating relevant documents.”

Lewis told The Jewish Week that Katrina Oakley, the commission’s law administrator in London, had tried to pressure him into changing two awards that he granted to claimants. She complained that his interpretation of “relaxed standards of proof” differed from that of other arbitrators.

In an e-mail she sent Lewis on Nov. 26, 2003, Oakley wrote that she was “concerned” that his “interpretation is sufficiently different that it would set a precarious precedent.”

Oakley wrote also that in cases where neither the heir nor the company was able to prove a policy’s existence, “the appellant has a heavy burden of proof that” such a policy was issued.

Lewis said he refused to change his ruling and that the appellants were paid because the “phantom rule” Oakley cited “was never adopted by ICHEIC, nor was it included in the arbitrator’s handbook.”

“Ms. Oakley had no authority to promulgate any of ICHEIC’s rules,” Lewis said.

He relied instead, he said, on rules adopted by ICHEIC that said arbitrators should be more lenient, following the “principles of equity and justice.” And he quoted the commission’s chairman, Lawrence Eagleburger, as saying “there is intentionally built into the standards wide latitude and flexibility.”

But Oakley delayed granting the contested awards, prompting Lewis on June 15, 2004, to send her an e-mail saying he considered her actions a “blatant attempt to pressure me as an arbitrator to reverse proposed monetary awards to claimants. It was a flagrant violation of the rules and it denied the claimants due process. … Your unauthorized conduct in delaying [the] award during which [the claimant] is receiving no interest is an affront” to those who drew the rules and acted as arbitrators.Elan Steinberg, a former member of the ICHEIC board, said he had never heard of the “phantom rule” and termed it a “smoking gun” for those who are still seeking payment of their relatives’ Holocaust-era life insurance policies.

“We had agreed that we would use relaxed standards of proof, which is contrary to the adjudicator’s letter,” he said, referring to Oakley.

Steinberg, who left the commission in 2004, said he was “deeply saddened and troubled” by the high percentage of claim rejections. “There should be no statute of limitations on justice,” he said. “There is no question in my mind that these issues, which touch on the moral and ethical obligations we have to our Holocaust martyrs, must remain open.”

Sidney Zabludoff, a retired U.S. government economist who was a consultant to Jewish claims restitution groups and has been highly critical of ICHEIC, said he had never before heard of the “phantom rule.”

Although he said it was “always clear” that documentary proof of each Jewish life insurance policy could never be found – he estimated that there were 870,000 of them in 1938 in what was later Nazi-occupied Europe – the commission’s rejection of 84 percent of claims “sounds a little high.”

“ICHEIC rules clearly state that there was to be a relaxed standard of proof and that if any evidence existed at all, the burden of proof shifted to the company,” he said. The rule Oakley mentioned in her e-mail, Zabludoff said, “is absolutely strange because it is against ICHEIC’s precedent.. I never heard anybody say that.”

Lewis said he was unable to review the cases before him in a detached way. “You have to be made of wood not to feel the pain,” he said. “One woman of six siblings is living in Borough Park and said she had a sister who had a $10,000 policy. I believed her. She said she went to five concentration camps and when she was liberated she couldn’t walk. She asked me to hurry up [with his review] because if she got something [from the policy] she would like to share it with her grandchildren. …. Is there an emotional involvement? Yes. Should I tell her she’s a liar? I gave her $104,000. It was my last award. They were upset with that one too.”

The $104,000 reflected the price of the insurance payoff adjusted for inflation over more than 60 years.

After his ruling, Lewis said he learned that the woman wrote to ICHEIC “wanting to know my mother’s name because she wanted to make a special prayer for her memory. … If I had to do it again, I would.”

Asked why he was coming forward now, Lewis said he was not aware of the high percentage of rejected claims until the commission released the figures in March. He said that of the more than 90,000 claims made, 78,814 – or 84 percent – were denied. What’s more, 34,158 of the claimants received a $1,000 humanitarian award, seemingly a token amount.

“Is a humanitarian award a mendicant award?” he asked. “I’m appalled,” Lewis continued. “It indicates to me that something is wrong, and part of what might be wrong is that phantom rule that was put into the system. “When ICHEIC was formed, [heirs] were urged to file their claims. Thus, they were given hope by ICHEIC that their claims would be heard, only to have them denied by ICHEIC. Is this tantamount to being indirectly labeled as fraudsters or liars? How much abuse must they take?”

Samuel Dubbin, a Miami lawyer who represents Holocaust survivors and their heirs, said he was aware that there had been “a lot of inexplicable denials” of claims. He noted that the ICHEIC process “resulted in the payment of less than 3 percent of all the policies owned by Jews at the beginning of World War II.”

Zabludoff said that of the more than 90,000 claims filed, only 16,000 were offered settlements as a result of documentary evidence or because of sketchy documentation that could be pieced together to prove a claim.

Lewis is calling for survivors and heirs to be able to press Holocaust-era claims in the courts, and he said he would ask the National Association of Insurance Commissioners to address this issue once more. He noted that the European insurance companies only began to address this issue after state insurance commissioners, who regulate the insurance industry in the United States, warned them that their Holocaust claims practices jeopardized their licenses in the U.S. Dubbin noted that Congressional legislation is now being written that would require insurers to disclose all Holocaust-era policies and permit heirs to pursue their claims through the courts. Few names of Jewish policyholders from Eastern Europe were ever published, despite the existence of ICHEIC. It is estimated that the value of those Holocaust-era policies is between $17 billion and $200 billion, according to a draft of the bill.