NEW YORK (Legal Newsline) - Sheila Birnbaum, an attorney who once represented State Farm Insurance Cos. in Hurricane Katrina litigation, has been picked as the next administrator of the September 11th Victim Compensation Fund program.

U.S. Attorney General Eric Holder made the announcement Wednesday, saying Birnbaum has already gained respect from mediating a $500 million settlement for 92 families of victims of 9/11. Birnbaum is a New York native and lawyer with Skadden Arps and succeeds Ken Feinberg, now the administrator of a fund for victims of the BP oil spill.

"As a life-long New Yorker, the opportunity to serve the country and the 9/11 community in this way is a tremendous honor," Birnbaum said. "My first priority will be to sit down with the people who will be most affected by the program, and see how we can design a program that is fair, transparent and easy to navigate. The fund needs to get up and running quickly. At the same time, I want to make sure we do it right.

"Ken Feinberg laid a great foundation during the fund's first iteration, and I plan to build upon it."

Birnbaum made headlines years ago when she accidentally sent an e-mail critical of Mississippi Attorney General Jim Hood to members of the press.

State Farm was one of five insurance companies sued by Hood after 2005's Katrina. After a settlement of 640 claims was rejected by a federal judge for procedural reasons, Hood sued State Farm for not making the rejected settlement work.

State Farm sued Hood, claiming he was threatening the company with a criminal investigation to coerce a civil settlement. The two sides reached a confidential settlement in 2007.

The two sides disagreed heavily over the circumstances of the settlement. Hood wrote in a column that "allegations lodged against me by this insurer were shown to be false," while his press secretary wrote the only reason the outcome was referred to as a "settlement" is because "the details of the Attorney General's criminal investigation needed to be protected. The case was dismissed because the allegations were false."

Birnbaum accidentally sent an e-mail to members of the press that said, "This is so over the top. Can we ask that (Hood) be held in contempt of court for misrepresenting a settlement agreement and order of the court?"

Birnbaum will administer a fund created by a new law that reactivated the 9/11 compensation fund. It expands the pool of applicants to include first responders and individuals who experienced physical injuries associated with the attacks or debris removal.

From Legal Newsline: Reach John O'Brien by e-mail at jobrienwv@gmail.com.