N000540

Friday, December 21, 2001 2:49 PM
September 11 Victim Compensation Fund Analysis

I am the husband of                  , one of the victims of the attack of September 11. I have never sent out a press release and I am not sure if there are any procedures to follow so I ask for a little patience on this. The attached analysis was origionally written a few weeks ago and submitted to the Justice Department as part of the comment taking procedure. It has since been revised in light of the press conference yesterday and the release of the interim rules. If you would like to contact me I can be reached at:

Individual Comment
Brooklyn, NY

________________________________________________________________________
September 11 Victim Compensation Fund- Revised
An analysis of the actual legislation and regulations from the point of view of a potential claimant.

On September 22nd, President George W. Bush signed into law the Airline Stabilization Act, providing for a bailout and protection to the airline industry effected by the terrorist attacks of September 11th. As part of this act, Congress included a provision called Title IV: The September 11 Victim Compensation Fund. Shortly after the passage of the Airline Stabilization Act, some media outlets mentioned that Congress did include a provision for compensating those who were physically injured or lost loved ones in the attack, but few of these sources have provided details of this provision, partly because of all it does not say. Only the barest outline of the actual plan was spelled out by the legislation, the rest to be created as regulations by the Justice Department and the Special Master for this fund. The Special Master is Kenneth Feinberg, selected by the Attorney General, and the decisions regarding the final regulations rest solely with him. The interim regulations for the Victims Compensation Fund were released December 20th.

As part of the overall legislation, both United and American Airlines were protected from any legal damages incurred above the amount of their liability insurance, assumed to be about $3 Billion each. Similar wording has been inserted in the form of an amendment to the recently signed airline security legislation that would give the same protection (liability only to the limit of insurance coverage) to every other potential lawsuit target except for the airline security companies and Osama Bin Ladin himself. Those who wish to file suit against the airlines for property damage losses, business interruption, or costs associated with relocation and clean up, must all be adjudicated from this amount. After the insurance money is distributed, any and all further claimants are out of luck, and due to the legislative language regarding the government?s right to subrogate claims arising from the fund, this will happen very quickly. In short, if some one does decide to file suit against the airlines or anyone else, they have a 2 year window to collect a judgment before the pool of insurance liability proceeds are taken by the Federal Government.

The legislation also makes it impossible to sue for punitive damages in the event of a court proceeding because under New York State law, insurance monies may never be used to pay for punitive damages. So, no matter what should be discovered during the course of the investigation and trial, neither the airlines nor any other party are actually financially liable for anything at all.

So while the legislation was touted as a choice of filing a lawsuit or entering into the fund, the choice is in fact only an illusion. There will be no money left to collect from insurance funds once the government takes its share as part of the subrogation clause.

Victims and their families are expected under this scheme to receive monies from the fund quickly, as the law states that the office of The Special Master must give a ruling on any determination no later than 120 days after the claim is filed. Payment must be authorized in no more than an additional 20 days. Compared to a traditional lawsuit, the system is faster, potentially cheaper and does not force the claimant to proved proof of any wrongdoing on the part of anyone. But there may be a catch or two. And they may be huge.

In order to make a claim, claimants must first waive all right to be involved in any suit anywhere against anyone regarding the attacks. And that leads to another problem. There are no appeals allowed in the claim process. If claimants file and do not like the decision, claimants are already locked in to the system, and have no further recourse. An addendum to the Aviation and Transportation Security Act clarifies this point and now does allow for a person to file lawsuit against any ?knowing participant? and still file a claim with the fund. One caveat is that the President may, at the request of the State Department, unilaterally quash any money judgments against foreign entities if they believe that it is in our national security interest. This is exactly what is happening right now regarding the judgments already entered against Iran for the terrorist kidnappings in the 1980?s.

Collateral Sources. The law states that any amount that the victim or their family would receive from the fund would be offset by any collateral sources. Among the sources specifically listed in the law are life insurance, death benefits and pension funds. So for the families of victims who have passed away in the tragedy of September 11, this would result in the very clear possibility that if they did advanced planning for the future, they would receive less than those that did no planning at all.

This begs a few questions: Why should those who did plan ahead be penalized for doing so? What about the money paid for the insurance? Would the premiums be allowed as an economic loss, and added to the award? Why would pension funds, which were monies saved over time by the victim, be a collateral source? Wasn?t this already the victims own money? What about payments made over time to the victims and their families? How will this be calculated? Will this be considered a collateral source? What about Social Security? Is it fair to deduct any amount from what is in effect the settlement of a lawsuit using an Alternative Dispute Resolution system?

The regulations and laws governing New York State Workers Compensation state that any payments made by the insurance companies would also be offset by collateral sources, though in that case the law refers to medical payments made directly by insurance or litigation settlements. Will these companies expect to be able to reduce their awards based on the amount received from the fund? Will the Special Master consider that a death benefit? Will both parties, the insurance companies and the government attempt to reduce the amount provided for? While the regulations state that the monies received from the fund are not subject to subrogation from any other party, has the government received waivers from the insurance companies underwriting the workers compensation benefits for their right of subrogation under state law? If not this could lead to victims? families being sued for the amounts paid by the insurance companies or suits regarding the illegal taking of property rights.

Please also note that due to the generous pension and death benefits provided by the government, the families of firefighters and police officers are effectively barred by the collateral source rule from filing for any economic damages. Due to the wording of the collateral source rule, unlike CPLR 4545, collateral sources can be used to offset non-economic damages as well.

There is no provision regarding the concerns of domestic partners or undocumented aliens. This fact could reduce the number of potential claimants.

The mechanism and procedures required for filing are now being finalized. The Justice Department is currently reviewing suggestions and comments. These comments can be reviewed on their web site.

In the announcement of the release of the interim rules, many claims were made regarding the amount people would be awarded, but these numbers are gross amounts before collateral source are deducted which could lead to little or no money going to victims families from this system. Payouts from the fund will be far lower than was announced at the press conference.

From here we can go in one of two directions. Steps can be taken before the final rules and regulations go into effect in January. The government can be generous and take into account the feelings and concerns of the families, and in the process make substantial monies available to the victims and their families. If this was done, the claimants would have positive and compelling reasons for not suing the airlines, the goal of the overall legislation and everyone would feel that they were dealt with fairly.

On the other hand, it could become a morass where victims and their families may be left with no legal recourse or form of redress, a settlement that is at best inadequate and at worst no compensation at all for their loss. The image of the fund, its principals and sponsors would then be that this fund is nothing but a way for the government to protect the airlines, their shareholders and lobbyists, the port authorities, security firms, and airports at the expense of the innocent victims and their families.

The writer is the husband of                  , a victim of the attack of September 11.



Previous Next Back to Comments by Date Back to Comments by Date
(Graphical Version) (Text Only Version)