W000487
Wednesday, November 21, 2001 5:50 PM
Regulations implementing the September 11th Victim Compensation
A ct
Kenneth L. Zwick, Director
Office of Management Programs
Civil Division
U.S. Department of Justice
Dear Mr. Zwick
Thank you for requesting comments on the proper content of regulations that
will implement the provisions of the statute creating the September 11th
Victim Compensation Fund (http://www.house.gov/mthompson/hr2926text.htm).
The swift passage of this statute regrettably resulted, as you no doubt are
aware, in provisions which pose very serious questions and problems, which
should be clarified and redressed to the extent possible by the implementing
regulations or if need be by amendments to the statute.
(1) Is the new federal action provided in section 408(b) exclusive of any
possible state tort action, or only of any other possible federal action?
Section 408(b)(1) states "this cause of action shall be the exclusive remedy
for damages arising out of the hijacking and subsequent crashes of such
flights." Read literally as globally applicable, this would exclude any
possible state tort action as well as any other federal cause of action.
But the preceding phrase "Notwithstanding section 40120(c)of title 49,
United States Code," is a reference only to remedies under the federal air
commerce and safety statutes. So an argument can plausibly be made (if not
clearly contradicted by legislative history?) that the exclusivity language
should be read as being limited to the context of section 408(b), that is,
as creating an "exclusive (federal) remedy," so that the newly created
federal action is not exclusive of possible state court actions, but only of
other possible federal actions. Given other major problems noted below, if
at all possible it should not be read as being exclusive of possible state
court actions, or else many valid claimants under state tort law will be
denied any chance of recovery without any alternative recovery under the
compensation fund, which would seem to be a clear violation of due process.
(2) The narrower exclusivity interpretation discussed in (1) above also
seems suggested by the limitation on civil actions enacted in section
405(c)(3)(B), which states that a claimant who submits a claim under the
federal compensation scheme "waives the right to file a civil action (or be
a party to an action) in any Federal or State court . . . ." There would be
no need for such a broadly stated waiver if the the newly created federal
action were the exclusively available court action, especially since a
single court, the federal District Court for the Southern District of New
York, is given original and exclusive jurisdiction over all claims under the
newly created federal action.
(3) The limitation provision itself literally creates a very serious
potential due process problem. Read literally, it makes the filing of any
claim an automatic waiver of the right to institute or join a court action
(other than for collateral source payments) in any federal or state court.
Yet, when an individual files, he or she does not yet know whether he or she
will be determined to be an "eligible individual," much less how much he or
she might be expected to receive from the compensation fund. Those who are
found (after having filed a claim) not to be "eligible individuals" thus
will be denied any possibility of compensation, through the fund or through
court actions, which would seem to be a clear denial of due process. To
avoid this draconian and presumably unintended result, all initial filings
should be deemed conditional filings, conditional upon a determination that
the claimant is an "eligible individual," or there should be a pre-screening
process prior to formal filing in which individual eligibility can be
confirmed (or denied).
(4) Read literally (again), under section 405, claims under the compensation
fund may only be filed and paid for harm suffered by the physically injured
or deceased individual, rather than in addition for (economic and
noneconomic) losses suffered by that individual's survivors (spouses or
other significant others, relatives, dependents, etc.) The claim by the
personal representative of a decedent seems to be solely a
"Survival"-statute-type action "filed . . . on behalf of the decedent,"
which preserves for the decedent's estate any claim the decedent herself
would have had for her own economic and noneconomic losses. Although the
purpose section, section 403, states that the statute's purpose is to
"provide compensation to any individual (or relatives of a deceased
individual) who was physically injured or killed," the reference to
"relatives" is limited to relatives of deceased (rather than also injured)
individuals, and thus seems meant merely to recognize the survival of the
decedent's own claim for harm suffered by the decedent as a claim that can
be brought by his "personal representative," which presumably will inure to
the benefit of the decedent's surviving relatives. But, if the compensation
fund is so limited, and thus provides no means of compensation for (economic
and noneconomic) losses suffered by relatives themselves as a result of the
injury or death of the "eligible individual," it would be a clear denial of
due process to shut the courthouse doors to the relatives, who have Wrongful
Death actions for their own losses, independent of the losses suffered by
the "eligible individual," under state laws. Thus, it definitely SHOULD NOT
be a requirement, for a filing of a compensation fund claim by any "personal
representative," that the personal representative first obtain from every
relative a waiver of the right to bring a court action for their own
injuries. Moreover, there is no warrant in the statute for any such
requirement. (Note that relatives of injured "eligible individuals" clearly
do not have to agree to such a waiver before the "eligible individual" can
file a claim. Why should relatives of deceased "eligible individuals" be
worse off?) There is a need to have a resolution of who, among possible
competing individuals, should be deemed the "personal representative," but
that is a distinct thorny issue which should not be merged and confused with
the waiver-of-civil-claims issue, as it seems to be in the request for
comments.
