N002444
January 18, 2002
Mr. Kenneth L. Zwick, Director
Office of Management Programs
U.S. Department of Justice
Civil Division
Main Building, Room 3140
950 Pennyslvania Avenue, N.W.
Washington, D.C. 20530
Dear Mr. Zwick
The Justice Department has requested comments with respect to the Interim
Final Rules ("IFR's") which were put in place on December 21, 2001 regarding the
September 11th Victim Compensation Fund Act of 2001. ("the Fund"). Unless
otherwise noted, the comments that follow have not been adopted as the policy of the
American Bar Association (ABA) or any of its entities and should be considered as
observations which the Attorney General of the Untited States, the Department of
Justice and the Special Master may wish to consider as part of their review of the
IFR's that have been drafted. There is much to be praised in the initial regulatory
efforts of the Justice Deparment and the Special Master. It is unquestionable that
significant time, effort and energy were expended in drafting these IFR's and that
volumes of information were thoroughly examined and considered by the Special
Master and the Justice Department; good intentions shine through. The clear intent
of Congress and the President in passing the Fund Program was to assure that the
vicitms and families of the outrages of September 11, 2001 promptly receive full
economic and non-economic compensation of their losses. The IFR's fulfill that
obligation in many respects. For example, not one penny of the more than $1.4
billion charitable contributions dontated by millions of Americans will be deducted
for vicitm's compensation. However, it appears that parts of the IFR's, as
presented, conflict with the intentions of Congress in enacting and passing the Fund
program. Additionally, various aspects of the regulations are ambiguous or present
other difficulties. These matters are addressed in detail below.
Limitations on Damages are Inconsistent with the Congressional Mandate
First and foremost, the IFR's suggest certain caps or presumptive limits on
compensation. In Section 402 of the Fund, Congress defined both the "economic"
and the "noneconomic" losses to be compensated by the Fund. Nowhere in the Act
was there any mention of caps or limitations on compensation. Instead, it appeared
that in passing the Fund program, Congress intended to provide the vicitms of the
September 11, 2001 outrages with compensation consistent with that which might
have been awarded in tort proceedings. The Act was a means of allowing the vicitms
to avoid the delays that would have resulted from litigation while at the same time,
removing the uncertainty and risk attendant to litigation. In exchange for proceeding
under the Act, the vicitms were required to give up their right to sue in court,
abandon any claim for punitive damages and accept a variety of other procedural
restrictions. Congress never made any mention of limitations on economic and/or
noneconomic damages.
Several comments made by the Special Master, in his Statement of December
20, 2001, raise concerns about the fixing and/or limitation of damages. For example,
in his comments, the Special Master stated:
We have concluded that the purpose of the Act is not simply to
examine economic and noneconomic harm, but also to provide
compensation that is just and appropriate in light of claimants'
individual circumstances. We have concluded that any methodology
that does nothing more than attempt to replicate a theoretically
possible future income stream would lead to awards that would be
insufficient relative to the needs of some vicitms' families, and
excessive relative to the needs of others. The statute specifies that
individual circumstances beyond economic and noneconomic harm
should be taken into account. It is our view that, absent extraordinary
circumstances, award in excess of $3 million, tax-free, will rarely be
appropriate in light of individual needs and resources.
This imposition of an apparent cap on economic damages is an unauthorized
exercise of power in the part of the Special Master. The Statement creates an
arbitrary, pre-determined notion of what the outer limits of an award should be.
Unquestionably, that was not the intent of the Congress in creating the Fund program.
Rather the Fund was intended to establish a process that entitles each claimant to a
hearing where he/she can present evidence and witnesses if he/she desires to do so.
The fundamental premise behind having a hearing is to allow each claim be analyzed
on an individual, case-by-case basis. Only through individual review can "just" and
"appropriate" compensation be accomplished.
