dojW000779.xml

dojW000779.xml

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2001-11-16

November 16, 2001

Kenneth L. Zwick
Director
Office of Management Programs
Civil Division
U.S. Department of Justice
950 Pennsylvania Avenue
Washington, D.C. 20530

Dear Mr. Zwick

We are writing to provide &nbsp&nbsp&nbsp response to the
Notice of Inquiry and Advanced Rulemaking published on November 5, 2001 in the
Federal Register. Our main office was located on the 104th floor of Two World Trade
Center in New York. SOP is a full service investment bank and broker dealer that prior
to September 11, 2001, had 148 employees in New York and an additional 23 employees
in four smaller offices throughout the country.

SOP lost sixty-six employees and four guests in the terrorist attack. Before the airplane
crashed into Two World Trade Center, approximately twenty employees on the 104th
floor who had been in the office had left the building. Another twenty-five employees
witnessed the events unfold from the street as they arrived for work. No SOP employees
on the 104th floor at the time of the second crash survived. At this time, only twelve of
the SOP victims have been found and positively identified.

Of these victims, forty-six were married and thirty-three had children. The thirty-three
leave behind seventy-five children with three having being born since September 11. We
also had one divorced single parent that was killed. In addition, several employees were
engaged to be married. Ages of the victims ranged from 22 years old to 61 years old.
Thirteen were in their 20's; twenty-six were in their 30's; twenty-three were in their 40's;
three were in their 50's and one was in their 60's. The victim's annual compensation
ranged from the high five figures into seven figures. The job descriptions of our victims
ranged from Senior Managing Principal to Associate. No SOP employees were
physically injured in the immediate aftermath of the attack.

Since the September 11 attacks, SOP has been communicating with each of our families
through our Family Support Center. The Family Support Center is staffed by both of us
and two additional SOP employee's and is assisted by the Triad Group, which has
provided grief counseling to our families, and employees. The Abernathy MacGregor
Group provided initial crisis management support to the families and SOP. Abernathy
has continued to provide support and assistance to SOP and its families. In addition, each
victim's family has been assigned to a surviving SOP principal. Through a combination
of these programs, SOP has become aware of the broad spectrum of concerns and
difficulties faced by those close to the victims.

The clear intent of Congress in adopting the September 11th Victim Compensation Fund
of 2001 (the "Fund" or the "Victims Compensation Fund") is to address, in a full, fair and
prompt manner, the consequences that will be faced by persons injured in the attacks and
their families and those that will be faced by the families of those who perished. As part
of the "Air Transportation Safety and System Stabilization Act" (the "Act"), this Fund is
intended to provide a meaningful alternative for all victims to pursue various tort claims
against the airlines and others.

We strongly believe that in order in to accomplish this goal, any regulations implemented
under this Act and the administration of the Fund by the Special Master should fairly
address the losses faced at all age, job description, or compensation levels.

* This will prevent families from deciding not to use the program, instead pursuing
costly protracted and emotionally devastating litigation.
* It will also absorb the time and energy of defendants and of employers of victims who
will be repeatedly called on to testify in these trials.
* The Fund will then only serve the limited number of persons whose claims will be
small enough to be fairly treated or those so desperate for a "quick" payout,
regardless of the fairness, that they will end up being short-changed for their true
losses.

We believe many victims and their families would embrace a fair and simple claims
process that would provide economic security, allowing them to move on with their
lives. Some families, either because they believe they will do better in conventional
litigation or because they have a need or desire to go through an individualized process
dealing with their loss, will not take advantage of such a streamlined process.

Because of these potentially different approaches, were believe that the regulations should
envision a bifurcated claims process.

1. Simplified Claims Process:
In one, a simplified claim process, the end result of filing a claim should be fairly obvious; almost based on a published formula and
assumptions. As discussed below under Topic #4, assumptions to be utilized by the
Special Master relating to life expectancy, number of productive working years in
relevant industries, anticipated inflation and discount rates, reasonable expectations as
to compensation growth and industry and economic cycles should be published and
be binding on the Special Master and victims representatives who would choose this
process. Even a clear understanding of the award related to pain and suffering should
be established. For this simplified process to provide a meaningful alternative,
awards would have to be in a range which may exceed awards resulting from
conventional litigation or an extended hearing on the facts before the Special Master.

