N002580
Mr. Kenneth L. Zwick, Director
Via Fax (301)
519-0699
Office of Management Programs
Civil Division
U.S. Department of Justice
Main Building, Room 3140
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530
Dear Mr. Zwick
As you know, the purpose of the Fund is to compensate the families of the victims (hereinafter
"heroes")
of September 11, 2001 according to Title IV of the Airline Bailout Legislation. However, the
regulations
promulgated to compensate the families of the heroes of September 11, 2001 are inconsistent and
self-
serving.
ECONOMIC LOSS:
The intent of Title IV is to compensate each and every individual for economic loss defined as
"any
pecuniary loss resulting from harm (including the loss of earnings or other related benefits related
to
employment...) to the extent recovery for such loss is allowed under applicable State law."
However,
the
regulations serve to provide two inconsistent "methodologies" to calculate economic loss.
Using outdated national statistics, the Fund created presumptive compensation charts for all of
the
victims
that earned annual income less than the top 2 percent of wage earners ($231,000.00). Forensic
economists have reviewed these charts and have determined that fundamental economic
principles were
disregarded in the calculation of economic loss. While these figures are arguably wrong, the
charts do
allow each family in this class to review the presumptive compensation applicable to their loved
one,
and
if satisfactory, to accept such compensation.
On the other hand, the Fund had failed to provide presumptive compensation charts for all of the
heroes
that earned annual income in excess of $231,000.00. The Fund has justified their failure to
provide
presumptive compensation charts to these heroes by citing the Bureau of Labor Statistics inability
to
accurately calculate these figures. This is absurd and insulting. Forensic economists have
requested the
necessary data to determine these figures and have not been given this information to date.
The Fund has an obligation to provide consistent information to each and every family. This
inconsistency serves to put heroes into different categories, placing different sets of standards and
burdens
on them. This would go a long way in explaining the Funds' stated intent to reduce the disparity
of
awards between heroes.
In addition, the presumptive compensation charts designed by the Fund clearly state that for those
heroes
who received a salary that exceeded the top 2 percent of wage earners (as defined by the IRS for
the
year
2000), the Special Master will compute the presumed compensation based on an average income
equal
to
the minimum amount earned by the top 2 percent of wage earners (i.e. $231,000.00). This would
appear to
be a cap on the economic compensation of top 2 percent earners.
The Fund argues that this does not put a cap on economic loss because a family has the ability to
present
evidence that the $231,000.00 figure does not accurately reflect an individuals' true economic
loss.
This
is somewhat confusing. The best evidence a family can present to prove economic loss is the
true
salary
of the hero. However, the Fund proposes charts, graphs and historical presentations from the
heroes'
employer (and industry) to corroborate that an individual would have continued to earn the same
salary
they had earned over the past who knows how many years Why?
Moreover, once a family opts into the Fund to provide this evidence, they will be giving up their
right to
bring a tort action. In short, the family of a hero whose salary is capped by the Fund is in effect
told to take
it or leave it.
Clearly, an additional burden is placed on one class of individuals. This serves not only as a
example of
the inconsistencies in the regulations, but the effective inconsistencies in the calculation of
economic loss
that will result from the application of the regulations as they stand. The Fund need only create
compensation charts for all the heroes' families using the same methodology as the original charts
to
correct this problem. The failure to do so is suspicious and cannot be explained away with
statistical
analysis problems.
Again, the Fund has made it very clear that they have a political motive to reduce the disparity of
compensation to heroes' families. This intent serves no other purpose than to reduce the
economic
compensation of one class of individuals. It is not being implemented in order to provide more
compensation to another class of individuals. Therefore, the true benefit of this mind set is to
reduce the
overall compensation of the Fund. This is a contradiction of the true intent of Article IV.
As a practical matter, one should keep in mind that the individuals that will receive reduced
economic
loss due to the Fund's attempt to reduce disparity are the same individuals that paid the largest
tax bills
to the federal government annually. In short, there has always been disparity in the tax
obligations of the heroes
based on annual earnings. Why is the Fund concerned with a disparity in economic
compensation?
NON-ECONOMIC LOSS:
In addition to economic loss, the intent of Title IV is to compensate the families of the heroes for
non-
economic loss. Non-economic loss is defined as "losses for physical and emotional pain,
suffering,
inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life,
loss of
consortium (other than domestic services), hedonic damages, injury to reputation, and all other
non-
pecuniary losses of any other kind or nature."
The definition of non-economic loss is extremely general and outlines a series of issues to
be assessed by the
governing body. However, the Fund simple applied arbitrary compensation ($250,000.00 for
spouses
and $50,000.00 for dependants). These figures are widely regarded by forensic economists as
arbitrarily low compensation figures in comparison to generally accepted principles used to
measure
non-economic loss that the Fund chooses not to apply.
OFFSETS:
The Fund has used its unrestricted power to cap the economic loss of a hero whose salary
exceeded
the top 2 percent of wage earners (i.e. 231,000.00). In doing so, it is important to illustrate that
the
Fund would reduce the economic loss of an individual making $1,000,000.00 per year to
approximately 25% of true annual earnings. However, when implementing the multitude of
offsets that
the Fund has defined, there is no such reduction. If the Fund decided to interpret Article IV in a
manner that serves to cap the economic compensation an individual is entitled to receive,
wouldn't is be
consistent to reduce the offsets by the same percentage (in this example, 25% of total assets)?
In addition, although the statutes require the Fund to reduce the compensation to be received by a
family by the offsets, the Fund does have the discretion to apply these offsets in a manner that
would prevent a "net zero" compensation situation.
The Fund argues that it is prohibited from implementing a minimum compensation figure.
However, the
Fund has been offered many alternatives so that a minimum award would not be necessary. For
example, the Fund can apply the offset figure against economic loss figure only, leaving the
non-economic loss
as remaining compensation.
OPT IN/OPT OUT:
The Fund has created procedures that are in their best interest as administrators of the Fund. The
major deficiency with the procedures of the Fund is that the family of a hero must choose to opt
into the
Fund before the process begins. The family would have to opt in before presenting any evidence,
having a hearing and most importantly, before they learn the proposed compensation. Once a
family
opts in they are barred from bringing a civil claim.
The Fund argues that a family has a fairly good idea of their compensation level based on the
presumptive compensation charts. However, as stated above, the Fund has failed to provide
presumptive compensation charts for the heroes that earned annual income in excess of
$231,000.00.
Therefore, these families have no idea at all how the fund will apply the additional evidence they
require
to corroborate economic loss. Moreover, and more importantly, the families do not have any
idea how
the Fund will choose to compensate them based on this evidence.
CONCLUSION:
The regulations the Fund implemented are clearly not meant to compensate the heroes in
accordance
with intent of Title IV. As stated above, the regulations are intended to reduce the liability of the
Fund
under the guise of reducing the disparity of the heroes' families. This is what is inherently unfair
and self
serving. The Fund is urged to consider the issues above and make the necessary changes to
remain
consistent in the compensation of every family.
This written objection to the regulations promulgated by the Fund are based on the clear
discrepancy
between the intent of the legislation and its application. They do not even begin to outline the
moral and
ethical obligations the Fund have ignored.
Thank you,
Individual Comment