W000756
November 26, 2001
VIA EMAIL AND OVERNIGHT MAIL
DELIVERY
September 11th Victim Compensation Fund of 2001
Note of Inquiry and Advance Notice of Rulemaking
U.S. Department of Justice
950 Pennsylvania Avenue, NW Room 3140
Washington, DC 20530
Re: Comments to the Notice of Inquiry and advance notice of rulemaking
for the September 11th Victim Compensation Fund of 2001 Dated
November 5, 2001
To the Office of Management Programs:
Please accept our comments to the advance notice of rulemaking for the
September 11th Victim Compensation Fund of 2001 offered for public review on
November 5, 2001. We provide these comments as a leading global financial services
firm headquartered in New York with over $42 billion in stockholder equity and over
$799 billion in assets.
Our perspective on the Fund, and specifically its system for processing and
compensating the victims of the September 11 attacks, comes from our extensive
knowledge and operational experience in the administration of large and complex trusts
and what is entailed in carrying out a massive compensation project. It is based on our
200 years of experience in providing trust and payment services to clients. Trust and
fiduciary services are a core competency of the Firm and JPMorgan currently manages
over $2.2 trillion in trust and custodial assets. We are administering the $5
billion National Tobacco Grower Settlement Trust, which makes annual payments to nearly one
half million tobacco growers and quota holders. We regularly assist in numerous
settlement payment requirements arising from complex litigation.
As an institution, JPMorgan is deeply committed to providing whatever assistance
or resources we have toward the effort of serving victims of the September 11th terrorist attacks.
We believe this is an effort that must succeed for the sake of our community and the nation.
Our experience in these matters indicates that design of the system is the absolutely
critical component to the successful administration of a large and public trust settlement.
The key is simplicity in design of the system. To be successful, the system implemented
here must rely on data management and data aggregation capacity, smart and
professional victim assistance counselors, multi-faceted outreach, and the ability to
transfer funds quickly and accurately.
Congress created the compensation fund as an alternative to litigation for victims
of the September 11th terrorist attacks. As the November 5th notice states:
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"Litigation to obtain damages, particularly in a massive tort
context, can be a lengthy, uncertain, process, filled with
substantial risk and expense. The purpose of this compensation
program is to offer all potential claimants a more expeditious,
predictable, and less complex alternative to that process."
We limit our comments to the fundamental operational decisions and practices
that will enable the Fund to meet the intent of the legislation -- delivery of compensation
payments to victims in an accurate, predictable and expedited manner.
The law requires a very rapid turnaround from the filing of claims to the payment
of compensation to victims who have suffered deeply from the extraordinary events of
September 11th. The legal deadlines can be met, but only if the guiding philosophy in the
administration of the Fund remains that it be a less complex alternative to litigation. To the degree that decisions are made that move away from more standardized practices, the Fund will approach litigation in complexity. Operationally, the number of claim disputes will increase, limiting the Fund's ability to rapidly distribute payments.
At JP Morgan we appreciate the opportunity to contribute our experience in trust
management to this process of determining how to rapidly distribute assistance to those
who were harmed, to minimize the incidents of disputes, and to ensure that the Special
Master is able to discharge his responsibilities in time prescribed in the law and in a
manner which will provide maximum benefit to the victims while minimizing the administrative
costs.
Topics # 1 and 2:
The Forms To Be Used in Submitting Claims Under This Program and the
Information To Be Included on the Claims Form
Claims forms should be designed to elicit the necessary information without
being complex and confusing. They need to support a transparent system based on careful
cataloging and assimilation of documents , thereby allowing the Fund to make quick and
accurate payments to eligible victims. Fundamental to the design of these forms must be
compatibility with existing data management systems. Accurate determinations to the key
questions of whether the claimant was physically present and whether the claimant suffered
physical harm will require supporting third party documents. To meet the twin goals of speed and accuracy these documents must respond to precise questions designed
to provide the essential data supporting the claim so as to require a minimum amount of
document interpretation.
The unique and terrible nature of this tragedy means that many claims should be easily
determined. This requires a form designed to expedite processing and permit speedy awards.
Our recommendation is that forms be designed so the complexity of various claims can be easily differentiated, thereby allowing awards to be made more quickly in the simpler cases. It is essential the system be viewed as fairly and openly administered and that the basis for awards can be easily understood.
