September 11 Digital Archive: XML Document
Tuesday, November 27, 2001 1:00 PM
Comments on September 11 Victims Compensation Program
The Comments of the Association of the Bar of the City of New York are attached.
November 26, 2001
VIA FACSIMILE (301-519-5956)
Kenneth L. Zwick. Director
Office of Management Programs
U.S. Department of Justice
Main Building, Room 3140
950 Pennsylvania Avenue, NW
Washington, DC 20530
Re: September 11 Victim Compensation Program
Dear Mr. Zwick:
The Association of the Bar of the City of New York, the City most affected by the September 11 terrorist attacks, welcomes the opportunity to respond to the Request for Public Comment, published on November 5, 2001, relating to the above program established 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." We recognize the enormity of your challenge in fashioning rules to implement this complex but vitally necessary procedure. The Request for Public Comment raises a number of important issues. However, given the abbreviated response time, our comments will be limited to (1) claimant eligibility; (2) procedures for determining the amount of compensation to be awarded; and (3) procedures for hearing and presentation of evidence. We will also comment on issues that may arise by virtue of the possible applicability of New York law under the regulations.
The comments presented below are informed by the general approach and policy set forth in the Request for Public Comment, which emphasizes that: "[w]ithout having information about how the compensation program works,. . . individuals might not be able to assess whether the compensation program is a viable alternative to continuing their litigation," and consequently, "potential claimants have an interest in knowing as soon as possible how the program is likely to operate in their circumstances." (Comment, p. 8). The regulations promulgated to administer the compensation program should adopt procedures that enable any individual considering participation in the program to determine his/her eligibility and to understand at least the approximate range of his/her potential award before waiving any litigation rights.*1
1. Claimant Eligibility
The Act's stated purpose 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." Act, §403. Claimants include individuals (excluding participants in the attacks) who were present "at the time, or in the immediate aftermath, of the terrorist-related aircraft crashes" and who "suffered physical harm or death as a result. . . ." Id. at §405(c)(2)(A). In the case of a decedent, "the personal representative of the decedent" is the person who is eligible to file the claim. Id. at §405(c)(2)(C). The Act further provides that "[n]ot more than one claim may be submitted. . . by an individual or on behalf of a deceased individual." Id. at §405(c)(3)(A).
The Act does not contain a definition of the term "personal representative". Consistent with the Act, the executor or administrator of a deceased individual, duly appointed under state or other applicable law, should be the only individual authorized to file claims on behalf of the decedent, absent a showing that obtaining such a court appointment in a timely manner is not feasible. This approach enables potential claimants to determine their eligibility to file claims with certainty before opting into the program (which is of paramount importance due to the statutory waiver of civil litigation rights), and avoids embroiling the Special Master in disputes among competing, self-appointed representatives of the decedent. For the same reasons, and again subject to exception for good cause shown, all awards should be made to this court-appointed representative and thereby subject to the supervision of the appointing court with respect to distributions of the award to the decedent's relatives. Escrow payments
can be used, as suggested in the Request for Public Comment, if an executor or administrator is not appointed by a court of competent jurisdiction within the time provided by the Act for the filing of claims.
The regulations should provide a method for proceeding under the Act in those situations where it would not otherwise be necessary for a personal representative to be appointed, such as, for example, where all property was held in joint names. In such situations where only adults are involved, they could provide for the decedent's distributees and the personal representative named in the will (if any) to designate one or more persons to act for them, and that person or those persons could be the personal representative for purposes of the Act.
In situations where the personal representative and the distributees cannot agree as to whether to execute the waiver required to proceed under the Act (see p. 5, below), the regulations probably have to prevent either side from so proceeding, absent a ruling to the contrary by a state court.
2. Nature and Amount of Compensation
The Act requires claimants to state "the amount of compensation sought" on the claim form, and it requires that all claimants must waive their rights to file or participate in civil litigation for damages sustained as a result of the terrorist attacks. Act, §§ 405(a)(1), 405(c)(3)(B). Consequently, individuals considering whether to participate in the statutory compensation program must be able to calculate the amount of potential awards, at least within an approximate range, in order to make reasoned, informed decisions about whether to opt into the program or to pursue litigation.