Claimants using this simpler process would have to file a limited amount of
information on a relatively simple form and get a quick result. They would avoid the
costs of hiring attorneys or other experts to prove economic loss or pain and suffering
of the victim. They would avoid a prolonged and emotionally painful process.

2. More extensive process: In a second, more extensive process, the regulations should provide for an evidentiary and hearing process which is much like the damages phase
of a conventional tort case. There should be no assumption that victims who pursue
this process will "do better" than those who pursue the simple process. Obviously, if
neither of these alternatives is acceptable, a victim's representative may pursue
conventional litigation, cognizant of the limitations on liability and venue contained
in Section 408 of the Air Transportation Safety and System Stabilization Act.

The remainder of this comment letter will address certain specific questions raised in
Notice of Inquiry and Advance Notice of Rule Making (the "Notice of Rulemaking") of
the Department of Justice published on November 5, 2001. The underlined captions
below refer to captions where specific issues have been raised in the Notice of Rule
Making.

General approach to regulations that must be promulgated by December 21, 2001.
f) Issues relating to the rules to be promulgated by December 21, 2001.

In light of the extensive waiver of rights for those who make claims under the Victims
Compensation Fund, we believe the rules adopted should be extremely comprehensive.
If the rules are vague or incomplete, many potential claimants may delay filing claims in
an attempt to discern patterns in the prior decisions of the Special Master. In addition,
such an incomplete set of rules may leave open important threshold questions for
potential claimants. For example, potential claimants will need clear guidance on the
scope and application of the definition of collateral source in assessing whether to seek
benefits under the Act. Charities, employers, and other potential sources of support to
victims will also benefit from clarity on this point in making gifts and structuring
survivors benefits. This is discussed in greater detail under Topic #6, below.
It is not entirely clear from the Act if claims made against the Fund can only be asserted
by the victim or the victim's estate or whether ancillary claims, such as family claims, are
also covered by the Fund.
* If allowable claims are limited to victim claims, the litigation waiver should only
apply to the victim or victim's estate.
* If family claims, such as, loss of consortium, loss of parental guidance and comfort or
intentional infliction of emotional distress, are allowed, the waiver of rights to pursue
civil litigation should also cover these persons.
* The eligibility requirements of Section 405(c) appear to indicate that claims are
personal to the victim or the victim's estate. However, the reduction of a benefit
award by collateral source payments that may be paid to others, such as survivors
benefits paid by an employer or insurance proceeds paid to a designated beneficiary
other than the estate, implies that claims should not be limited to the estate. The
regulations should cover this point explicitly.

Topics #1 & 2: The forms to be used in submitting claims under this program and
the information to be included on the claims form.

Consistent with the bifurcated approach discussed above, a simplified application form
should be made available for the simple application process. This form should be
available for any size of benefit claim and should not be limited to claims below a
maximum dollar amount. Even large claims may be efficiently handled through a fair
simplified application process.

Even a simple claims form will require fairly detailed information (which may best be
provided in the form of attachments). Some of the most important information would
include the following:

* Personal information about the victim
* An employment and compensation history and job description of the victim
(either through copies of W-2's, tax returns or letters from employers)
* A description of injuries, if the victim has been injured (which may be in the
form of medical records and receipts)
* Information which establishes the presence of the victim at the sight of the
attack (which may be similar to the information required for issuance of a
death certificate--such as a certificate from the next of kin and from an
employer)
* Information about persons who may have an interest in the benefits paid to the
victim, including family members, other dependents, and known creditors or
others with legal claims against the victim (this information should be used as
the basis for some mailing of a notice to such interested parties, similar to the
process used in administering a probate proceeding)
* Information establishing the legal right of a claimant to act as the personal
representative of the victim (which could be a state guardianship order or
appointment as an administrator or executor for a decedent)

Because this is a new program, we believe there should be a liberal opportunity to correct
mistakes in a filing. Also, in light of the requirement that claimants waive rights to civil
litigation, such waivers should not be effective until the form is accepted as complete for
filing by the Special Master.

