N002607
Congress of the United States
House of Representatives
Washington, D.C. 20515
January 14, 2002
The Honorable Kenneth Feinberg
Special Master
September 11th Victim Compensation Fund
U.S. Department of Justice
Washington, D.C. 20530
Dear Mr. Feinberg:
I am writing to provide comment on the interim final rules for the September 11th Victims
Compensation Fund ("the Fund").
I appreciate the hard work you, your Staff, and the Justice Department put into assembling the
interim final rules. I also appreciate the fact that, under the interim final rules, charitable
contributions to persons injured in the September 11th terrorists attacks or the relatives of those
who lost their lives in this tragedy will not offset Fund awards. I had weighted in on that
particular issue during the prior notice-and comment period, in correspondence dated November
26th, 2001.
At the same time, I strongly and respectfully request that the interim final rules be modified to
provide truly full and fair compensation for economic and non-economic harm incurred by
victims of the September 11th terrorist attacks and their loved ones. I had emphasized the moral
and practical imperative of providing full and fair economic and non-economic damage awards
through the Fund during our meeting of December 13th, 2001. Unfortunately, I do not believe the
interim final rules achieve this objective. More importantly, those directly affected by the
September 11th terrorist attacks consider the interim final rules to be seriously deficient and are --
quite understandably--angry, hurt, and frustrated.
A combination of unjustifiably low presumed non-economic damages awards, a flawed
presumed economic damages formula, the collateral source offset rule, and an inappropriately
steep evidentiary hurdle to securing modifications to presumed Fund awards will operate in
many instances to prevent victims and their loved ones from receiving full and fair compensation
-and, on occasion, any compensation-through the Fund. This would frustrate Congress's
intent, deprive some families of resources critical to their economic security, encourage
litigation, and send entirely the wrong signal to these families regarding our government's and
society's estimation and appreciation of the magnitude of their loss.
1
In the airline relief and airline security bills, Congress limited the courtroom liability of airlines,
the airline industry, the World Trade Center, and other parties. It recognized that these liability
limits-operating alone-might deprive victims of the September 11th terrorist attacks and their
loved ones of full and fair compensation for the terrible harms they have suffered. Thus,
Congress created a government-funded program to provide full and fair compensation for the
economic and non-economic harm suffered by victims and their loved ones, minus a narrow
range of collateral source payments. Notably, it did not subject the program to the annual
appropriations process. Rather, it funded the program through mandatory spending. In other
words, the manifest intent of Congress was to ensure that the program fully and fairly valued the
economic and non-economic harm suffered by victims and their loved ones--federal budgetary
and cost considerations notwithstanding. Indeed, this would not only benefit victims and their
loved ones but also reduce litigation arising from the September 11th attacks.
Along these lines, the fact that courtroom litigation may be less attractive to victims and their
loved ones due to liability limits imposed by recently enacted federal law certainly does not
support valuing economic and non-economic damages incurred by victims or their loved ones for
purposes of the Fund at levels significantly lower than what one would secure in a successful
courtroom action. Those liability limits instead make it particularly imperative that damages
estimates under the Fund be full and fair. Again, this is not only good policy but also the clear
intent of Congress.
To achieve this objective, I respectfully urge you to modify the interim final rules to increase
presumed non-economic damage awards to amounts that fully reflect the damages that Congress
listed as compensable, correct any and al methodological and statutory interpretation flaws in
the setting of presumed economic damages, and allow increases to presumed awards based
simply upon a showing that such awards do no accurately reflect the damages incurred by
victims and their loved ones (as opposed to requiring a showing of "extraordinary
circumstances" for increases to presumed awards).
First, the presumed non-economic damages awards provided under the interim final rules are
substantially lower than those paid in comparable cases. Non-economic damage awards in
considerable excess of $1 million are typical for other airline crashes and terrorism cases, but
in this instance, presumed non-economic damages awards are limited to $250,000 per victim and
$50,000 for a spouse and each dependent. This dramatic undervaluation of presumed non-
economic damages runs contrary to Congress's general intent to provide full and fair
compensation and, significantly, to the specific language of the law establishing the Fund, which
lists an extremely broad array of non-economic damages for which victims and their loved ones
are to be compensated (regardless of what may be allowable under state law). This problem
bears considerable responsibility for the fact that many victims or their loved ones would
reportedly be severely under compensated or even receive no compensation under the Fund -
potentially driving them to pursue litigation which, due to statutorily imposed liability limits,
may shortchange them as well. The interim final rules can and should be fixed to increase
presumed non-economic damages awards to amounts which properly reflect Congress's intent
and are a more realistic assessment of the considerable pain and suffering endured by the victims
of the September 11th terrorist attacks and their loved ones.