As the ABA previously stated, a pre-determined grid or matrix of awards will
defeat the function and purpose of the Act. Similarly, arbitrary limitations on
economic damages will have the same effect and will erode the confidence of the
public in the Fund program's ability to provide full and fair compensation and due
process protection. Additionally, while refernce is made in the IFR's to the
possibility of exceeding the presumed limitation of $3 million, when "extraordianry
circumstances" are presented, the term "extraordianry circumstances" is not defined.
Therefore, there is no predictability, and potential claimants cannot make an
informed decision on wheter to waive their fundamental right to file a lawsuit and
proceed under the Fund program.
On the issue of noneconomic damages, the IFR's are even more restrictive
than the SPecial Master's remarks regading economic damages. More specifically,
with respect to noneconomic damages, the Special Master states:
...the Special Master and the Deparment have concluded that the
most rational and just way to approach the imponderable task of
placing a dollar amount upon the pain, emotional suffering, loss of
enjoyment of life, and mental anguish suffered by the thousands of
victims of the September 11 attacks is to assess the noneconomic
losses fo rcategories of claimants. The most obvious distinction is
between those who died and those who suffered physical injury but
survived.
The regulations therefore set a presumed award for noneconomic
losses sustained. For those vicitms who died as a result of the
September 11 aircraft crashes, the presumed noneconomic losses will
be $250,000, plus an additional $50,000 for the spouse and each
dependent of the deceased victim.
These pre-determined limitations on both economic and noneconomic
damages cast doubt on the individualized decision-making goals of the Fund program
and abandon any effort to adhere to the individualized, claim-by-claim system
envionsed and intended by Congress. It appears that the Special Master has
substituted his views about what is a "just" award, and "appropriate" compensation
before any evidence has been put before him from a single Claimant. Moreover, this
presumptive award does not take into account variables such as the ages of the
spouse and/or dependent(s) of an individual who died in the September 11, 2001
events. Further doubt is cast on whether the individualized decision making goals
of the Fund program will be met under the IFR's because of the following
comment:
Claimants should not expect awards grossly in excess of the highest
awards listed on the Special Master's presumed award chart, as the
individual circumstances of the wealthiest and highest-income
claimants will often indicate that multi-million dollar awards out of
the public coffers are not necessary to provide them with a strong
economic foundation from which to rebuild their lives.
Moreover, the employment of the range of limitations set out in the IFR;s
defeats the Special Master's own first objective which is to create a process that is
"efficient, straight foward and understandable to the claimants." There can be no
understanding where there are no standards (unless the presumptive limits are not
presumptive and binding.) There can be nothing straight foward if presumptions are
on-again, off-again tools. Additionally, the caps on damages and presumed awards
don not conform with the intent of Congress. Instead of allowing a real evidentiary
hearing at which evidence can be aired, without prejudgement, and damages can be
fixed by hearing officers well versed in such matters, as was suggested in the ABA's
earlier comments, the IFR's are filled with presumptions and caps on damages
which were never envisioned by Congress in enacting the Fund program. This cuts
across the grain of fair and just compensation.
Although the ABA appreciates the fact that the IFR's do not impose an
absolute cap, but instead a presumptive cap on pain and suffering awards, we are
disappointed that there is a presumptive cap. By use of this presumptive cap and by
subtracting collateral sources from the awards, seriously injured persons who are in
most need of pain and suffering awards will recieve less than full compensation for
the harm caused them to while less seriously injured persons may receive full
compensation for their injuries. We believe that the nation recognizes that the
injuries caused by pain and suffering as a result of the September 11 tragedy should
be fully compensated and especially so for those most seiously impacted.
In addtion to the above comments with respect to economic and
noneconmic damges, the IFR's present a number of other issues which warrant
further review and consideration.