Claimants who wish to offer special expert testimony or other substantial proof of special
losses should not be able to avail themselves of the simpler form and process. The
Department may wish to provide for a form that will effectively commence this claims
process, recognizing that greater detail will be submitted in further submissions and
hearing testimony. Shortly after submission of these forms, a schedule should provide
dates by which detailed written submissions of proof are to be provided to the Special
Master. There should be some rules of evidence adopted, including rights to subpoena
witnesses and rules of conduct for document subpoenas and depositions. In addition, if
requested, a hearing should be scheduled. Since this will be a complex procedure, the
Special Master and the claimant should have some limited right to waive specific
deadlines to allow for the proper productions and the preparation of expert reports and
testimony.

Recognizing that this is a new program, and that such claimants may subsequently elect
to pursue the simple process, or pursue litigation, the waiver of the right to pursue civil
litigation should not be deemed effective until some time after the initial filing.

Topic #4: Procedures to assist an individual in filing and pursuing claims under this
title.

The Department should engage experts who can prepare a variety of models and
assumptions on which the Department will rely in handling any simplified version of a
claims process. We believe that such data should be published along with some
explanation of how it will be applied by the Special Master in the claims process. This
will provide certainty in the determination of any awards for simplified claims.
Generally, such data should be prepared by independent highly qualified sources to
assure the fairness of the process. However, certain data may best come from
government sources that have routinely prepared such information for public
dissemination for purposes other than the administration of the Act.

The models and assumptions should cover information such as life expectancy, number
of productive working years in comparable jobs in relevant industries, anticipated
inflation and discount rates, reasonable expectations as to compensation growth and
industry and economic cycle statistics. The assumptions used in establishing awards
related to the pain and suffering of a deceased victim should also be published. All of
such published assumptions should be binding upon the Special Master and those victims
and personal representatives who elect to utilize the simplified claims process.

Claimants seeking relief under the more complicated process may elect to rely on some
or all of such data or offer expert data on their own. However, the preparation of
individualized expert testimony may involve factors not considered in the preparation of
standardized published data used in the simple claims process. Accordingly, the Special
Master should not be bound by such published data and may consult with its own experts
to reflect such special considerations in each of these complex claims.

The Department may wish to specifically address the right of claimants to sell their
potential future awards to other parties. If a fair and quick claim process is made
available, the ability to sell potential future awards would not appear necessary. To the
extent not already covered by existed laws, improper solicitations of potential claimants
should be prohibited. There should be an outright ban on any "cold call" solicitations of
victims or their families.

Topic #5: Claimant Eligibility

In defining both "physical harm" and "immediate aftermath" we believe certain types of
claims, such as those made by persons who were not present in a "circle of imminent
physical danger" at the time of attack or subsequent structural failure, should be excluded
from the Victims Fund process. If this is not the case, the process may be overrun by
claims with a far less clear connection to the terrorist attack. For example, residents of
apartments in lower Manhattan making claims based on environmental damage related to
ongoing fire condition or asbestos contamination have the option to pursue conventional
tort claims and should not be claimants against the Victims Compensation Fund.

The New York City Coroner's office has already established the type of proof necessary
to issue a death certificate for victims. Such a level of proof should be sufficient for the
Special Master to prove that the victim was in such a circle of imminent physical danger.
This would require an affidavit from the next of kin and the employer. Other
information, such as letters from persons who saw a victim in the building, or who spoke
with or received an email from the victim at the time, may help verify these affidavits.

We suggest the following general recommendations:
* If ancillary family claims are not allowed, an injured victim who is competent to
make a claim should be the only party permitted to make such a claim under the Act.
* However, if ancillary claims are allowed to be included, such persons should be
notified that they have a right to join in such a claims process.
* For a surviving victim not competent to make an individual claim, a properly
appointed guardian under state law should be the personal representative.
* For deceased victims, their personal representative should be the same as the
administrator or executor under the intestacy or probate process, since these persons
legally represent the victim's estate. Since New York and other states have adopted
streamlined death certificate and probate processes, the appointment of such a
representative should not be an undue burden.
* In order to limit fraudulent claims, any claims made by persons other than the victim,
the victims next of kin or the state appointed guardian, executor or administrator of
the victim should be reviewed extremely carefully.