To achieve this objective, the regulations should establish a grid that calculates awards, to the extent feasible, through the use of formulas that give similar amounts to claimants similarly situated. This approach will enable potential claimants properly to evaluate their options before filing a claim. It will also expedite the process, assuring that awards are determined within the designated 120-day statutory period, obviating in most cases any need for extensive hearings and evidentiary submissions. It will also promote both the fact as well as the perception of fairness, minimizing the risk of arbitrary award distinctions between similarly situated claimants.
There are practical and statutory limits to the completeness and rigidity of such a grid, however. It is not possible to represent fairly, in advance of any filings or hearings, all possible variations in the "harm to the claimant, the facts of the claim, and" -- especially -- "the individual circumstances of the claimant," which the Act requires be the bases of the "amount of compensation to which the claimant is entitled." Act, § 405(b)(1)(B)(ii). Nor would a rigid prohibition on variations in awards, based on the claimants' respective circumstances, be consistent with the value America places on the unique dignity and worth of each individual. We should not treat the thousands of victims of the terrorists as faceless and fungible, unworthy of particularized decision-making. Thus the grid should provide presumptive parameters for awards, but should not preclude the Special Master from varying awards within those parameters (or even outside the parameters, in extraordinary cases) to reflect "the individual circumstances of the claimant."
Similarly, while a well developed grid should minimize the number and length of evidentiary hearings, thus helping achieve the Act's purpose of affording prompt compensation, it cannot preclude the right of a claimant under the Act "to present evidence, including the presentation of witnesses and documents. . . ." Act, § 405(b)(4)(B).
The Act provides for awards to individuals who suffered "physical injury" as a result of the September 11 terrorist-related aircraft crashes. Act, § 405(c)(2)(A)(ii). No bright-line test (e.g., "serious injury") should be applied once the threshold of "physical injury" is established, though the degree and permanency of the injury necessarily should be a significant factor in determining the award amount.
With respect to latent injuries, should such an injury manifest itself between the time a claim is filed and the award issued, we believe that the claimant should be permitted to amend the claim to assert such injury.
The Act provides no express guidance as to the size of awards, and plainly the regulations must address this subject in order to establish an award grid. By pointing to "applicable State law" in defining the types of recoverable "economic loss," Act, § 405(5), Congress has pointed to one logical source for the Special Master's decision-making. Compare Act, § 408(b)(2), providing, in the context of the federal cause of action against air carriers, that the substantive law for decision "shall be derived from the law, including choice of law principles, of the State in which the crash occurred. . . ."
However, there is not a direct correlation between the purposes and provisions of the Act and the operation of New York law as it would apply to lawsuits for injuries or deaths in analogous circumstances. Accordingly, while the Special Master may be able to make some use of state case law in formulating awards, the regulations cannot adopt state law whole cloth. In fact, the regulations need to address some issues that otherwise will arise by reason of the application of the New York law governing the estates of decedents and their survivors. We now summarize some of those issues.
Section 403 of the Act states that the purpose of the Act is to provide compensation to persons injured and to relatives of those who were killed as a result of the September 11, 2001 terrorist related aircraft crashes. Compensation may be awarded for both economic loss and noneconomic loss. Section 402(5) of the Act defines economic loss as "any pecuniary loss resulting from harm ... to the extent recovery for such loss is allowed under applicable State law". It is not restricted to loss suffered by a "claimant". However Section 405(b)(1) of the Act requires the Special Master to determine the amount of compensation to which a claimant is entitled based upon the harm "to the claimant." Reading Sections 402(3), 405(a)(1) and 405 (c)(2)(A) of the Act leads to the conclusion that, in the case of decedent victim, the claimant is the decedent. The regulations must therefore determine whether only damages recoverable by the decedent (or the decedent's estate) under New York law are recoverable under the Act
or whether it is also possible to recover damages that New York law would allow to the family of the decedent. We urge the latter approach.
