N002528
January 22, 2002
The Honorable Kenneth Feinberg
Special Master
September 11th Victim Compensation Fund
U.S. Department of Justice
Washington, D.C. 20530
Dear Mr. Feinberg:
Below please find my comments on the interim final rules for the September 11th Victim
Compensation Fund ("the Fund").
At the outset, please know that I appreciate the hard work you, your staff, and the Justice
Department put into assembling the interim final rules. I also appreciate the fact that,
under the interim final rules, charitable contributions to persons injured in the September
11th terrorists attacks or the relatives of those who lost their lives in this tragedy will not
offset Fund awards.
On behalf of the families most gravely impacted by the events of September 11th, I
strongly and respectfully request that the interim final rules be modified to provide truly
full and fair compensation to victims of the September 11th terrorist attacks and their
loved ones. Unfortunately, I do not believe the interim final rules achieve this objective.
Most importantly, those directly affected by the September 11th terrorist attacks consider
the interim final rules to be seriously deficient and are, quite understandably, angry, hurt,
and frustrated.
A combination of unjustifiably low presumed non-economic damages awards, a flawed
presumed economic damages formula, the collateral source offset rule, and an
inappropriately steep evidentiary hurdle to securing modifications to presumed Fund
awards will operate in many instances to prevent victims and their loved ones from
receiving full and fair compensation-and, on occasion, any compensation-through the
Fund. This would frustrate Congress's intent, deprive some families of resources critical to their
economic security, encourage litigation, and send entirely the wrong signal to
these families regarding our government's and society's estimation and appreciation of
the magnitude of their loss.
In the airline relief and airline security bills, Congress limited the courtroom liability of
airlines, the airline industry, the World Trade Center, and other parties. It recognized that
these liability limits, operating alone, might deprive victims of the September 11th
terrorist attacks and their loved ones of full and fair compensation for the terrible harms
they have suffered. Thus, Congress created a government-funded program to provide
such full and fair compensation to victims and their loved ones. Notably, it did not
subject the program to the annual appropriations process. Rather, it funded the program
through mandatory spending. In other words, the manifest intent of Congress was to
ensure that the program provided full and fair compensation to victims and their loved
ones-federal budgetary and cost considerations notwithstanding. Indeed, this would not
only benefit victims and their loved ones but also reduce litigation arising from the
September 11th attacks.
Along these lines, the fact that courtroom litigation may be less attractive to victims and
their loved ones due to the liability limits imposed by recently enacted federal law
certainly does not support awarding compensation through the Fund that is significantly
lower than what one would secure in a successful courtroom action (apart from the award
of punitive damages, which the Fund may not award under its governing statute). Those
liability limits instead make it particularly imperative that compensation through the
Fund be full and fair. Again, this is not only good policy but also the clear intent of
Congress.
To achieve this objective, I respectfully urge you to modify the interim final rules to
increase presumed non-economic damage awards to amounts that fully reflect the
damages that Congress listed as compensable, correct any and all methodological and
statutory interpretation flaws in the setting of presumed economic damages, and allow
increases to presumed awards based simply upon a showing that such awards do not
accurately reflect the damages incurred by victims and their loved ones (as opposed to
requiring a showing of "extraordinary circumstances" for increases to presumed awards).
First, the presumed non-economic damages awards provided under the interim final rules
are substantially lower than those paid in comparable cases. Non-economic damage
awards in considerable excess of $1 million are typical for other airline crashes and
terrorism cases, but in this instance, presumed non-economic damages awards are limited
to $250,000 per victim and $50,000 for a spouse and each dependent. This dramatic
undervaluation of presumed non-economic damages runs contrary to Congress's general
intent to provide full and fair compensation and, significantly, to the specific language of
the law establishing the Fund, which lists an extremely broad array of non-economic
damages for which victims and their loved ones are to be compensated (regardless of
what may be allowable under state law). This problem bears considerable responsibility
for the fact that many victims or their loved ones would reportedly be severely under-
compensated by the Fund-potentially driving them to pursue litigation which, due to
statutorily imposed liability limits, may shortchange them as well. The interim final rules
can and should be fixed to increase presumed non-economic damages awards to amounts
which properly reflect Congress's intent and are a more realistic assessment of the
considerable pain and suffering endured by the victims of the September 11th terrorist
attacks and their loved ones.
