During World War II, the Mermelsteins were living in Czechoslovakia when the Nazis hauled them off to the infamous death camps. David Mermelstein, then a teenager, lost his entire family: parents, grandparents, four brothers and a sister.
But he couldn’t collect on a life insurance policy held by an Italian company because he couldn’t meet its demand for proof of his father’s death.
Decades later, the Miami-Dade Holocaust survivor and hundreds of others in his same predicament are struggling to recover payouts from Assicurazioni Generali of Italy and other large European insurers.
They can’t sue them, however, because a formidable foe is now standing in the way: the U.S. government.
“They took away our rights to go to an American court,” said Mermelstein, 81, of Kendall, who came to this country in 1947 after he was held at Auschwitz and other concentration camps during the war.
“Can you tell me why the Justice Department would fight us instead of an Italian insurance company?” he said. “It’s unbelievable.”
Prospects for justice are growing dimmer. On Monday, Mermelstein and other victims of Nazi concentration camps will be awaiting a possible decision by the U.S. Supreme Court to reconsider their appeal against Assicurazioni Generali.
Meanwhile, federal legislation that would give them that legal right has gone nowhere in Congress, stalled by millions of dollars of insurance industry lobbying and competing political agendas pushed by lawmakers, the Obama administration and even establishment Jewish organizations.
The legal battle raged further this fall after Mermelstein, using the Freedom of Information Act, obtained internal Justice Department documents revealing the U.S. government’s past misgivings about its strategy opposing victims’ access to the courts.
The records show the Clinton administration was not opposed to their filing lawsuits in state courts as an alternative to an international Holocaust insurance commission, which was set up in 1998. That fact was concealed by the Justice Department during the past decade of litigation.
Justice Department lawyers, saying the records had been “inadvertently and erroneously” released, told Mermelstein and his Miami group’s attorney, Samuel J. Dubbin, to return them.
“Let them take us to court because I’m not giving them back,” said Mermelstein, who posted the documents on the Holocaust Survivors Foundation-USA website, www.hsf-usa.org.
Much is riding on the legislation stuck in Congress.
If it passes, the legislation would undo the impact of a 2003 Supreme Court decision that blocked a California law requiring any insurers doing business in that state to disclose information about life insurance policies they sold in Europe between 1920 and 1945.
That split ruling undermined litigation against the European insurers, forcing Holocaust survivors to accept the terms offered by Italy’s Generali and others through the international insurance commission. Generali, which rejected thousands of claims, ultimately paid a total of $135 million to some 5,000 Jewish claimants through the commission and a separate class-action settlement in 2007.
Sidney Zabludoff, a retired U.S. government economist who later worked for a Jewish claims restitution group, has been a critic of the commission. He estimates that Generali and its affiliates had about 105,000 life insurance policies with Eastern European Jews in 1938.
Their face value: $80 million, he said. Today’s value: more than $3 billion. Several hundred survivors and heirs refused to be part of those settlements, saying the payouts by the Italian insurer amounted to a pittance of policy values.
Among them: Thomas Weiss, a Miami Beach doctor. Weiss’ father, who lost his first wife and their three children in the Nazi camps, was turned away by Generali after the war when he tried to collect on a then-valued $50,000 policy.
“The Holocaust settlements have been nothing but disappointing,” said Weiss, whose Miami lawsuit against Generali was dismissed and is now pending on appeal before the Supreme Court.
U.S. Rep. Ileana Ros-Lehtinen, R-Miami, sponsor of the stalled legislation aiming to give Holocaust survivors their day in court, condemned European insurers for initially rejecting their life insurance claims without death certificates.
At a recent congressional hearing, she said the international commission was “flawed” and that it yielded fractional payouts on billions of dollars in claims.
The International Commission on Holocaust Era Insurance Claims, which completed its work in 2007, obtained total payouts of $250 million for some 14,000 claimants. The commission also issued 34,000 humanitarian payments of $1,000 each.
But Zabludoff, the former government economist, estimated that today’s value of unpaid Holocaust-era policies held by the European insurers is more than $17 billion.
While her legislation has 37 co-sponsors, it has failed to gain momentum in the House and no companion bill has been filed in the Senate over the past four years.
“I am befuddled by the opposition to this bill,” said Ros--Lehtinen, who is expected to be named as chair of the House Committee on Foreign Affairs in the new year.
“All this bill would do is give the survivors the right to have their cases heard in the court,” she said. “It’s just an opportunity. This doesn’t mean they will win. . . . I’m going to keep fighting, [but] we’re up against some big guns.”
Her congressional counterpart, Sen. Bill Nelson, D-Florida, has been heavily lobbied by the Miami-based survivors group to file similar legislation in the Senate.
In an April letter, the foundation’s president, David Schaecter, and several other Florida survivors excoriated Nelson for failing to make good on a promise to introduce such a bill.
The group’s rebuke of Nelson was striking because as Florida’s insurance commissioner in 1998, he played a critical role in the passage of state legislation that allowed Holocaust survivors to sue the European insurers for unpaid claims.
But political forces, from the White House to high-profile Jewish organizations, have kept Nelson and other key figures such as U.S. Rep. Howard Berman, D-Los Angeles, from lending their support.
“Senator Nelson shares their concerns with the process, but he’s also heard from several major Jewish groups as well as some Holocaust survivors that strongly oppose the legislation,” spokesman Bryan Gulley said in a statement.
He said that “the lack of consensus among affected parties, the international objections and fears these factors could impair the ability of Holocaust survivors to receive compensation through the existing channels of relief has left the legislation in a stalemate.”
Some argue that the legislation, if passed, would undo existing agreements between the U.S. government, Germany and other European entities, and could damage negotiations over Holocaust claims in the future.
“Despite its seemingly admirable goals, we believe that the proposed legislation would actually be detrimental to the interests of survivors,” said a joint letter to the House Foreign Affairs Committee signed by the American Jewish Committee, Anti-Defamation League and Conference on Jewish Material Claims Against Germany, among others.
In early November, six employees of the New York-based Claims Conference and 11 others were indicted on charges of bilking more than $42 million from programs funded for Holocaust survivors.
Mermelstein, whose wife, Irene, is also a Holocaust survivor, bristles at this argument: “My legal rights are none of these groups’ business.”
Stuart Eizenstat, who is serving as both the Claims Conference’s chief negotiator and special advisor to the secretary of state, said official negotiations over bank accounts, insurance policies, slave labor and Nazi-looted art have been key to disbursements of more than $8 billion to Jewish victims and others.
In return for payments, there has been an “understanding” that the U.S. government would strive to provide a “legal peace” so the European entities would not be further sued in U.S. courts, said Eizenstat, whose work on Holocaust-era claims dates back to the Carter presidency.
“The legislation before us, however, threatens to undo all these accomplishments and to end this legal peace,” he told the House panel in September.
His argument, backed by major Jewish groups, is refuted disputed by the Justice Department documents released to Mermelstein.
In 2008, a Justice Department lawyer who has followed the Holocaust insurance litigation admitted in a memo that prior settlement agreements “do not provide an independent legal basis for dismissal of individual claims.”
In a handwritten note on the same memo, a senior Justice Department lawyer responded that “we should get that much on the record now so that we would not appear to have been hiding the ball if this case later goes to the Supreme Court.”
But the department didn’t include that crucial point in its court filings, leading to an early 2010 appellate court ruling in Generali’s favor. That closed the door to Holocaust survivors’ lawsuits, raising the stakes before the Supreme Court and Congress.