(5) The substantive law to be applied in the newly created federal action is
clear under section 408(b)(2): it is the law "of the State in which the
crash occurred." But it is not clear with respect to the claims under the
compensation fund. Section 402(5) defines "economic loss" to mean "any
pecuniary loss resulting from harm . . . to the extent recovery for such
loss is allowed under applicable State law," and thus seems to envisage
(unspecified) state law being applied. However, the reference to
"applicable State law" does not appear in the very broad definition of
"noneconomic losses" in section 402(7). It would be desirable, if possible,
to have a uniform definition of economic and noneconomic losses which would
not vary in each case depending on the myriad factors that enter into state
choice-of-law rules.
(6) I don't see any statutory authorization or warrant for limiting
"physical harm," as required for filing a claim under the compensation fund,
to "serious" physical injury. The only rationale offered for possibly doing
so in the request for comments is the very tight statutory time period (120
days) in which filed claims are required to be processed. But that
unrealistically short statutory time period does not justify or authorize a
limitation on claims not specified by the statute itself, especially given
the other limitations on those claims, noted above. (If such a limitation
were adopted, those who did not suffer "serious" physical injury would have
to, and presumably would be able to, file a court action in either state or
federal court--all in the federal District Court for the Southern District
of New York if the newly created federal action is deemed to be the
exclusively available tort action).
(7) Similarly, despite the very tight time frame for processing claims, I
don't see any statutory authorization or warrant for using a fixed schedule
of damages, rather than individual claim-by-claim determinations, in
assessing and awarding compensation for economic and noneconomic losses as
required by the statute. Section 405(b)(1)(B)(ii) of the statute explicitly
states that the Special Master shall determine "the amount of compensation
to which the claimant is entitled based on the harm to the claimant, the
facts of the claim, and THE INDIVIDUAL CIRCUMSTANCES of the claimant."
Moreover, the definitions of "economic losses" and "noneconomic losses" in
section 402 are extremely broad, encompassing "any pecuniary loss" and all
"nonpecuniary losses of any kind or nature," which can accurately be
assessed only through individual consideration. In apparent recognition of
the need for individual consideration to assess inidividual harm and
resulting individual losses, section 405(b)(4)(B) gives the claimant "the
right to present evidence, including the presentation of witnesses and
documents," during the Special Master's review of the filed claim. While
uniform criteria, factors, guidelines, etc. would be desirable, a fixed
schedule of damages would be contrary to the letter and spirit of the
statute.
(8) The requirement, in section 405(b)(6), that the amount of compensation
under the compensation plan be reduced "by the amount of the collateral
source compensation the claimant has received or is entitled to receive," is
both a can of worms and a potential source of great unfairness unless it is
properly narrowly interpreted. The request for comments asked if it would
be possible to exclude charitable contributions from the definition of
collateral sources. But the problems are much broader than that:
(a) There will be serious fairness and due process problem if collateral
source payments are deducted even if the collateral source has a subrogation
right which could be exercised to obtain reimbursement from the compensation
provided by the compensation fund, thus resulting in a double deduction.
The regulations should specify that funds obtained from the compensation
fund are not subject to subrogation rights. (But would this raise a
constitutional "impairment of contract" claim by the collateral source,
especially since the compensation claim constitutes a waiver of any court
claim?). Moreover, the "entitled to receive" language should be interpreted
quite narrowly to encompass only those collateral source payments which
clearly will be forthcoming.
(b) As under the usual practice in court, collateral source deductions
should be made only for collateral source payments that cover specific items
of economic and noneconomic loss that are also compensable under the
compensation fund.
(c) Under the literal language of section 405(b)(6), but also consonant with
fair compensation principles, only collateral source compensation that the
CLAIMANT HIMSELF has received for compensation for HIS OWN economic and
noneconomic losses due to his injury or death can be deducted from the
compensation under the compensation fund. Compensation or funds received by
spouses, children, etc., rather than by the "eligible" injured individual
(or the "personal representative" of the "eligible" deceased individual for
losses suffered by the "eligible individual"), are not subject to deduction
under the literal language of section 405(b)(6), nor should they be given
the broad remedial purposes of the statute (and the liberal compensatory
interpretation usually given by courts to alternative compensation schemes).
Indeed, deducting compensation or funds received by spouses and children of
the "eligible individual" to remedy their own distinct economic and
noneconomic losses suffered as a result of the injury or death of the
"eligible individual," when (apparently) those individuals are not allowed
to make claims against the compensation fund for their own distinct economic
and noneconomic losses (see item 4 above), would constitute a grossly unfair
denial of due process and an unconstitutional taking of private property.
Individual Comment
Chicago, IL