W000642
Wednesday, November 21, 2001
Comments on Notice of Inquiry and Advance Notice of Rulemaking
Dear Mr. Zwick:
The bifurcated approach as indicated in comment W000413 by the General Counsel of
Keefe, Bruyette & Woods, Inc. has a great deal of merit as do a great many of the other 400
plus responses to date. These responses indicate a great deal of pain and suffering.
In these comments I would like to focus on those who suffered the most, i.e. the 3,000
plus who lost their life and those that they left behind. I would like to suggest a possible
simplified and fair claims approach for the economic loss of earnings for each deceased
member of this group. This is only one loss under the category of economic losses.
The economic compensation for each estate might utilize the following formula:
A = X (65 - Y) - Z
where A equals the Award for economic loss of earnings
X equals total 2001 annualized employee compensation or in the case of self
employed their net profit from Schedule C of Form 1040 for the year 2000 plus contributions
for their pension and profit sharing plans.
Y equals age at last birthday
Z equals collateral amounts received as ultimately interpretated under the law
If the deceased were a 45 year old employee earnina an annualized salary and
bonus of $80,000 during 2001, and had a employee term insurance policy of $200,000 and no
other benefits, the award might be:
A = $80,000 (65 - 45) - $200,000 or
A = $1,400,000
A floor for these types of losses might be $1,500,000. If that amount were the floor,
then the award solely for loss of earnings would be increased to this higher amount.
This analysis assumes that the annual rate of increase in compensation or earnings exactly
equals the discount rate that would be utilized to obtain a net present value for the future stream
of these earnings or compensation. While it would appear that this assumption is biased against
the decedent's estate, under this simplified approach it might be acceptable.
While this is admittedly an overly simplistic approach to something extremely
complicated, it appears to work reasonably well. It also serves two very important
considerations: 1) Those who decide to waive their rights and proceed under the Fund will
have ample notice of the consequences of their decision and 2) It treats all members in the class
fairly by removing the "needs" analysis which has proven unworkable.
If this doesn't provide an acceptable monetary award for the loss of earnings, then the
alternative approach as outlined in comment W000413 could be utilized for those special
situations that require more analysis, documentation and hearings.
Thank you.
Individual Comment
Hackensack, NJ