A000053
Tuesday, November 27, 2001 11:45 PM
Notice of Inquiry and Advance Notice of Rulemaking
Attachment 1:
November 26, 2001
Kenneth L. Zwick, Director
Office of Management Programs
Civil Division
US Department of Justice
Main Building, Room 3140
950 Pennsylvania Avenue NW
Washington, DC 20530
Dear Mr. Zwick:
This will serve as my submission of comments on the implementation and rule-making aspect of the September 11th Victim Compensation Fund of
2001 legislation. I am in possession of a nine-page document issued by your Division entitled "Notice of Inquiry and Advance Notice of Rulemaking"
(hereinafter referred to as the Notice).
I write this as a professional economist who has been engaged in the field of forensic economics for over fifteen years. I serve as of the National Association of Forensic Economics (NAFE), and I am Professor of Economics at where I have
served on the faculty for over thirty years. I have authored more than 1,000 damages reports in litigated matters and have testified at more than
500 trials and depositions as an expert witness and qualified economist. (I will not take up any more space regarding my background and qualifications to speak to the issues contained in this letter. My qualifications profile is available upon request should anyone in your office require a copy.)
Regarding Topic #4, Procedures to assist an individual in filing and pursuing claims under this title, your notice states that "the Department believes
that it is important that claimants be able to proceed without economic experts." I suppose the thinking here is that both money and time can be
saved by not utilizing economic experts. However, there has been discussion among members of NAFE who want to do their part in addressing the
events of September 11th by providing pro bono services to disaster claimants on a timely basis. Hence, I think it would be a mistake to rule out
the use of economic experts. Instead, the Department could compile a list of acceptable experts who would be willing to provide pro bono services.
Alternatively, perhaps the Special Master would want to permit the charging of fees by economic experts but at a reduced "public service" rate. I
know that when I do work for municipalities, there is usually a request to be charged a fee lower than my standard rate and I am willing to oblige.
The same could be applied to the September 11th filings. Furthermore, all of this could be done by having the Special Master engage the expert who would work on behalf of the court instead of individual litigants.
Regarding Topic #6, "Nature and Amount of Compensation," regarding the actual calculation of economic losses that may have been suffered by
claimants, it appears that the Department is well aware of the variables that can impact a damages calculation. To compensate survivors for their
losses, the underlying methodology should be the "make whole" principle so well established in case law. This implies, among other things, that
economists must limit themselves to calculating measurable economic losses. Typically, this includes measurement of lost earnings, lost fringe
benefits (including such elements as medical insurance and stock options), lost pension benefits, and the like.
But what is amenable to economic measurement does not have unanimity. For example, under New York State court rules, in death cases valuation
of loss of household services to spouse and children is permitted as is valuation of the loss of parental nurture, guidance and care to surviving
children. Economists routinely measure these losses. In contrast, under New Jersey rules, economists are regularly called upon to measure not
only parental nurture and care but also the value of lost companionship services as well as the loss of guidance and counsel to a decedent's
spouse. These losses are distinguished from non-economic damages such as consortium and emotional feeling because they are amenable to market equivalent replacements whereas emotional feelings are not.
Hence, the Special Master is faced with the prospect of having different components of loss measured in different venues, depending on the
geographic location of the decedent. Either the Special Master should allow prevailing state law to apply, or should establish universal damages
guidelines that would apply to all claimants. If the latter, which appears to be an even-handed policy, some claimants would then complain that
they are being "shortchanged" because their claim would have encompassed additional loss components had it been brought to court in their local jurisdiction.
Regarding documentation that should be required of every claimant, many of us forensic economists routinely use some version of what I call a
Fact-Finding Questionnaire in eliciting relevant information in preparing our damages calculations. It would be helpful to the Special Master to adopt
a standard format for this type of questionnaire as a reasonable way of gathering information from each and every claimant. Consultation with
several economic experts would be a fruitful approach to developing such an instrument.
For those "individuals whose lost future income streams would have been highly contingent, variable, or unpredictable" (Notice, p. 8), forensic
economists often encounter this problem. Generally, we rely on the past earnings performance of an individual. If that performance has been
variable from year to year, the economist would be wise to take an average, which would incorporate good and bad years, to develop a reasonable
projection of future earnings losses. My point is that there are reasonable methodologies that can address this difficulty without being characterized as speculative.
Regarding "Collateral Sources," most state courts recognize that Social Security survivors payments should be subtracted from claimed damages.
At the same time, virtually all states remove from consideration any proceeds from life insurance policies. Furthermore, I have never seen
charitable contributions received by a family considered to a collateral source offset. Neither are in-kind payments such as those provided by family members considered collateral income sources.
In short, I think that the Special Master can take some steps to standardize procedures, but must face the fact that damages claims by September
11th claimants will vary in substantial ways, depending on the employment history of the victim, family structure and size, place of residence, and
other variables that must be considered in arriving at a fair valuation of losses. Like many of my colleagues in the field of forensic economics, I stand ready to assist in whatever way would be helpful to the Special Master.
Sincerely,
Individual Comment
South Orange, NJ