Under New York law a decedent (or, more properly a decedent's estate) can only recover in a personal injury action under section 11-3.3 of the Estates, Powers and Trusts Law (the "EPTL") for damage, such as pain and suffering, medical expenses, etc, suffered by the decedent prior to death. No recovery may be had under that section for post-death damages, other than funeral expenses. Any recovery under that section accrues to the decedent's estate and passes with his other property under his will or, if he has no will, to his intestate distributees.
The right to recover for post-death damages, such as loss of future earnings, must be asserted in a wrongful death action under EPTL 5-4.1 - 5-4.6. This is an action brought on behalf of the decedent's distributees by the decedent's personal representative. Any recovery belongs to those of the distributees who suffered damage by reason of the decedent's death, and not to the decedent's estate. The measure of damages is the loss suffered by the distributees, and not the loss suffered by the decedent. If a personal representative fails to bring a wrongful death action, the distributees can have an administrator appointed by the court to bring the action on their behalf. The action belongs to the distributees and the personal representative who brings it on their behalf acts, in effect, as an agent or trustee for them.
The regulations should clearly provide that damages recoverable in a wrongful death action in New York will be awarded (even though, technically, they are not compensation for harm to the claimant, i.e. the decedent). This result is faithful to the express purpose of the Act "to provide compensation to . . . relatives of a deceased individual" killed in the attack. Act, § 403.
The regulations also should provide for the Special Master to identify the basis for the grant of the various portions of the award so that the local probate court can determine the portions properly allocable to the distributees and to the decedent's estate. (Parenthetically, the portion allocable to the distributees as recoverable in a wrongful death action would not be subject to estate tax.)
The regulations also should deal with the problem of the dual rights created by New York law, in the content of the waiver requirement of Section 405(c)(3)(B) of the Act. Since the right to the wrongful death action is vested in the decedent's distributees, while the right to the pain and suffering action is vested in the decedent's estate, it would seem that a waiver by the distributees who would be entitled to bring the wrongful death action as well as by the personal representative should generally be required. Where one or more of the distributees is a minor who does not have a court appointed guardian, the regulations could adopt virtual representation concepts, such as those of section 315 of the Surrogate's Court Procedure Act of the State of New York, or permit waiver on the minor's behalf by a natural guardian, such a parent. Every effort should be made to avoid the need to have a guardian appointed by a court for this purpose. Since any award would be payable to a personal representative (and where minors are involved, a court appointed personal representative should be required), the minor's rights would be safeguarded by the local court which appointed the representative.
In a wrongful death action, recovery by the distributees of a firefighter or police officer can be barred by the so-called "fireman's rule", which prohibits recovery when otherwise actionable negligence resulted in a hazard that the firefighter or officer was employed to confront and the death resulted from that hazard. (The same rule prevents a living fire or police officer from recovering for injuries in such a situation.) Application of the fireman's rule is not appropriate under the Act, since the rule is a defense to a negligence action, and under Section 405(b)(2) of the Act negligence is not to be considered. The regulations should provide that the fireman's rule will not bar a recovery under that Act. Contributory negligence also should not be considered.
The Act appears to require, by its definition of economic loss, that distinctions in the awards to claimants be drawn in part based on the differing levels of, inter alia, their "earnings and other benefits related to employment. . . ." Some distinctions between claimants may also be appropriate with respect to "non-economic losses," such as for pain and suffering. But we suggest that there should be no distinctions in the pain and suffering component of awards to decedents. The amount of compensation for pain and suffering should not turn on such factors, for example, as whether a decedent was or was not able to reach his family by phone after a crash or hijacking, and was thought on this or some other basis to have suffered or not suffered an instant death or a prolonged anticipation of death. Such distinctions among the deceased victims would neither appeal to our sense of fairness nor respect the dignity of the victims. Here is one situation, then, in which we recommend as a matter of policy that the grid establish a fixed or generous amount, not subject to variation.
The Act requires the Special Master to reduce the amount of any award "by the amount of the collateral source compensation the claimant has received or is entitled to receive" as a result of the terrorist attacks. Act, § 405(b)(6). This section does not specify whether charitable contributions received by claimants should be treated as collateral source compensation. We urge that charitable contributions not be treated as collateral source compensation, consistent with New York law. We understand that this point has been fully briefed for you in the joint comments submitted by the Governor and Attorney General of New York State and the Mayor of the City of New York.
