N002471
January 18, 2002
Mr. Kenneth L. Zwick, Director
Office of Management Programs
U.S. Department of Justice
Civil Division
Main Building, Room 3140
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530
Dear Mr. Zwick:
The Justice Department has requested comments with respect to the
Interim Final Rules (AIFR=s@) which were put in place on December 21, 2001
regarding the September 11th Victim Compensation Fund Act of 2001. (Athe
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 United
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 Department 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 victims 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 donated by millions of Americans will be deducted from victims=
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 Aeconomic@
and the Anoneconomic@ 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
victims 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 victims 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 victims 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 victims=
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, awards 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 on 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 Ajust@ and Aappropriate@ 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 reference is made in the IFR=s to the
possibility of exceeding the presumed limitation of $3 million, when
Aextraordinary circumstances@ are presented, the term Aextraordinary
circumstances@ is not defined. Therefore, there is no predictability, and potential
claimants cannot make an informed decision on whether 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 regarding economic damages. More
specifically, with respect to noneconomic damages, the Special Master states:
. . . the Special Master and the Department 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 for categories 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 victims 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 envisioned and intended by Congress. It appears that the Special Master
has substituted his views about what is a Ajust@ award, and Aappropriate@
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
Aefficient, straight forward 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 forward if presumptions
are on-again, off-again tools. Additionally, the caps on damages and presumed
awards do not conform with the intent of Congress. Instead of allowing a real
evidentiary hearing at which evidence can be aired, without prejudgment, 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 receive less than full
compensation for the harm caused to them 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 seriously impacted.
In addition to the above comments with respect to economic and
noneconomic damages, the IFR=s present a number of other issues which warrant
further review and consideration.
Rescue Workers Receive no Benefits Under the Current IFR=s
The IFR=s suggest that Arescue 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 has
excluded virtually all rescue workers (at least those in government employ) from
benefits because their collateral payments 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 AStatement@ that it [Amay 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
victims 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 for 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 Aundertaking@ 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
potentially 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 Ato enter the program B
or choose not to enter the program B 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 claimants 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 offer 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 Officers Cannot Become Adversaries of Claimants 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 Claimants 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 proposition 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
previous 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 witnesses 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 charts 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