N002525
January 18, 2002
Kenneth L. Zwick, Director
Office of Management Programs
Civil Division
U.S. Department of Justice
Main Building
Room 3140
950 Pennsylvania Avenue NW
Washington, DC 20530
Dear Mr. Zwick:
I am a plaintiff's attorney with an office in Westborough, Massachusetts. Enclosed are
my personal comments on the proposed regulations for the Victim's Compensation Fund.
The "presumed" awards are grossly unfair and undervalued. By way of example, the
award for a forty-five year old man earning $125,000.00 a year with one child is $1,384,000.00.
As you are well aware, in the Lockerbie case, received a verdict of
$19 million. I suspect that Attorney and other aviation attorneys will be prepared to file
suit against the airlines and that verdicts for the September 11, 2001 tragedy will easily exceed
the Lockerbie verdicts. Even if we look to statistics kept on jury verdicts and use " conservation
values, "the presumed awards are grossly unfair. Enclosed is a printout of an independent
evaluation prepared on Jury Verdict Research software. I am informed that some insurance
companies utilize this software as a basis for "conservative" settlement awards. The projected
award for a forty-five year old man earning $125,000.00 a year with one child is $4,983,000.00.
As you know, the Fund is supposed to cover economic and noneconomic damages (including
hedonic damages). Government and Economic studies have put the value of life at between
$9 million and $13.4 million1
Tragically, children from Massachusetts who lost parents on September 11, 2001 will be
denied fair compensation. Under Massachusetts law, if the decedent is survived by a wife and
two minor children, any proceeds form a wrongful death claim are paid one third to the wife and
two thirds to the minor children. Massachusetts General Laws Chapter 229 §1
1 The 1979 Viscusi Study Determined a value of life at $3.6 to $4.8 million. The 1981 Viscusi Study
put the value at
$9.0-$13.4 million (see attached table form The New Hedonics Printer for Economists and
Attorneys (1996)
A guardian ad litem is often appointed to take responsibility for the settlement proceeds
awarded to the minor child. In many cases a structured settlement will be approved to fund the
minor's education. The minor's money cannot be spent by the parents and the settlement
proceeds earn interest tax free.
One of the main purposes of the Victims's Compensation Fund is to save the families
from reliving the horrific events of September 11 and to provide fair compensation. The
regulations further provide that the Special Master shall review the plans submitted by the
Personal Representatives to be certain that ample funds are paid to the spouse and children. It
seems clear that Congress intended to provide fair compensation to a victim's children
However, because the new set of regulations is different than the first set of proposed
regulations, it appears to me that the regulations have created certain vagueries and ambiguities.
As a result, many young children will not receive any collateral source benefits or any
compensation from the Victim's Compensation Fund.
As originally proposed, the regulations specified that collateral source payment would
be deducted only from the beneficiary who actually received the collateral source payment. Now
that the rules have eliminated this proviso, many children who lost their parents may now receive
nothing form the Fund. To prevent this injustice, the rules must clarify the distinction between
"personal representatives," "beneficiaries" and "claimants." Here are two examples of how the
collateral source payment provision can be interpreted to deny compensation to children who lost a
another or father in the September 11 tragedy:
EXAMPLE 1
1. On September 11, 2001, Mr.X was insured for $1.5 million. However, since
Mr.X was an attorney in partnership with his brother, Mr. X named his brother as the
beneficiary of the policy. Furthermore, since Mr.X's brother is an attorney, Mr.X named his
brother as the executer under the will. Mr.X was forty-five years old; he had two children
and he was earning $100,000.00 a year.
Under the Fund, the "presumed" award would be approximately $1.5 million. However,
since his brother received $1.5 million in insurance, there would be no payment to the wife and
no payment to the children under the Fund. Since the presumed award is zero, there is no "plan"
to be submitted to the Special Master and therefore the Special Master would not even have an
opportunity to step in and undo this injustice. However, if the regulations specified that the
collateral source payment would be deducted only from the beneficiary who received the
collateral source payment, then the $1.5 million "presumed" payment from the Fund would be
payable to the brother as "executor." Under Massachusetts law the brother would not receive
any of the money form the Fund. However, as executor, he would be required to pay one third to
the wife ($500,000.00) and two thirds to the children ($1,000,000.00).
Obviously, Congress did not intend to deprive the victim's wife and children of any
compensation under the Fund simply because the decedent had a life insurance policy payable to
his brother. In these types of cases the provisions of the Fund and the regulations will force the
wife and children to file suit against the airlines (as their only source of compensation).
EXAMPLE 2
2. Similarly, if the decedent's 1.5 million life insurance policy is payable solely to
the wife, then the children will not receive any compensation from the Fund.
The current regulations would be construed as follows:
If the wife received $1.5 million in life insurance, then neither the wife nor the children
would receive anything under the Fund. However, under Massachusetts's law, if the wife and
children were awarded $1.5 million for the decedent's wrongful death, then the wife would
receive $500,000.00 and the two children (through a court appointed guardian) would receive
$1,000,000.00.
If regulations clearly stated that the collateral source payment would be deducted only
from the beneficiary who received the payment then the injustice would be corrected and the two
minor children would receive $1,000,000.00 from the Fund. Since the wife received $1.5 million in
insurance, she would not receive any payment from the fund.
In other words if we assume that the benefits form the Fund to be paid to a personal
representative would be $1,500,000.00, then the deduction for collateral payments should work
as follows:
Wife Child
"Presumed" benefit: $500,000.00 $1,000,000.00
Collateral payments: (-$1,500,000.00) No collateral payments
paid directly to child
Payment form the Fund: [Zero] $1,000,000.00
As a nation, we must be certain that any child who lost a mother or father on
September 11, 2001 will be financially secure. These children will live their lives without the
care, comfort, guidance and support of a parent. Under the current regulations, just because the
decedent's brother or his wife received a payment form a life insurance policy, a young child
may not be able to collect any money from the Fund. As a result, the children of this tragedy
may have no choice but to file suit against the airlines and be forced to litigate and relive the
death of a parent.
Please be certain that the regulations are clarified so that collateral benefits are deducted
only from the beneficiary who actually received the collateral source payment. We must protect
the children who are the true victims of the terrorists.
Very truly yours,
Individual Comment
Westborough, MA
ECB/JS
Enclosures