N002337
Tuesday, January 22, 2002 6:23 PM
Comments on Interim Final Rule
Attachment 1:
January 22, 2002
VIA ELECTRONIC MAIL (victimcomp.comments@usdoj.gov)
Kenneth L. Zwick, Director
Office of Management Programs
Civil Division
U.S. Department of Justice
Main Building, Room 3140
950 Pennsylvania Avenue
Washington, DC 20530
Re: September 11th Victim Compensation Fund of 2001
Dear Mr. Zwick:
This letter is a submission of comments on the Interim Final Rule issued by the Attorney General, in consultation with the Special Master, on December 21, 2001 (the "Interim Rule"), to implement the "September 11th Victim Compensation Fund of 2001" (the "Fund"). The President signed the Fund into law on September 22, 2001, as Title IV of Public Law 107-42, "Air Transportation Safety and System Stabilization Act" (the "Act"). I am an attorney specializing the estate planning and estate administration who is writing on behalf of the family of a young woman from Boston, Massachusetts, who was a passenger on American Airlines Flight 11. This young woman’s family includes her fiancé, her mother and her father.
The purpose of this submission is twofold. First, the family wishes to urge the Attorney General and Special Master to recognize the interests in the Fund of all those persons who were financially and emotionally dependent on the victims, beyond the limited class of heirs under state intestacy laws and dependents listed on income tax returns. Second, the family wishes to offer examples of situations where the treatment of collateral source payments under the Interim Rule may lead to unintended results and suggest that the types of such payments that are deducted from awards be limited to ones more in keeping with a careful reading of the Act.
Before proceeding to outline the comments to the Interim Rule, I would like to review the parameters of the Fund that were set down by Congress in the provisions of the Act. Section 403 of the Act states that the purpose of the Fund is to provide compensation to any individual (or relatives of a deceased individual) who was physically injured or killed as a result of the terrorist-related aircraft crashes of September 11, 2001. Under Section 405 of the Act, a "claimant" may file a claim for compensation with the Special Master. In the case of a deceased individual, the claimant is the personal representative of the decedent. The claim form to be developed by the Special Master shall request information confirming the decedent’s death as a result of the terrorist-related aircraft crashes, information concerning any possible economic and noneconomic losses that the personal representative suffered as a result of such crashes, and information regarding collateral sources of compensation that the personal representative has received or is entitled to receive as a result of such crashes.
The term "collateral source" is defined in Section 402 of the Act to mean all collateral sources, including life insurance, pension funds, death benefit programs, and payments by federal, state or local governments, related to the such crashes.
Section 405(b) of the Act provides that the Special Master is to determine, after review of the claim submitted, the extent of the harm to the personal representative, including any economic and noneconomic losses, and the amount of compensation to which the personal representative is entitled based on the harm to the personal representative, the facts of the claim and the individual circumstances of the personal representative. The Special Master is to reduce this compensation by the collateral source compensation that the personal representative has received or is entitled to receive. Pursuant to Section 406 of the Act, the Special Master is to authorize payment to the personal representative of the amount determined to be due the personal representative.
It is important to note that, in the language of the Act dealing with claimants, awards and offsets, Congress speaks of personal representatives only. A personal representative is commonly the administrator of the estate of a deceased individual who has not left a will or the executor of the estate of a deceased individual who has left a will. By dealing only with personal representatives and imposing no restrictions on the ultimate beneficiaries of the award, Congress did not exclude any class of survivors who have lost loved ones and suffered economic and noneconomic harm as a result of the terrorist-related aircraft crashes. In addition, by referring to collateral source payments to the personal representative, Congress was limiting the deductions from the award to such payments received by the personal representative only (i.e., the estate of the deceased individual) and not to such payments received by individual loved ones.
Section 407 of the Act vested the Attorney General with the authority, in consultation with the Special Master, to promulgate regulations to carry out the title, including those with respect to forms, procedures for hearings, procedures for pursuing claims and other matters he deemed appropriate. The Interim Final Rule represents these regulations. We submit, however, that the Attorney General and Special Master have issued procedural rules that restrict the substantial application of the Act in ways not provided in the Act itself and offer the following comments:
1. Definitions of family. "Family" for purposes of the Fund should not be limited to those who appear as dependents on the victim’s tax returns and/or who are the victim’s heirs under state intestacy or wrongful death laws. Any term for "family" should recognize the reality of the victim’s life and the tremendous losses suffered by all those survivors who were financially and emotionally intertwined with the victim. The Interim Rule introduces terms that do not recognize these survivors. Section 104.3(a) of the Interim Rule defines the term "beneficiary" as a person entitled under the laws of the victim’s domicile to receive payments or benefits from the estate of or on behalf of the decedent. "Dependents" are defined by Section 104.3(b) as those persons so identified by the victim on her federal income tax return for the year 2000.
