September 11 Digital Archive: XML Document
November 9, 2001
Comments on Regulations to Implement the
Victim Compensation Fund Legislation
Kenneth L. Zwick, Director
Office of Management Programs
U.S. Department of Justice
Main Building, Room 3140
950 Pennsylvania Avenue
Washington, D.C. 20530
Dear Mr. Zwick:
Enclosed is a hard copy of an e-mail comment that I submitted. My e-mail server stated that this e-mail was undeliverable to [private]
Since my e-mail was undeliverable, please accept this mail comment.
The following comments are submitted pursuant to the Notice of Inquiry and Advance Notice of
Rulemaking with respect to regulations implementing Public Law 107-42 establishing the
September 11th Victim Compensation Fund of 20001.
The basic thrust of my comments are to call attention to work of the Presidential
Commission on Catastrophic Nuclear Accidents, , and to
its Report to Congress, volumes 1 and 2, dated August, 1990.
While this report submitted pursuant to the 1988 amendments of the Price-Anderson Act,
(Public Law 100-408) was a comprehensive study of the appropriate means of fully
compensating victims of catastrophic nuclear accidents (greater, than approximately $7.3
billion) many of the issues addressed in the rulemaking to implement the September 11th Fund
were considered in detail in this report from both a legal and public policy aspect. Specifically, with respect to one of the most important issues, the Presidential Commission considered the degree to which payments from collateral sources should be used to offset recovery through a judicial process containing administrative features designed to speed the resolution of cases. The administrative process set forth in the September 11th Fund legislation follows very closely the system set forth in the Presidential Commission report.
On pages 93 to 95 of its August, 1990 report the Presidential Commission on Catastrophic
Nuclear Accidents recommends that payments from collateral sources should not be used to
offset recovery except when a claimant has demanded plenary adjudication (i.e. trial rather
than than the proposed administrative claim resolution process). Further, the Presidential
Commission recommended that in no case should proceeds from life insurance policies be used
to offset recovery.
I recognize that the September 11th Fund Legislation in Section 405 (b)(6) provides that the
Special Master shall reduce the amount of compensation...by the amount of collateral source
compensation the claimant has received or is entitled to receive as a result of the terrorist attacks. While the definition of collateral source means all collateral sources including life insurance, pension funds, death benefit programs and payments by Federal, State or local governments, an open question is whether collateral source compensation includes receipts from charitable donations. In this regard, the consideration of the pros and cons of subtraction of collateral sources in general discussed by the Presidential Commission on pages 93 to 95 of its report, are germane.
The Presidential Commission noted that the collateral source rule usually bars a defendant from introducing evidence that a claimant had received compensation from collateral sources such as insurers or governmental benefit programs. The rationale seemed to be that the defendant (called the tortfeasor in the report) should be required to pay the full extent of the damages his conduct had caused, and should not benefit through a reduced award as a result of any compensatory payments received by the plaintiff from third parties. The Presidential Commission noted that "although double recovery arguably produces a windfall for the plaintiff, the rule reflects the value judgement that it is preferable to overcompensate a victim than to inadequately penalize a wrongdoer."
The Presidential Commission noted that with tort reform, the collateral source rule has
increasingly been subject to debate. At the time of the 1990 report it was noted that 25 states and two federal statutes had restricted or abolished the application of the rule. The
Presidential Commission felt that the collateral source rule should have little force under the special scheme of the Price-Anderson Act because compensation, rather than deterrence, is the principal goal of the Act. Further, the retributive function of the collateral source rule is also not relevant in the Price-Anderson context because losses are borne by the entire nuclear industry and its ratepayers rather by the tortfeasor.
Nevertheless,reducing awards by the full amount of collateral recovery was veiled by the
Presidential Commission as possibly raising substantial considerations of fairness. Where
collateral protection has been obtained through the payment of premiums for insurance, for
example, reducing awards by the full collateral recovery would result in net economic loss to the claimants.
While the Presidential Commission did not consider charitable contributions in its analysis (a non-issue with respect to nuclear accidents) the fairness argument would seem to apply to
charitable gifts. The charitable contributions whether made by individuals and organizations
irrespective of what other compensation, were made by individuals and organizations
through lawsuit, the plaintiff might receive. An after-the-fact use of these funds to reduce
taxpayer burden was probably not one that was contemplated by the charity contributers and
in at least with respect to this collateral source, the possible "evils" of so-called
overcompensation (if such a concept could even exist in the case of these horrendous deaths)
must yield to basic fairness for the plaintiffs.
While not considered in the Presidential Commission report, the regulations under the
September 11th Fund legislation should acknowledge that the use of the fund will entail
questions of sensitivity and tact that may be overlooked in the legally-driven compensation
scheme with a 120 day deadline for awards. For this reason I recommend that the rules
establish at the ouset an Office of Ombudsman, not as another source of special pleading, but as an assistant to claimants and others through the bureaurocratic maze.
PART-TIME AND VOLUNTEER ASSISTANCE
These are new and untried approaches both for the plaintiffs and judicial and executive
governmental bodies involved. The special master and others involved in carrying out the
provisions of the statute should look to experienced persons such as myself who have been
involved in consideration of the pertinent issues in these and other compensation schemes to
assist on a part-tome compensated or volunteer basis.