Rescue Workers Receive no Benefits Under Current IFR's
The IFR's suggest that "rescue workers" (an undefined term) should receive
special benefits. Almost everyone would applaud providing special and generous
benefits to the heroic rescue workers at the World Trade Center and Pentagon;
however, a careful review of the IFR's as they exist, leaves the rescue workers with
nothing but an empty promise. Due to existing compensation programs and the
Special Master's interpretation of the collateral source deduction requirement,
virtually no uniformed safety or rescue workers will qualify for any benefits whether
the window of qualifications under the IFR's is held open for 96 hours or 20 years.
By making collateral source deductions apply against all losses, both economic and
noneconomic, the Special Master had excluded virtually all rescue workers (at least
those in government employ) from benefits because their collateral payment will
generally exceed any award the Special Master might otherwise make. Only if, as the
ABA has urged, noneconomic damages are excluded from collateral source
deduction will the heroic uniformed rescue workers have any reasonable prospect of
recovering significant amounts from the Fund. It is a grave error that such
individuals have, in reality, been excluded from the Fund. They will certainly
recover their economic losses without the intervention of the Fund. If policemen,
firemen, EMS workers, etc. are to be compensated for noneconomic loss, the present
approach to the collateral source deductions must be changed.
Noneconomic Loss of Those Physically Injured
The Special Master has suggested in his "Statement" that it ["may be]
appropriate to give some percentage of the noneconomic loss award given for victims
who died" to those who were physically injured. Those who have suffered truly
serious injury and survived will have far more long-lasting pain and suffering,
disfigurement, etc. than those who died. To suggest that these living victims should
receive smaller awards does not seem logical whether you look at it from a common
sense perspective, on the basis of well-established tort principles, or in light of the
apparent intentions of Congress (as set forth in its expansive definition of
noneconomic loss). This issue must be further reviewed in order to assure that fair
and reasonable compensation is provided to living victms consistent with the
evidence unique to each claimant.
Collateral Sources Deductions from Pain and Suffering Awards
The ABA is pleased that the Special Master chose not to deduct charitable
sources as a collateral source, for all of the reasons we set forth in our earlier
comments. The ABA also believes, however, that it is equally inappropriate to
deduct from pain and suffering awards collateral sources from such things as life
insurance, etc. Pain and suffering awards are entirely different than awards for
economic losses. They are meant to be a salve for those who suffer and are scarred
physically or emotionally. They are not meant to substitute for economic losses. It
is therefore inconsistent with the purpose of providing pain and suffering awards to deduct
collateral sources from these awards. If we could find another way to try to
make up for the pain and suffering that occurred, we would, but know of no other
way to begin to try and make up for it except through the use of money to
compensate for these losses. The pain and suffering award tells the victim that we understand
something of what he or she went through and want to make up it as
best we can. If we deduct collateral sources from the awards, we are undercutting
that purpose and adding salt to the wounds.
Waiver of Claims to Receive Immediate Advance Appears Coercive
Requiring waiver of claims in order to receive the immediate advance
payment of $25,000 or $50,000 is unduly harsh on the most needy and vulnerable
victims of September 11. At a minimum, claimants in need of such immediate relief
should have the opportunity to complete an "undertaking" to repay the funds and
rescind their waiver within the period in which the Victim Compensation Fund is
active. We recognize that some poor claimants may not be able to make this
repayment, but believe that is a small cost to absorb in order to relieve the potentically
coercive nature of this provision of the IFR's. The rationale for this is discussed in
detail below.
In his Statement introducing the Interim Final Rule, the Special Master
recognizes the importance of claimants being empowered "to enter the program - or
choose not to enter the program - with an understanding of how their claims will be
treated. This is especially important because the Act provides that, upon submission
of a claim, a claimant waives the right to file a civil action for damages sustained as
a result of the September 11 attacks." The structure of the IFR's waiver provision
is problematic. The IfR's as currently drafted, create the possibility of cliamants
waiving their legal right to file a civil action without receiving any benefit. At the very least, the
IFR's should establish that claimants who are found ineligible by the
Special Master have not waived any of their legal rights to file a civil action for
damages sustained as a result of the September 11 attacks.