We ask that the Special Master recognize those loved ones who were financially dependent or mutually interdependent upon the victim and include them within any term appearing in the regulations that refers to familial relationships, such as "beneficiary" and "dependents." Many of the victims who died on September 11th were young people who did not leave wills. Many were in the midst of building their lives and creating their own families and homes with fiancés or domestic partners who shared in their income and expenses along with their hopes for the future. We urge the Special Master to emulate New York Governor George Pataki’s Executive Order 113.3, signed on October 11, 2001, which directs the state to consider all appropriate factors in determining an eligible dependent, for purposes of these regulations. The Executive Order reads in pertinent part as follows:
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Such a dependent person shall be eligible for awards upon a showing of unilateral dependence or mutual interdependence upon such a victim, which may be evidenced by a nexus of factors, including but not limited to common ownership of property, common householding, shared budgeting and the length of the relationship between such person and the victim.
2. Determination of economic and noneconomic losses. In considering the individual circumstances of the claimant when determining economic and noneconomic losses as a result of the victim’s death, the Special Master should be required to include the financial resources and the financial needs of all survivors who were financially and emotionally intertwined with the victim. Now, Section 104.41 of the Interim Rule provides merely that the individual circumstances of the claimant may include the financial needs or the financial resources of the claimant or the decedent’s dependents and beneficiaries. In determining presumed economic loss, under Section 104.43 of the Interim Rule, the Special Master shall consider presumed determinations of loss of earnings and other benefits related to employment that are calculated based upon the number of dependents who survive the victim and whether there is a surviving spouse. And, in determining presumed noneconomic loss under Section 104.44 of the Interim Rules, the Special Master will determine such loss to be $250,000 plus an additional $50,000 for the spouse and each dependent of the deceased victim.
The combined effect of this is that, under the Special Master’s "Presumed Loss Calculation Tables Before any Collateral Offsets," the loss (before collateral offsets) for the family of a married decedent with no dependents would be presumed to be as much as $1.3 million more than a single decedent with no dependents. This means that, in the case of a young victim who considered her family to include her fiancé and her parents, who had not yet had children and who left no will, the presumed loss would be as much as $1.3 million less than if this young victim had married her fiancé prior to September 11, 2001. And the actual loss, based on individual circumstances, may be determined by the Special Master to be even less, because the Special Master is not now mandated to consider the financial needs of the fiancé but merely those of the parents, who are not likely to be financially dependent upon their child. Such a result is contrary to the true "individual circumstances" that exist in the case and more narrow than what is required by the Act.
3. Collateral source payments. Under the Act, the Special Master is to reduce the amount of compensation by the amount of the collateral source compensation the claimant (i.e., the personal representative) has received or is entitled to receive as a result of the terrorist-related aircraft crashes of September 11, 2001. The Interim Rule amplifies this by stating, in Section 104.41, that the Special Master shall reduce the amount of compensation by the amount of source compensation that the claimant "(or, in the case of a Personal Representative, the victim’s beneficiaries)" has received or is entitled to receive. The parenthetical added by the Interim Rule represents a significant broadening of Congress’ definition of collateral source payments and could serve to reduce or wipe out entirely any economic loss component of a family’s award from the Fund.
This treatment of collateral source payments under the Interim Rule could lead to inequitable and, at times, unduly harsh results. For example, the children of a victim’s first marriage could lose most of their award if the victim had chosen to leave his estate to them but benefit his second wife with substantial amounts of insurance. As another example, the surviving spouse of a decedent who had a will that left everything to her could lose most of her award because of a large life insurance policy that benefited the decedent’s grown children. (These results will not be uncommon, because some estate plans are designed to benefit one set of loved ones with estate assets and another set with insurance and other non-probate assets.) And, the families of victims who made no advance plans and/or chose to invest their income in the stock market will receive greater awards than the families of those victims who planned ahead and/or chose to invest their incomes in life insurance. To avoid situations such as these, the regulations should abide by the provisions of the Act and offset any awards by collateral source payments received by the victim or the victim’s estate only.
