W000654
Monday, November 26, 2001 4:24 PM
EY Comment: Notice of Inquiry (66 Fed. Reg. 55,901) [WatchDog
checked]
Dear Mr. Zwick:
Attached please find Ernst & Young's comments in response to the Department
of Justice's Notice of Inquiry and Advance Notice of Rulemaking (66 Fed.
Reg. 55,901 (Nov. 5, 2001)), regarding the development and implementation
of a program to provide compensation to victims of the September 11, 2001,
terrorist attacks.
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November 26, 2001
Kenneth L. Zwick
Director, Office of Management Programs
Civil Division
U.S. Department of Justice
Main Building, Room 3140
950 Pennsylvania Avenue
Washington, DC 20530
victimcomp.comments@usdoj.gov
September 11 Victim Compensation Fund of 2001
Notice of Inquiry and Advance Notice of Rulemaking,
66 Fed. Reg. 55,901 (November 5, 2001)
Dear Mr. Zwick:
This letter is in response to the Department of Justice’s Notice of Inquiry and Advance Notice of Rulemaking (66 Fed. Reg. 55,901 (Nov. 5, 2001)) (the "Notice"), seeking public comment on the development and implementation of a program to provide compensation to victims of the September 11, 2001, terrorist attacks.
Ernst & Young is a leader in providing accounting, assurance, and information technology services around the globe, with 84,000 employees based in 130 countries. Of particular relevance to the Victim Compensation Fund, Ernst & Young performs accounting, internal audit, claims compliance audits, and tax services for several large class action settlement funds across the country.
Our comments are directed to the proposed claims process, eligibility requirements, and compensation determination methodologies.
Claims Process
As outlined in the Notice, the Air Transportation Safety and System Stabilization Act (the "Act") requires the Special Master to make a final determination on any claim within 120 days of its receipt, and, if an award is made, to authorize payment within 20 days thereafter.
To comply with the time frame established in the Act, the Special Master may want to establish a process that expedites claims adjudication, allowing, in certain cases, for claims to be decided on the basis of a paper record (the claim form and other written evidence), without the need for a hearing. If this is the case, claims forms must be designed to provide all of the information that is needed to adjudicate the claim and to determine an award. At the same time, it must be easy for the claimant to understand and follow. To accomplish this, the individuals designing the claims process must coordinate with those designing the forms from day one. It has been our experience that such an integrated approach, in which process and form designers work in tandem, accelerates implementation and avoids potentially confusing, misleading and disjointed claims procedures and forms.
Eligibility Requirements
Given the large sums of money to be disbursed by the federal government as a result of the Act, there exists a high likelihood of individuals claiming awards based on false or fraudulent information. One’s presence at the World Trade Center, the Pentagon, or Shanksville, PA "at the time, or in the immediate aftermath" of the terrorist attacks may be very difficult to prove or disprove.
Additionally, any regulations should clearly define terms such as "physical harm," "at the World Trade Center," and "in the immediate aftermath," to name a few. To deter bad actors, the claims forms should clearly communicate that the Justice Department will prosecute individuals who submit fraudulent claims, and require a statement, signed by the claimant or his representative, stating that all of the information being submitted is factual to the best of his or her belief and knowledge.
Furthermore, provisions should be made, under the supervision of the Special Master, to verify information contained on the forms. Procedures should be designed that are both comprehensive and sensitive to the claimant, and allow for random auditing of claims, with special emphasis placed on exceptionally large awards. Finally, potential claimants should be advised that their forms might be selected for audit.
Nature and Amount of Compensation
Section 405(b) of the Act indicates that the Special Master shall determine the amount of compensation based on "the harm to the claimant, the facts of the claim, and the individual circumstances of the claimant." As the Notice suggests, this will be difficult to accomplish in a detailed, consistent fashion given the potentially large number of claimants and the short 120-day period in which determinations must be made.
We believe that a fair and consistent methodology for determining compensation can be developed using statistical and actuarial techniques. Matrices set up to determine compensation based on the information provided in the claims forms would serve many purposes, including: treating each claimant consistently within the guidelines as determined by the Special Master, reducing the emotional subjectivity that could arise by providing a framework for fairness, and expediting the process in light of the time constraints established by Congress. Several large class action suits have used this methodology very successfully in determining claimant awards. Publication of such matrices would further assist potential claimants in determining whether to apply for compensation from the Fund.
Use of a matrix system for determining compensation would not unduly limit the Special Master’s flexibility. Even with such matrices, hearing officers would need to weigh individual factors when making a compensation determination. Moreover, after notifying a claimant of an initial determination, a claimant could request a hearing to present additional information.
We appreciate the opportunity to submit these comments. If you need additional information or if Ernst & Young can be of any further assistance, please don’t hesitate to call me at .
Sincerely,
Comment By:
Ernst & Young