Topic #6: Nature and Amount of Compensation

As noted in earlier comments, we believe that the publication of various statistical and
other assumptions used by the Special Master will greatly facilitate the decision process
for potential claimants. In addition, if a bifurcated claims system for simple and complex
claims is adopted, the publication of such information will also assist claimants in
determining which, if any, of these systems should be used.

Noneconomic Losses. While state courts often consider extensive proof as to pain and
suffering, in the case of deceased victims, with very limited exceptions, it will be nearly
impossible to assess relative suffering of similarly situated individuals. Various post-
mortem reviews for the few remains recovered in the Trade Center may provide some
information as to how a specific person died. It is not unlikely that personal
representatives in a position to offer such individualized proof may elect to present
complex written and oral testimony on this issue.

For personal representatives who would avail themselves of a simplified claims process,
a publication of assumptions based on the location of an individual in the various
buildings attacked may be useful to fix compensation for pain and suffering or other
similar claims.

Collateral Sources. We believe that an overly broad definition of collateral sources is
likely to force potential claimants to pursue conventional tort claims and avoid the
Victims Compensation Fund. The Act itself has a substantial inconsistency between the
definition of "Collateral Source" in Section 402 (4) and the impact of collateral sources
on the decision process of the Special Master, as set forth in Section 405 (b)(6).

Section 404 (4) provides:

The term " collateral source" means all collateral sources, including life
insurance, pension funds, death benefit programs, and payments by Federal, State
or local governments related to the terrorist-related aircraft crashes of September
11, 2001. (emphasis supplied)

Section 405 (b)(6) provides:

The Special Master shall reduce the amount of compensation determined under
paragraph (1)(B)(ii) by the amount of the collateral source compensation the
claimant has received or is entitled to receive as a result of the terrorist related
aircraft crashes of September 11, 2001.

If the allowable claims of a personal representative or injured victim do not include
family claims of other relatives, a narrow reading of the operation of Section 405 (b)(6)
to reduce an award solely by amounts payable to the victim or their estate by reason of
such person's death or injury would be appropriate. Such a reading would exclude from
collateral sources used to reduce benefit awards amounts paid to beneficiaries of
insurance policies, pension funds, IRA accounts and other similar items, other than those
paid directly to the victim or the victim's estate. Such a treatment would be generally
consistent with tort law in New York. On the other hand, if family claims are allowable,
it may be proper to include in collateral source payments certain payments made or to be
made to family members.

The definition in Section 402 is apparently very inclusive. However, we believe that the
inclusion of items which were already assets owned by the victim prior to the attack in
collateral sources is not appropriate. For example, vested interests in pension funds and
IRA or 401(K) accounts; the cash surrender value of whole or universal life policies (as
opposed to term policies); vested interests in deferred compensation plans; and other
previous owned equity interests are really assets owned by the victim before the terrorist
related attack. To include these in collateral source items would be to penalize the
victims who saved and built their assets while benefiting victims who made fewer efforts
to save and build their assets. Such "owned" assets can easily be distinguished from term
life insurance payments; disability insurance payments, survivor's benefit payments; and
payments made under various government programs such as Social Security, Workman's
Compensation, and Crime Victims Board payments.

While an argument could be made that payments from various charities are collateral
sources, there is no "entitlement" to such amounts and, accordingly, the language of
Section 405(b)(6) would appear to support exclusion of such amounts. Similarly,
outright gifts from family, friends or employers, do not represent an "entitlement" and
should be excluded from collateral sources. Including such items as the definition of
collateral sources will either reduce the interest of various persons in helping victims and
their families or will cause such persons to wait until claims have been awarded under the
Victims Compensation Fund before making such gifts. If the Department is not prepared
to completely exclude such gifts from collateral source treatment, two alternative options
should be considered. First, at a minimum, gifts for certain purposes, such as payment of
health insurance premiums, tuition or other education assistance and housing and other
"emergency" expenses should be excluded. Second, an allowance for the first $300,000
should be permitted with additional amounts being subtracted from the award.

We appreciate the opportunity to provide these comments to the Department of Justice.
While we recognize the difficulties in drafting regulations to implement the September 11
Victims Compensation Fund of 2001, a fair simplified process will benefit many victims
and families consistent with the purposes of the Act.

If you have any questions, you can contact us at (212) 847-6024.

Very truly yours,

Individual Comment
New York, NY

2001-11-16