World Trade Center Tower 4, center left, under construction by...

World Trade Center Tower 4, center left, under construction by developer Larry Silverstein, rises next to an open pit where he hopes to build two additional towers, Thursday, March 25, 2010 in New York. Credit: AP Photo/Mark Lennihan

In a dramatic move, lawyers for New York City and its contractors filed an appeal Wednesday challenging U.S. District Judge Alvin Hellerstein's efforts to force them to throw more money into a proposed settlement of Ground Zero worker health claims.

Hellerstein said last month that he would likely not approve the settlement of up to $657 million for more than 10,000 workers unless millions more dollars are included and legal fees are reduced. The appeal challenging his powers to interfere in a private settlement could further delay compensation for workers, but could also cause the judge to rein in his demands.

New York City corporation counsel Michael Cardozo, in a statement, hinted that Hellerstein's intransigence had forced the appeal to the Second U.S. Circuit Court of Appeals.

"In this case, the parties have tried to address concerns that were raised, but the judge's statements and actions, together with his refusal to even consider other viewpoints, have made it necessary to appeal his rulings so that the plaintiffs and defendants can proceed with a settlement they consider fair and reasonable," Cardozo said.

Hellerstein last month said he felt a moral duty to intervene because of the historic importance of the litigation. He indicated he was unlikely to approve the "fairness" of the settlement unless it was more generous to the workers and gave him a bigger role in overseeing its implementation.

Federal judges' power to rule on the fairness of a class action settlement is well established, because people without lawyers need the court's protection. Experts have questioned Hellerstein's power, however, because the World Trade Center litigation is not a class action - it's thousands of separate lawsuits filed by plaintiffs with lawyers.

Victims generally lauded Hellerstein when he demanded more money for them last month, and some blasted the city Wednesday.

"I think it's a sad day for 9/11 responders who are waiting desperately for compensation," said John Feal of Nesconset, who runs an advocacy group for Ground Zero workers. "They're just going to prolong this."

Lawyers for the victims, whose fees Hellerstein wants to cut from the standard rate of 33 percent, said they weren't joining the city's appeal but supported its core claim - that individual plaintiffs should be allowed to decide on accepting or rejecting the settlement.

"We believe the settlement is not the judge's right to make a decision on, but the individuals who have been harmed," said Marc Bern, whose firm represents thousands of the claimants.

Because Hellerstein hasn't yet actually blocked the settlement, the appeal targets narrow steps he has already taken - delaying the appointment of a monitor to implement the agreement, and scheduling a fairness hearing.

Legal experts said the Second Circuit may hesitate to intervene prematurely with a trial judge's discretion, but if the city is able to reach the substantive question of Hellerstein's power to hold up a private settlement, it will have a good chance.

"That would be a very strong appeal," said Anthony Sebok, an expert on mass tort cases at Yeshiva University's Cardozo School of Law.

Latest video