The regulations also should clarify that collateral source compensation received by persons other than the claimant (i.e., the decedent's estate) will not reduce awards. For example, reductions for life insurance and death benefits should be restricted to insurance and benefits that are payable to the decedent's estate, rather than to a spouse or other survivors. A different reading would treat unfairly between survivors of a decedent who invested in a life insurance policy, the proceeds of which would go to reduce an award, and a decedent who invested in stock, the value of which would not go to reduce an award.
If, contrary to our recommendation, the regulations are written to require a reduction of awards for collateral compensation to persons other than the decedent's estate, then the regulations should distinguish between benefits that are payable to those entitled to receive an award and benefits that are payable to others. For example, an award to a surviving spouse under the Act should not be reduced by the proceeds of a life insurance policy that are payable to a sibling who is not one of the decedent's distributees.
The regulations should further provide that the claim of a domestic partner of a deceased should have the same weight as that of a spouse, to the extent permitted by applicable law. In addition, a domestic partner should be entitled to serve as a personal representative under the Act.
3. Procedures for Hearing and Presentation of Evidence
As stated above, adoption of the aforementioned approach would permit resolution of many claims on written submissions, reducing the need for evidentiary hearings before the Special Master, though preserving the statutory right of a claimant to a hearing and the right to present witnesses, if the claimant so requests. Hearing officers may utilize different means of speeding the hearing process, such as by requiring, in appropriate cases, direct testimony to be submitted in writing and cross-examination to be limited to instances in which credibility has to be determined.
Claimants who cannot afford counsel should be referred to attorneys who have registered with local bar associations or trial lawyers associations to represent such claimants on a pro bono basis. The Special Master should provide for claimants to be able to consult with accountants or other experts as necessary to prepare a claim.
While pro bono counsel should be available to claimants, claimants should be free to retain counsel of their own choice. Any attorney appearing on behalf of claimants before the Special Master should obtain from their clients, as part of their retention, an acknowledgement that the claimant has been advised that it is not necessary to retain counsel in order to make a claim or appear before the Special Master and that there are bar associations providing free legal counsel, a list of which can be obtained from the Special Master's office. The attorney must also fully disclose, in writing, the amount or means of calculating attorney's fees and disbursements and who is to provide capital outlays anticipated in advance of an award. Finally, the regulations should provide that fees be reasonable as recognized by professional rules of ethics.
The information and evidence required to state a claim should be plainly stated in the form to be developed for the program. The form should be available in English, Spanish and other languages needed by more than a nominal number of claimants. The evidence required to support a claim should not exclude potential claimants by reason of citizenship or residency status in the United States.
Hearing officers should review each claim form to determine whether it is complete before submitting it to the Special Master. Until the form is determined to be complete and is so submitted, the claim should not be deemed "filed" for the purpose of triggering the Special Master's 120 day decision period (Act, § 403(b)(3)), or waiving the claimant's right to sue in court (Act, § 405(e)(2)(B)(i)). No claim should be denied with prejudice on the basis of an incomplete form. In addition, should the Special Master determine at any phase of the proceeding that a claimant is not eligible for purposes of § 405(c) of the Act, the claimant should have the right to opt out of the procedure, thereby permitting the claimant to pursue litigation.
Claimants should be permitted to designate venue, and there should be hearing tribunals established in, New York City, Washington, D.C., Boston and Los Angeles.
* * *
The Request for Public Comment notes that the regulations to be issued by December 21 could be promulgated as "internal final" rules, making possible an additional round of public comment concerning whether such regulations should be
amended. The Association strongly supports this procedure, and looks forward to submitting further comments in response to these regulations once issued. In addition, committees of this bar association would be happy to provide further assistance as you develop and implement these rules.
Very truly yours,
*1 In response to an inquiry in the Request, we are advised that to date four claims have been filed in the Southern District of New York seeking damages arising out of the September 11 terrorist attack.
Association of the Bar of the City of New York