Second, a number of economists or experts have pointed out flaws in the interim final rules'
methodology for calculating presumed economic damages. The use of outdated and improperly
aggregated federal government data and the underestimation of household services performed by
victims and of real increases in earnings by administrative support and clerical workers, among
other things, has resulted in the unjustified and unnecessary undervaluation of presumed
economic damages. The interim rules' cap on the level of income a victim may be
considered to have earned per year for the purpose of calculating presumed economic damages
awards serves to exacerbate this problem. I strongly urge you to provide interested parties with
all information that is necessary and useful to further evaluate the propriety of the interim final
rules' presumed economic damages methodology and then correct all flaws that would tend to
undervalue such damages.
The fact that these are merely presumed economic and non-economic damages amounts -
purportedly subject to upward adjustment based on specific evidence of loss presented at
hearings or through supplemental evidentiary submissions by victims or their loved ones-does
not excuse flaws in their calculation. Rather, presumed awards should be based on the best
available data and methodologies regardless of the hearing or evidentiary submission option.
Indeed, the goal of providing accurate compensation expeditiously through the Fund is furthered
by having properly justified presumed Funds awards, as this may diminish the need for hearings
or supplemental evidentiary submissions in each and every case. It also may be overly optimistic
to assume that each fund claimant will be able and willing to present evidence at a hearing to
correct inaccuracies in the presumed Fund awards in light of their individual circumstances.
Indeed, one can reasonably expect that some victims or their loved ones may, upon viewing
inadequate presumed Fund awards, have little faith in the ultimate fairness of the hearing or
supplemental evidentiary submission process and decide to forsake the Fund altogether.
More importantly, the misplace requirement contained in the interim final rules (though not
contained in the statute establishing the Fund) that a Fund claimant demonstrate "extraordinary
circumstances" through supplemental evidentiary submissions or at a hearing to justify increases
to presumed Fund awards could serve essentially to "lock in" the unfair presumed economic and
non-economic damage awards in any given case. Whether or not the presumed awards are fair,
upward adjustments should be possible simply upon a showing by a claimant that a presumed
award does not accurately reflect the economic and non-economic damages he or she has
endured. But this degree of flexibility is particularly essential if the presumed economic and
non-economic damage wards would in many cases provide less than fair and full compensation.
The "extraordinary circumstances" threshold, however, may prevent the accurate and
individualized Fund awards intended by Congress, because while all victims and their loved ones
have endured extraordinary hardships, it may be difficult for a single Fund claimant to establish
that his or her circumstances are "extraordinary" relative to all other victims and their loved ones.
The hearing or supplemental evidentiary submission opportunities for victims and their loved
ones must certainly be structured so as to afford them ample time and a convenient way to make
their case. But even a properly structured hearing or evidentiary submission process would not
remedy the difficulties arising from the inappropriately stringent "extraordinary circumstances"
standard. Congress did not erect or envision any such obstacle to the award of accurate and
individualized compensation to victims and their loved ones. Indeed, as Congress has considered
bankruptcy reform legislation over the past few years, it has moved away from using an
"extraordinary circumstances. Accordingly, the "extraordinary circumstances" threshold should be
modified.
I do appreciate the fact that the interim final rules will not offset Fund awards by the amount of
charitable contributions received by a victim or his or her loved ones. I believe the collateral
source offset provision of the law is misguided. To the extent the final rules do offset Fund
awards by virtue of certain collateral source payments, I strongly urged that you construe the
collateral source offset provision of the law narrowly, consistent with the tenets of proper
statutory interpretation. In particular, amounts paid by victims or their loved ones to secure
certain types of collateral source compensation-for example, life insurance premium payments
-should be deducted from any amount considered to offset a potential Fund award. Likewise,
where collateral source payments trigger new income or estate tax liability, that new tax liability
should be deducted from any amount considered to offset a potential Fund award.
Thank you as always for your consideration and attention to these matters.
Sincerely,
Individual Comment
Member of Congress