N002535
MMC
VIA FACSIMILE
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, D.C. 20530
Re: Comments of Marsh &McLennan concerning the Interim Final Regulations of the
September 11th Victim Compensation Fund of 2001
On December 14, 2001, in response to the Notice of Inquiry and Advance Notice of Rulemaking,
Marsh & McLennan Companies, Inc. ("MMC") submitted comments concerning the
development of regulations to administer the September 11th Victims Compensation Fund of
2001 ("The September 11th Fund"). MMC's interest in commenting was, and remains, to support
the families of the MMC employees affected by the September 11the terrorist attacks. We urged in
those comments, among other things, that charitable contributions and in-kind assistance be
excluded from the "collateral source" and that the Fund's application procedures be
simple and flexible. We appreciate your consideration of those comments concerning the recently
published Interim Final Regulations.
The Computation of Noneconomic Loss Under the Interim Final Regulations
The Air Transportation Safety and System Stabilization Act ("the Act"), incorporating terms
traditionally utilized to describe tort damages, defines, "noneconomic loss" as including:
...losses for physical and emotional pain, suffering, inconvenience, physical
impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of
society and companionship, loss of consortium...hedonic damages, injury to
reputation, and all other nonpecuniary losses of any kind or nature.
The Act charges the Special Master with responsibility for quantifying losses under this
definition, as a component of the overall damage award to be made to claimants. A procedural
framework for the Special Master to fulfill this descionmaking responsibility is proposed in the
Interim Final Regulations which, as a first step, establishes a "presumed award amount" for
noneconomic losses. Claimants an accept such presumed award amount, or reject it in favor of
Mr. Kenneth L. Zwick
January 18, 2002
Page 2
presenting evidence at a hearing to demonstrate that "extraordinary circumstances" justify
departure from such presumed award.
The "extraordinary circumstance" condition, for departure from the presumed award, is not an
evidentiary burden that is imposed by the Act itself. Inclusion of such requirement in the
regulations therefore, implies that the pressed award amount is intended, for the vast majority
of claimants, to reflect an approximation of full noneconomic damages. Neither the regulations,
however, nor the supplementary information accompanying those regulations, explain the nexus
between the presumed award amounts and the individual components of the Act's definition of
noneconomic loss. Potential claimants, therefore, will have difficulty making a reasoned
judgement about the adequacy of that presumed award amount. While the supplementary
information accompanying the regulations does state that presumed award amounts have been
derived from the amounts paid by existing federal programs to the representatives of public
servants killed in the line of duty, they do not state, or adequately demonstrate, that the sums
represent a fair measure of noneconomic loss under the Act's own definition.
MMC urges the Justice Department to give serious consideration to increasing the amount of the
presumptive noneconomic loss awards to be paid to victims' families. The existing presumed
award amounts do not appear to serve as an adequate substitute for the broad range of non-
economic damages included by Congress in the Act's own definition of noneconomic loss. In
addition, any presumptive award established should be supported by a carefully reticulated
explanation of the manner in which such amount was derived.
The Calculation of Economic Loss under the Interim Final Regulations
The current regulations provide, with respect to presumed determinations of economic loss
attributable to loss of earnings and other benefits related to employment, that "the decedent's
salary/income in 1998-2000 shall be evaluated in a manner that the Special Master deems
appropriate," and that "[t]he Special Master may, if he deems appropriate, take an average of
income figures for each of those three years."
We believe, that for virtually all MMC victims, the amounts earned in the most immediate past
(i.e. during the year 2000 and thereafter) most accurately reflect the current earnings of those
victims on September 11, 2001. The vast majority of MMC's victims earned a salary that
increased with period raises. MMC victims, in other words, did not have earnings patterns that
fluctuated wildly form year to year. Using a three-year average, therefore, for MMC. employees,
would unfairly discount the base earnings calculation for each such employee, and consequently
understate future earnings calculations. We respectfully request that the Justice Department
clarify the existing regulations to provide that three-year averaging will only be utilized in cases
in which the victim's earnings are determined by the Special Master to be prone to fluctuation.
Mr. Kenneth L. Zwick
January 18, 2002
Page 3
Application Procedures
The current application procedures require applicants to waive their right to file litigation before
those applicants have been provided with an estimate of the amount of the award they are likely
to receive from the September 11th Fund. We believe that it is appropriate for applicants to be
provided with a preview of their expected award prior to being required to irrevocably waive
their right to litigate. We are concerned that denying potential applicants such an opportunity
would act as a deterrent to those that might otherwise be inclined to make an application to the
Fund.
Collateral Sources under the Interim Final Regulations
MMC agrees with the determination, as stated in the supplemental information accompanying
the regulations, that amounts that a victim has accumulated in a 401k or similar salary deferral
plan will not be treated as collateral sources. Victims' families should not be penalized because
victims chose to defer the receipt of their salary. We also urge the Special Master to consider the
application of similar logic to the social security benefits payable to victims families and to
abandon the current plan to treat those payments as collateral source payments. As with 401(k)
plans, social security is contributory and pays a benefit that is, at least in part a function of the
amount of income deferred by a worker over a lifetime of employment.
We are also of the view that workers compensation payments should not be treated as collateral
source payments. While workers compensation requirements vary form state to state, in many
states, workers compensation payments end upon remarriage of the surviving spouse and when
children reach the age of majority. The present value of such workers compensation benefit,
therefore, cannot be calculated with any degree of precision and using such calculation as an
offset will unfairly assume that a contingent benefit is a permanent.
Finally, we are troubled that, as currently written, the regulations would make filing an
application with Fund an exercise in futility for certain families. Families that have received,
or may receive, collateral source payments that exceed, or almost equal, the available award
under the Fund will have no incentive to file an application with the September 11th Fund. This
would eliminate, for certain families, the only viable remedial alternative to litigation. MMC
urges the Special Master to remedy this undesired result by creating a minimum award amount
that will be paid to every family, without regard to payments received from collateral sources.
Mr. Kenneth L. Zwick
January 18, 2002
Page 4
Conclusion
MMC is grateful for the opportunity to provide these comments concerning the Interim
Regulations and appreciates the continuing efforts the Attorney General and the Special Master.
Sincerely,
Comment By:
Marsh & McLennan Companies, Inc.
New York, NY