Second, a number of economists or experts have pointed out flaws in the interim final
rules methodology for calculating presumed economic damages. The use of outdated
and improperly aggregated federal government data and the underestimation of
household services performed by victims and of real increases in earnings by
administrative support and clerical workers, among other things, has resulted in the
unjustified and unnecessary undervaluation of presumed economic damages. The interim
final rules cap on the level of income a victim may be considered to have earned per
year for the purpose of calculating presumed economic damages awards serves to
exacerbate this problem. I strongly urge you to provide interested parties with all
information that is necessary and useful to further evaluate the propriety of the interim
final rules presumed economic damages methodology and then correct all flaws that
would tend to undervalue such damages.
The fact that these are merely presumed economic and non-economic damages
amounts-purportedly subject to upward adjustment based on specific evidence of loss
presented at hearings or through supplemental evidentiary submissions by victims or their
loved ones-does not excuse flaws in their calculation. Rather, presumed awards should
be based on the best available data and methodologies regardless of the hearing or
evidentiary submission option. Indeed, the goal of providing accurate compensation
expeditiously through the Fund is furthered by having properly justified presumed Fund
awards, as this may diminish the need for hearings or supplemental evidentiary
submissions in each and every case. It also may be overly optimistic to assume that each
Fund claimant will be able and willing to present evidence at a hearing to correct
inaccuracies in the presumed Fund awards in light of their individual circumstances. Indeed, one can
reasonably expect that some victims or their loved ones may, upon viewing inadequate presumed Fund
awards, have little faith in the ultimate fairness of the hearing or supplemental evidentiary submission
process and decide to forsake the Fund altogether.
More importantly, the misplaced requirement contained in the interim final rules (though
not contained in the statute establishing the Fund) that a Fund claimant demonstrate
"extraordinary circumstances" through supplemental evidentiary submissions or at a
hearing to justify increases to presumed Fund awards could serve essentially to "lock in"
the unfair presumed economic and non-economic damage awards in any given case.
Whether or not the presumed awards are fair, upward adjustments should be possible
simply upon a showing by a claimant that a presumed award does not accurately reflect
the economic and non-economic damages he or she has endured. But this degree of
flexibility is particularly essential if the presumed economic and non-economic damage
awards would in many cases provide less than fair and full compensation. The
"extraordinary circumstances" threshold, however, may prevent the accurate and
individualized Fund awards intended by Congress, because while all victims and their
loved ones have endured extraordinary hardships, it may be difficult for a single Fund
claimant to establish that his or her circumstances are "extraordinary" relative to all other
victims and their loved ones.
The hearing or supplemental evidentiary submission opportunities for victims and their
loved ones must certainly be structured so as to afford them ample time and a convenient
way to make their case. But even a properly structured hearing or evidentiary submission
process would not remedy the difficulties arising from the inappropriately stringent
"extraordinary circumstances" standard. Congress did not erect or envision any such
obstacle to the award of accurate and individualized compensation to victims and their
loved ones. Indeed, as Congress has considered bankruptcy reform legislation over the
past few years, it has moved away from using an "extraordinary circumstances" threshold
for permitting deviations from a grid of allowable expenses for debtors in favor of a
standard that more readily accounts for debtors' particular economic circumstances.
Accordingly, the "extraordinary circumstances" threshold should be modified.
I do appreciate the fact that the interim final rules will not offset Fund awards by the
amount of charitable contributions received by a victim or his or her loved ones. I believe
the collateral source offset provision of the law is misguided. To the extent the final rules
do offset Fund awards by virtue of certain collateral source payments. I strongly urge that
you construe the collateral source offset provision of the law narrowly, consistent with
the tenets of proper statutory interpretation. In particular, amounts paid by victims or
their loved ones to secure certain types of collateral source compensation-for example,
life insurance premium payments-should be deducted from any amount considered to offset
a potential Fund award. Likewise, where collateral source payments trigger new
income or estate tax liability, that new tax liability should be deducted from any amount
considered to offset a potential Fund award.
Thank you as always for your consideration and attention to these matters.
Sincerely,
Comments by:
Stephen F. Lynch
Member of Congress