Along the same lines, the Special Master should not have the discretion (as now given to the Special Master in Interim Rule Section 104.47(b)(2)) to determine that funds provided to victims’ families through a private charitable entity constitute, in substance, a payment that constitutes a collateral source. This proviso to Section 104.47(b)(2) of the Interim Rules should be removed, so that charitable donations distributed to the beneficiaries of the victims by private charitable entities will not constitute collateral source compensation. The continued existence of the proviso will leave some doubt in the minds of families who are deciding whether to proceed under the Fund or file a lawsuit.
4. Distribution of awards. Awards should be distributed among all those loved ones who can show unilateral dependence or mutual interdependence upon the victim. As Section 104.52 of the Interim Rule reads, the Personal Representative shall distribute the award in a manner consistent with the law of the decedent’s domicile or any applicable rulings made by a court of competent jurisdiction. If the victim died without a will, this reference to "law of [her] domicile" means that the Personal Representative would be required to distribute the entire award to the victim’s parents, if she left no children and no spouse. This portion of the Interim Rule would prevent the Personal Representative from paying over any amount of the award to a fiancé or domestic partner who was dependent upon the victim, regardless of a showing that the fiancé or domestic partner and the victim shared a residence, shared expenses and were otherwise financially and emotionally intertwined in a familial relationship. The Personal Representative and the victim’s parents may very well agree that a portion of the award should be used to compensate the fiancé or domestic partner for his or her loss, but the Interim Rule stands in the way of the parties achieving that result.
We ask that the Attorney General and Special Master allow the Personal Representative to act on behalf of all of those who can show themselves to be the survivors of the victim, seeking compensation in proportion to their losses and distributing the award accordingly. Where no will exists, the awards should not be confined to the victim’s heirs as defined only by state intestacy law or distributees under state wrongful death statutes. This is unduly restrictive and ignores the true needs and losses of those who can demonstrate unilateral dependence or mutual interdependence upon the victim. The suggestions we offer are as follows:
a. The Special Master should be authorized to direct the Personal Representative to distribute a part of the award to a dependent fiancé or domestic partner of the victim. This would be akin to Section 104.52 of the Interim Rule, which allows the Special Master, "notwithstanding any other provision of these regulations or any other provision of state law," to direct the Personal Representative to distribute all or part of the award among the victim’s relatives if the Special Master concludes that the Personal Representative’s plan for distribution does not appropriately compensate them.
b. In the alternative, the Special Master should be authorized to accept a Personal Representative’s plan of distribution that includes payment of part of the award to a dependent fiancé or domestic partner of the victim.
c. Otherwise, the Special Master should be required to accept any distribution of the award by the Personal Representative that is in a manner consistent with any applicable ruling made by a court of competent jurisdiction. The authority conferred on the Special Master by Section 104.52 of the Interim Rule to reject a Personal Representative’s plan of distribution should not extend to such plans derived from a local court order. The Statement by the Special Master that precedes the text of the Interim Rule makes many references to the regulations’ reliance on state law and the Special Master should be required to observe an applicable ruling of a court of competent jurisdiction in the state of the victim’s domicile.
d. Finally, if the current text of the Interim Rule becomes final, the loved ones of the victim who receive the award should be permitted to transfer as much of their award as they deem appropriate to loved ones of the victim who were precluded from benefiting from the Fund. Such a transfer, if made within the year of the award or the year following the award, should be free of federal estate, gift or generation-skipping transfer tax consequences. Thus, the parents of a victim who receive an award as their daughter’s sole heirs-at-law and who wish to benefit her fiancé with a portion of that award should be allowed to do so without a diminution of their so-called "unified credit" or applicable exclusion amount or an obligation to pay federal transfer taxes as a result.
5. Publication of awards. To assist potential claimants in evaluating their options of either filing a claim with the Special Master or filing a lawsuit in tort, the Special Master should be required to publicize the amounts of all awards granted under the Fund. Section 104.34 of the Interim Rule provides merely that the Special Master reserves the right to publicize the amounts of some or all of the awards. If the Special Master was to publish only a portion of the awards -- or none at all - potential claimants could receive a skewed picture of the distributions and be unable to evaluate their options in a fully informed way. Potential claimants, in either case, would need to understand that the published decisions, as now stated in the Interim Rule, would be intended by the Special Master as general guidelines and not as binding precedent.
We are grateful for the opportunity to submit these comments and respectfully ask for full consideration of their contents.
Very truly yours,
Individual Comment
Boston, MA