It must be clarified what the impact of the IFR's office of an immediate
advance payment of $50,000 in cases involving death, or $25,000 in certain cases
involving serious physical injury will be. While it is appreciated that this provision
is intended to help those most desperately in need of financial assistance, there is
concern about the potentially coercive consequences of such a provision. In order to
receive this immediate financial assistance, claimants have to permanently waive
their right to file a lawsuit for damages sustained as a result of the September 11
outrages. While claimants who are financially secure may have the luxury of
declining this offer of assistance, in exchange for having more time to weigh their
options, financially desperate individuals may feel that they have no choice but to
apply for this advance payment, regardless of whether or not that decision will best
serve their long-term interests. As a result, this provision appears coercive to the
most vulnerable segment of the population, the very segment it was designed to
assist.
Hearing Offices Cannot Become Adversaries of Cliamants at Hearings
The fraud detection and interrogation functions should be distinct and
separate from the work of Hearing Officers. The present IFR's are exceedingly vague
on this point and appear to suggest that the Special master may use any and all of his
designees, including Hearing Officers, to cross-examine claimants and to probe for
fraud. Abuse must be eliminated, but this must not be part of the Hearing Officer's
job. Instead, any such probing should be part of the assignment and duties of other
specifically designated officials. Any other approach will inevitably leave a bitter
taste in the mouths of the Claimants and will undermine the legitimacy of the
function of Hearing Officers and the process, itself. This would erode public
confidence and trust in the program's ability to offer full and fair compensation and
due process protection. Inevitably, the Fund program will be scrutinized by
numerous bodies, including various governmental agencies, public interest groups
and the media. One can only imagine the backlash that will result if the Hearing
Officers are perceived as the adversaries of the Cliamants at the hearing stage. In
order to maintain the integrity of the system, fraud detection and interrogation
functions must be distinct and separate from the work of Hearing Officers.
Adversarial friction is likely to be fostered because of the previously discussed
limitations on economic and/or noneconomic damages. Having an arbitrary
limitation on economic and/or noneconomic damages will result in the perception
that the Hearing Officer is an adversary to the claimant as opposed to an unbiased,
neutral decision-maker, who is working to award fair and reasonable compensation
based on the evidence presented. This perception will obviate the trust and faith in
the integrity of the system.
Attorney's Fees
The ABA continues to support the propossition that all Claimants should be
instructed to seek legal counsel if they so desire and should be referred to pro bono
services that may be available. In the event that a claimant chooses to retain counsel
instead of utilizing the available pro bono services, it is incumbent on the Special
Master to make sure that fee arrangements are written in plain language that clearly
identifies the basis on which a fee is to be calculated so that the victims and their
families have an understanding of what the fee arrangements are.
Schedules or Statistical Methodologies
The ABA maintains, as urged in the ABA Task Force on Terrorism's
pervious submission, that schedules and statistical methodologies should not be
developed and used. The intent of Congress in establishing the Fund program was
to create a process that entitles each claimant to a hearing at which he/she can present
evidence and withnesses if he/she desires to do so. This requires that each claim be
analyzed on and individual case-by-case basis. The pre-determined schedules and
charts that have been created defeat the purpose and function of the Act; moreover,
having schedules and charts in place is likely to erode public confidence in the
program's ability to offer full and fair compensation and due process protection for
the same reasons discussed above relating to the limitations and caps on damages.
The proposed pre-determined chart do not promote the goal of fairness and
individualized claims receiving reasonable awards consistent with the evidence that
is unique to each claimant. Instead, they give the perception that the Fund program
is a take it or leave it proposition. This was certainly not the intent of the Congress
in passing this legislation.
As previously stated, there is no doubt that the Justice Department and the
Special Master put forth extensive effort in creating these IFR'S. However, the
IFR's must be consistent with the Congressional mandate, and the letter and spirit of
the law must be honored.
Respectfully submitted,
Comment by:
The American Bar Association