N002610
Congress of the United States
House of Representatives
Washington, D.C. 20515-2109
January 22. 2002
The Honorable Kenneth Feinburg
Special Master
September 11th Victim Compensation Fund
U.S. Department of Justice
Washington, D.C. 20530
Dear Feinburg:
Below please find my comments on the interim final riles for the September 11th Victim
Compensation Fund ("the Fund").
At the outset, please know that 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.
On behalf of the families most gravely impacted by the events of September 11th, I strongly and
respectfully request that the interim final rules be modified to provide truly full and fair
compensation to victims of the September 11th terrorist attacks and their loved ones.
Unfortunately, I do not believe the interim rules achieve this objective. Most 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 resumed non-economic damages awards, a flawed presumed
economic damages formula, the collateral source offset rule, and 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.
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 such full and fair compensation to
victims and their loved ones. 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 provided full and fair compensation
to 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 the liability limits imposed by recently enacted federal law certainly does not
support awarding compensation through the Fund that is significantly lower than what one would
secure in a successful courtroom action (apart from the award of punitive damages, which the
Fund may not award under its governing statute). Those liability limits instead make it
particularly imperative that compensation through 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 all 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 not accurately reflect the damages incurred by
victims and their loved ones (as opposed to requiring s 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 and 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 by 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 of 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 final 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 Fund 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 hearing or
supplemental evidentiary submission process and decide to forsake the Fund altogether.
More importantly, the misplaced 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 awards 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 ne 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 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" threshold for permitting deviations from a grid of allowable
expenses for debtors in favor of a standard that more readily accounts for debtors' particular
economic 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 urge 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,
Stephen F. Lynch
Member of Congress