CLAIM FILING PROCEDURE
For efficiency and to address the question of when the 120-day determination clock begins, the
Special Master should not be part of the claim filing process. Rather, claim filing should be
considered a two step process. The first step would be a review of claim forms for completeness
and accuracy by a third party. The second step would be the forwarding of the claim forms by
the third party, after they are deemed ready, to the Special Master. Only when received by the
Special Master would they be considered officially filed and trigger the 120-day determination period.
DESIGN FORMS
The form's design and the information to be included should adhere to the following principles:
Good data
It is absolutely essential that the forms capture the needed data. This will require
experience in system design and management based on the knowledge of what
information is critical and the capability to confirm the accuracy of the
information. Form design should avoid open-ended questions. Instead the forms'
design must produce very specific and exact data. Secondly, each data field
should request only one type of data to prevent multiple inputs of the same
information within the form, thereby avoiding the potential of discrepancies.
Standardization
The form design should be simple to complete and standardized to ensure that
the key data is captured for all claims. Instructions should be written in plain
language, not legalese. the design should also make data entry simple.
Additionally, the form should be divided into clear sections to again facilitate
data entry and information research. This will help accelerate classification and
preparation of claim report. Lastly there should be one common process with a
common set of forms, so that every claim includes the same information and
claimants are not confused by which form to file.
Machine readability
With such a tight timeframe and the need to keep consistent and accurate records,
it is extremely desirable to create a system with forms that can be scanned into a
computer system.
Transparency
A system design that focuses on simplicity and is easy to understand will stand up
to public scrutiny, eliminate confusion, and minimize disputes.
Predictability
An application system based on transparency, simplicity, and uniformity of
supplementary documentation will lend itself to fairness and predictability of
outcome. The claims certification process should be so predictable that any
person looking at an application would make the same judgment as to validity
of the application or the need for additional information
Designed to expedite awards/Pre-awards
The application should incorporate a design that would gather the fundamental
information up front so that you can provide qualifying victims a pre-award. In
other words, it is possible to design a system where especially needy victims who
have already suffered economic harm can receive interim relief. Supplementary
data can then be assembled to complete the application and determine a final
award.
Multi-lingual
The application design and information requirements should take into
consideration the needs of non-English speaking claimants.
Topic # 3
Procedures for Hearing and the Presentation of Evidence
With the large number of potential claimants and only 120 days to make determinations,
the system will need to have a reliable record system supported by documents requiring a
minimal amount of interpretation and so that the system avoids becoming subjective.
A properly designed application and certification process will minimize the
number of claims disputed as to qualification or amount of claim. Nevertheless, some
number of cases will simply be disputed. A quick and informed process of claim
presentation is necessary. The decisions should be quick and the relevant principles
immediately recorded as consistent with the standards and precedents defined at the
outset of the program. As an example of how a standardized, operationally sound
program can expedite claim payment and limit challenges, JPMorgan consulted with the
Commonwealth of Kennedy on a claim certification and dispute resolution program for
tobacco farmer claims. There were more than 140,000 valid claimants, and disputes were
heard in fewer that 150 cases, with funds being paid out for all claimants 90 days after
the applications were received. A timetable, like what is envisioned for the September
11th Victims Funds is complex, but doable.
Simplicity
The fewer the variables, the faster and more accurately the payments can be made
to claimants.
Speed
Direct and immediate payments will make clear that the September 11th Fund has
only one goal, rapidly providing assistance to victims. the process for submitting
evidence should be designed to expedite claim management, reduce the need for
third party assistance, and reduce the potential for fraud.
Access to Records
The compressed schedule will also put a premium on the need for accurate
records which are both readily accessible and easy to interpret.
Responsive and Accurate
The records system must have the capability to track and respond to pre and post
payment administrative issues. The Special Master needs to have confidence that
the right funds get to the right person.
Topic #4:
Procedures to assist an Individual in Filing and Pursuing Claims Under this Title
Outreach to the victims who are eligible for compensation must be professional,
comprehensive, and personal. Information about how to apply for compensation should
be shared with victims using all forms of the media. Claim applications need to be
straightforward. The staff who speak directly with the victims must be knowledgeable,
professional, and sensitive. A well designed outreach and victim's assistance program
should:
Keep forms simple and available
Forms should be easily obtained, understandable, and easy to complete.
Provide access to non-English speaking
The application process should be accessible to non-English speaking claimants.
Utilize a Website
A website should be designed and put up immediately to serve as an information
source for victims and to enable electronic filing of applications.
