N001647
Tuesday, January 15, 2002 4:57 PM
Interim Regulations
Overall, I think the published Interim Regulations for the September 11th
Victim Compensation Fund of 2001 establish a fair and efficient process for
expediting reasonable compensation to most of the individuals and families
harmed by this tragedy. I do see, however, one substantial defect in the
regulations, which may well serve to undermine one of the statutory
purposes: litigation avoidance. I comment upon that defect below.
It appears from the interim regulations, and the accompanying loss tables,
that compensation awards for "economic loss" are being capped at the level
of the 98th percentile of income earners ($231,000). Placing such an
artificial cap on the potential fund awards for this type of demonstrable
loss leaves a huge gap in the fairness of this regulatory system. That gap,
stated plainly, is wholly inadequate compensation for the families of the
highest wage earners: for example, a bond trader at Cantor Fitzgerald who
might have been earning an annual salary of $1 million. Why should fund
compensation for the economic loss experienced by that bond trader's family
be capped through reference to a $231,000 salary, rather than the trader's
actual salary of $1 million? How can it possibly be fair for that bond
trader's family to receive the same economic loss compensation from the fund
as the family of another victim who might have been earning exactly $231,000
annually?
Ironically, this irrational shortfall in economic loss compensation for all
victims who were earning above $231,000 on 9/11 will potentially alienate
the very individuals likely to have the contacts, resources and motivation
to pursue the type of plaintiff's litigation against the airline industry
that the fund seeks to avoid. Higher wage-earning victims, of course, will
also lead to higher damages claims - and, ultimately, higher potential
awards - against the airlines as well. Thus, the artificial cap on economic
loss recoveries from the fund for the highest earning victims may well serve
to drive the families of those victims to the very litigation that the fund
seeks to abrogate in the first instance.
Fortunately, there is a simple solution to this defect in the Interim
Regulations: just remove the 98th percentile/$231,000 cap used under the
fund's formulas to calculate economic loss in these upper end circumstances,
and allow those same formulas to use each victim's actual earnings to
calculate true - not deemed - economic loss.
Individual Comment
Washington, D.C.