P000026
Wednesday, January 23, 2002 2:34 PM
Twelve of my friends and former colleagues were lost at the World Trade
Center. I am writing to express my serious concerns and objections to the
Department of Justice's (DOJ) "Interim Final Regulations Governing Payments
Under the September 11th Victim Compensation Fund." As things stand now,
the airlines essentially get bailed out at the expense of the human victims
of the tragedy.
The airline bailout act gave the airlines $15 billion in cash and loan
guarantees and capped the airlines' liability for the September 11 crashes
at the limits of their insurance coverage. Because of this cap, the damage
caused by the crashes greatly exceeds the private funds available to
compensate victims and their families. Thus for the vast majority of victims
and families, the cap has the effect of eliminating the right that they
would otherwise have to sue the airlines. Congress set up the Victim
Compensation Fund to ensure that the airline bailout would not come at the
expense of the victims' families. The act mandates full and fair
compensation to victims and their families for their actual economic and
non-economic damages.
DOJ seems to have ignored this mandate and instead has written arbitrary
regulations that will result in compensation levels far below the losses
actually suffered by the victims and their families. In fact, many families'
total compensation from the fund and all collateral sources combined will
not even fully replace lost income.
DOJ's formula allows for non-economic awards at only one-tenth the level
paid in comparable cases, even though Congress explicitly enumerated a
broader range of non-economic damages than could be recovered in any single
jurisdiction. DOJ's formula for non-economic damages is $250,000 for the
person killed and $50,000 for the spouse and each dependent. In a wide
variety of air crash and terrorism cases, however, judges, juries, and
mediators commonly have provided non-economic damage awards well into the
seven-figure range.
Independent economists have found serious flaws in DOJ's method of
calculating economic damages, including use of outdated and inapplicable
worklife and life-cycle earnings data. DOJ underestimates promotions and
other increases in earnings for victims. It relies on civil service and
military retirement system actuarial data that track federal worker incomes
and pension requirements, not the higher-paying private sector career paths
followed by the vast majority of the victims.
Importantly, the interim final regulations appear to arbitrarily ignore
a victim's income to the extent that it exceeds $231,000 a year. The income
cap would result in some families receiving compensation for less than 25%
of their actual economic losses, despite the Act calling for consideration
of ?the extent of the harm to the claimant, including any economic and
noneconomic losses.? The cap would produce truly bizarre results that are
surely not the intent of the Congress: a 40-year old earning a seven-figure
income would be awarded substantially LESS money than a 30-year old earning
$230,000 ? despite the fact that the 40-year old would have greatly
out-earned the 30-year old over the course of the respective remaining
working lives. (This results from the 40-year old?s income being capped at
$231,000 for the purposes of the award, but having 10 fewer years of assumed
remaining working life.) Again, Congress wanted to provide compensation for
actual economic loss?there is simply no mention, or even hint, of a
income-based cap in the Act.
Under DOJ's rules, a family's award may be increased above the
"presumptive" award only by a showing of "extraordinary circumstances" --
beyond those suffered by other victims or victims' families. This high
burden of proof makes a charade of the right to a hearing provided by the
statute.
DOJ should fulfill the act's intent by revising the rules to compensate
victims and their families for the types of damages specified by Congress,
at levels comparable to those provided in the tort system the fund was
designed to replace. While DOJ has shown flexibility on some aspects of the
rules, it is resisting the victims' and families' requests for significant
changes. If the proposed regulations are not changed significantly,
victims' widows will have to sell their homes, deplete their children's
college funds, and give up their plans of being full-time parents while
their children are young. Many
families, anticipating little relief from the fund, will decide to sue the
airlines and others, despite the handicap of the liability limits. We do not
believe these are the outcomes Congress intended.
Sincerely yours,
Greenwich, CT