Public outreach meetings
Highly trained individuals should hold a series of informational meetings in the
metropolitan area to bring applications to victims and help them understand the
process.
Frequently Asked Questions
A list of frequently asked questions should be prepared as quickly as possible and
made widely available.
Media
The outreach campaign should make aggressive use of the media when the
program is launched to convey information and to encourage immediate
responses.
Disaster Relief Organizations
The Special Master should meet with the Disaster Relief Organizations who are
already responding to the tragedy both for victim outreach but also as part of the
design process for determining assistance from collateral sources.
Expertly staffed 800 number
Not everyone has internet access and an expertly staffed 800 number with
professionals who are capable of leading a victim through the application process
will be for many their primary interaction with the September 11th Victim Fund.
Computer tracking/Contact log
All interactions should be tracked and logged to keep clear and accurate files on
victims.
Topic #5:
Claimant Eligibility
The Special master needs to establish clear rules for determining claimant
eligibility and have in place definitions of "personal representatives" and a process for how to identity is determined. This is especially important with a rolling claim award program where applications and awards will not be all made at the same time. With this Fund, there is the potential that a claim could be awarded to an individual claiming to be the personal representative before the official personal representative even applies.
These personal representative determination rules can be reflected in the design of the application and the record management system. One component of the system should be a design to flag duplicative claimants for eligible individuals. Accurate record keeping for these cases is at a premium. In cases where there is uncertainty or a dispute over who is the appropriate personal representative of the victim, we would advise making a claim determination and holding the award payment in escrow.
Topic #6
Nature and Amount of Compensation
Based on our experience with the preference of beneficiaries in other trusts, the
Special Master may need to consider lump sum cash payments to the victims as their
preferred award option. There are potential advantages to such a system, although an
annuity plan may be the preferred course. In this special case, money gets to the victims
immediately. It would also enable the Special Master to complete the program faster.
Economic Loss/Noneconomic loss
In a program with such a large number of potential claimants, there is a strong
need to err on the side of simple criteria, defining very finite standards which
include a manageable number of variables in regard to situation and amount of
claim. The system should asking open-ended questions calling for description as
opposed to using very specific questions designed to elicit clear data. As an
example a question which asks for a description of a victim's compensation will
not yield as complete data as questions designed to ask specifically about the
individual elements of a compensation plan. The goal should be to allow a
nearly immediate determination of the claim with the proper documentation
and information to minimize the need to exercise judgment or discretion as
to individual cases.
Fraud Prevention Measures
There are three principles our experience has shown are effective tools in
preventing fraud. First, create clear documents standards in the application
process. Second, make quick determination and awards where possible; and
third, offer financial advisory assistance to claimants after awards are made. A
balance must be struck between sufficient supplementary document requirements
and creating a process which is so onerous that potential claimants prefer the
alternative of litigation.
- Define acceptable documentation
- It is absolutely critical to establish at the front end what information is
required for an application and what will constitute acceptable
documentation to support the claim. Uniformity and standardization will
make it harder to manipulate the system.
- Build compatible data exchange with collateral source
- An experienced and sophisticated trust manager will have the capacity to
develop data exchange capabilities with other record keepers in order to
collaborate or fill in the information gaps in victim applications.
- Establish third party sources for immediate verification
- As part of the process for defining acceptable documentation, it is vital to
establish acceptable third party sources to facilitate the verification of
applications.
- Cross check data
- The data management system should automatically cross check the data
entered on forms with related data contained in supplementary documents.
For example, wages declared on the form should be cross-checked with
income filed on a 1040 form. Supplementary documents should also be
inspected for tampering.
- Quick determination to eligible victims with clear needs
- Quick determinations will demonstrate a commitment to distributing
payments to victims and will minimize the need for unnecessary
intermediary fees.
- Bring in team of investment advisors
- Though not explicit in the proposed rulemaking, the government should
consider the potential for post award fraud and how that can be
minimized. Victims who receive large compensation benefits may not be
prepared to manage those funds and may be vulnerable to bad advice. As
an operational issue, in addition to the data management and payment of
awards, JPMorgan strongly recommends that a team of qualified
investment advisors be offered as an additional victim's counseling
resource to help beneficiaries think through how to manage those funds.
JPMorgan appreciates the opportunity to submit comments for your review and
urges the Department to consider how these fundamental operational decisions will effect
the ability of the Fund to be a viable alternative to litigation by enabling it to expedite the fair and accurate delivery of compensation to the victims of this horrible tragedy.
Comments by:
JP Morgan