N002608
JANUARY 15, 2002
Kenneth L. Zwick, Directory
Office of Management Programs, Civil Division
U.S. Department of Justice
Main Building, Room 3140
950 Pennsylvania Avenue NW
Washington, DC 20530
Re: The September 11th Victims Compensation Fund of 2001/
.
Dear Mr. Zwick:
My brother-in-law, , ., was lost in the World Trade Center atrocity on
September11.
He is survived by his wife (my sister), , and their four children ,
and was a resident of New Canaan, Connecticut, and worked for Floor of One World Trade Center. I have been appointed as the executory of estate.
With the hope of realizing a measure of financial security for the family, I have been paying close
attention to developments concerning the "September 11 Victims Compensation Fund" (Title IV of
Public
Law 107-42). I have reviewed the regulations for the Fund (28 CFR Part 104) published in the
Federal
Register on December 21, 2001, as an Interim Final Rule (CIV 104P; AG Order No. 2541-2001;
RIN 1105-
AA79). We are considering filing a claim under the Fund but, in light of the Interim Final Rule, we hold
considerable reservation. I understand that the Department of Justice is seeking further comment on the
regulations and I would accordingly like point out certain aspects of the Rule that are inconsistent with
intent
U.S. Department of Justice
January 15, 2002
Page 2
of the legislation and that are otherwise inequitable to victim's families.
The Statute and the Interim Final Rule clearly provide that as a condition to filing a claim under the
Fund,
a victim's estate and family must waive all rights to sue any parties except the terrorists. Paraphrasing
the
Interim Final Rule, the Fund is intended to be an alternative to litigation. At the same time (further
paraphrasing the Interim Final Rule), the purpose of the Fund is to provide compensation to a victim's
spouse and children that is just and appropriate in light of the victims' individual circumstances. If that is
true, if the Fund is truly intended to provide just and appropriate compensation in lieu of litigation, it is
incumbent upon Special Master Kenneth Feinberg to develop a methodology within the parameters of
the
Statute that establishes awards under the Fund that are roughly equal to awards that would otherwise
be
available to victims by way of the litigation process. In order to ensure that any award from the Fund is
in
fact an equitable alternative to litigation, none of the recoveries to which a victim's estate and family
would
normally be entitled should be reduced through a restrictive interpretation of the wording or intent of the
legislation. To that end, a number of critical issues still need to be resolved and/or clarified in favor of
WTC
victims in order to convince family members that the September 11 Victims Compensation Fund is
indeed
an equitable alternative to bringing suit against American or United Airlines, the Port Authority of
NY/NJ,
the City of New York, Silverstein Properties (the WTC landlord) and/or the other parties protected
under
Public Law 107-42.
One such issue is the "collateral source" deduction set forth in the Interim Final Rule. Traditional tort
recoveries to victims are typically "free" from federal income tax. In an attempt to follow suit, the
Interim
Final Rule seems to indicate that awards issued under the Fund will be "tax-free". That, however, will
not
necessarily be the current Interim Final Rule requirement that certain collateral sources be
deducted from all such awards is applied. For example, the Interim Final provides that the Special
Master shall reduce the amount of an award under the Fund by any "pension" that a victim "has
received
or is entitled to receive". The term "pension" is not clearly defined in either Public Law 107-42 or the
Interim Final Rule. All the same, it would appear under Section 104.47 thereof that the Interim Final
Rule
adopts an all inclusive interpretation of term "pension". Even traditional individual retirement accounts
(IRA) would arguably constitute collateral source compensation to be deducted from awards. Unlike
Traditional tort recoveries, IRA distributions will not be "tax-free" to a victim's family. the new law
exempting most victims form federal income and estate taxes does not change that fact. Under that law,
individual retirement accounts remain taxable for purposes of federal income taxation (see the Technical
Explanation). As a result, for the families of many victims, it cannot be said that an award under the
Fund will
be equal to a like award under the traditional tort process. An IRA is not a "pension" and should not be
considered a "collateral source" under Public Law 107-42.
In addition to individual retirement accounts, the collateral source provisions of the Fund should not
include
any insurance that was paid to a trust that does not grant a power of appointment to any family
member,
permit a victim's family to independently invade any principal of the trust or otherwise permit a family
member to independently direct the disposition of any trust principal or income. Moreover, collateral
sources (however defined) should be deducted against economic losses only, not the entire award.
As a whole, the Interim Final Rule succeeds in certain respects but substantially fails in others. In the
final
analysis, unless the above changes are made to the Interim Final Rule, as well as other changes needed
to
ensure that claims for losses will be handled in an equitable way, victim's families will be unwilling to
give
up what is, for all intents and purposes, their most important right (i.e., the right to sue any responsible
party).
We sincerely appreciate the extraordinary and difficult work undertaken by the Department of Justice
and
Special Master Feinberg on behalf of WTC Victims. If I can be of any further assistance with respect
to the
September 11 Victims Compensation Fund, I will be honored to help and can be reached day or night.
My
telephone numbers are: , cell , and home . My fax
number
is and my e-mail address is or . Thank
you in
advance for your attention and courtesy.
Very truly yours,
Individual Comment
Syracuse, NY