A000986
Sent: Wednesday, December 05, 2001 5:29 PM
Before the
UNITED STATES DEPARTMENT OF JUSTICE
Washington, D.C. 20350
September 11th Victim Compensation Fund of 2001 )
Notice of Inquiry and Advance Notice of Rulemaking )
66 Fed. Reg. 55901 (November 5, 2001) )
December 5, 2001
pappreciates the opportunity to comment on the Department of
Justice's Inquiry and Rulemaking regarding the September 11th Victim
Compensation Fund of 2001 (the "Fund") on behalf of the immediate family of
a victim of the September 11th terrorist attacks on the World Trade Center.
The Fund must focus on the long-term needs of victims and their families.
These needs, largely unaddressed by other sources, can best be met by a
uniquely designed compensation scheme like the Fund. To encourage eligible
individuals to participate in the Fund and thereby forego litigation, the
rules should ensure that the categories and amounts of compensation awarded
through the Fund for both economic and noneconomic losses reasonably
approximate what would otherwise be available to similarly-situated
claimants in state courts.
Economic Losses
Each family directly affected by the terrorist attacks will likely face
massive long-term consequences from the permanent loss of the household's
primary wage earner. The Fund should be used to alleviate the burden that
these families face in the absence of those contributing household members.
Though it is impossible to make the victims' families whole again,
accounting for future lost income and benefits can help provide families the
financial means to continue their lives. The premature loss of a primary
wage earner can be particularly devastating for a young family that has not
yet had the opportunity to realize its plans or potential for long-term
financial security. The Fund must include mechanisms for estimating growth
in income and other economic resources over time, in order for surviving
family members to have meaningful opportunities for financial independence
commensurate with what they had prior to September 11th.
Long-term losses associated with the death of the primary wage earner have
not been addressed by private relief funds or other charitable
organizations. These resources, while valuable, are focused on providing
emergency relief in the form of immediate living expenses. Even if private
relief organizations decide to help meet the long-term needs of victims,
they are poorly equipped to do so. Private relief and other charitable
organizations are designed to aid in emergencies or through broad
discretionary grant programs. Neither means of financial assistance is
appropriate for addressing the long-term financial losses of thousands of
families. The Fund is in the unique position of being able to effectively
aid victims' families by using its specialized resources to focus on a need
that is not otherwise being met.
The Fund is designed to "provide a no-fault alternative to tort litigation"
for victims who are willing to waive their right to pursue civil action. 66
Fed. Reg. 55901. In order to be a true alternative to a wrongful death or
negligence action, the Fund should compensate victims for long-term losses.
Wrongful death suits regularly involve damage awards that include lost
future income and benefit streams. If the Fund is to be a successful
alternative to litigation, the benefits awarded must be comparable to those
reasonably predictable through litigation. There must be an incentive for
claimants to waive their rights to pursue civil actions. If the recovery is
limited to shorter-term compensation, or the process is too cumbersome or
speculative, victims' families will refuse to participate in the process,
negating a principal purpose of the Fund. In this same vein, however,
claimants should not all receive the same types or amount of compensation.
Civil damages arise out of an attempt to quantify actual loss to the injured
party. The Fund must attempt to make the claimants whole by acknowledging
the disparate financial contributions that the victims were making before
the attacks.
A straightforward calculation can be used to determine a baseline for
compensation amounts. The Maryland accounting firm of Regardie, Brooks &
Lewis suggests the following process. The calculation should start with
lost wages only. Apply an annual growth rate based upon the consumer price
index and factoring in a conservative estimate representing merit raises and
other salary increases to the base salary being earned in 2001. Apply this
growth rate to the 2001 salary for a number of years equal to the difference
between age at death and the projected retirement age for the victim's
generation. Discount this cash flow stream back to the present value using
an appropriate interest rate, such as the applicable federal rate for
determining the present value of an annuity. Apply a similar growth rate to
the amount of fringe benefits, such as employer retirement plan
contribution, medical insurance, etc. and again discount back to present
value. Add these two numbers to determine a minimum one-time compensation
amount. Finally, factor in federal and state taxes, depending on the
taxability of the award.
Noneconomic Losses
Avoiding litigation is a noble goal in that it seeks to avoid costs, time
delays, and risk for victims already profoundly burdened by the aftermath of
the events of September 11th. Survivors of attack victims should be able to
avoid such problems by waiving their right to a day in court. To protect
and provide comfort to survivors who decide to forgo litigation by seeking
compensation through the Fund, amounts awarded under the Fund must
incorporate all categories of noneconomic loss currently available through
traditional litigation. While some reasonable adjustment for reduced risk
and delay may be appropriate, ensuring comparability of awards granted under
the Fund and in the courtroom will help eliminate uncertainty and encourage
reliance on the Fund. The rules regarding the Fund should reflect this
commitment to consistency with prevailing judicial practices.
The regulations must also expressly provide that similarly situated
claimants will receive similar treatment by the administrators of the Fund.
Noneconomic loss determinations are, by their nature, subjective. To
further reduce uncertainty and promote participation in the Fund, we urge
the Department to ensure that the rules require that the methods and
criteria for determining compensation for noneconomic losses be applied to
all claimants in a consistent manner. Of course, as with all types of
compensation available through the Fund, hearing officers or the Special
Master should be able to adjust the outcome for each claimant, so long as
such outcome is rationally related to the claimant's individual
circumstances.
Respectfully submitted,
Individual Comment
Washington, D.C.
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