dojN002014.xml

dojN002014.xml

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2002-01-18

Friday, January 18, 2002 6:54 PM
Letter to Kenneth Zwick 1/18/02 (A0521964.DOC;1)


Attachment 1:

January 18, 2002


Kenneth L. Zwick, Director
Office of Management Programs
Civil Division
U.S. Department of Justice
Main Building
Room 3140
950 Pennsylvania Avenue NW
Washington, DC 20530


Dear Mr. Zwick:

I am a plaintiff's attorney with an office in Westborough, Massachusetts. Enclosed are my personal comments on the proposed regulations for the Victim's Compensation Fund.
The "presumed" awards are grossly unfair and undervalued. By way of example, the award for a forty-five year old man earning $125,000.00 a year with one child is $1,384,000.00. As you are well aware, in the Lockerbie case, &nbsp&nbsp&nbsp&nbsp , Esq. received a verdict of $19 million. I suspect that Attorney &nbsp&nbsp&nbsp&nbsp and other aviation attorneys will be prepared to file suit against the airlines and that verdicts for the September 11, 2001 tragedy will easily exceed the Lockerbie verdicts. Even if we look to statistics kept on jury verdicts and use "conservative values," the presumed awards are grossly unfair. Enclosed is a printout of an independent evaluation prepared on Jury Verdict Research software. I am informed that some insurance companies utilize this software as a basis for "conservative" settlement awards. The projected award for a forty-five year old man earning $125,000.00 a year with one child is $4,983,000.00. As you know, the Fund is supposed to cover economic and noneconomic damages (including hedonic damages). Government and Economic studies have put the value of life at between $9 million and $13.4 million1.
Tragically, children from Massachusetts who lost parents on September 11, 2001 will be denied fair compensation. Under Massachusetts law, if the decedent is survived by a wife and two minor children, any proceeds from a wrongful death claim are paid one third to the wife and two thirds to the minor children. Massachusetts General Laws Chapter 229 §1
A guardian ad litem is often appointed to take responsibility for the settlement proceeds awarded to the minor child. In many cases a structured settlement will be approved to fund the minor's education. The minor's money cannot be spent by the parents and the settlement proceeds earn interest tax free.
One of the main purposes of the Victim's Compensation Fund is to save the families from reliving the horrific events of September 11 and to provide fair compensation. The regulations further provide that the Special Master shall review the plans submitted by the Personal Representatives to be certain that ample funds are paid to the spouse and children. It seems clear that Congress intended to provide fair compensation to a victim's children.
However, because the new set of regulations is different than the first set of proposed regulations, it appears to me that the regulations have created certain vagueries and ambiguities. As a result, many young children will not receive any collateral source benefits or any compensation from the Victim's Compensation Fund.
As originally proposed, the regulations specified that collateral source payments would be deducted only from the beneficiary who actually received the collateral source payment. Now that the rules have eliminated this proviso, many children who lost their parents may now receive nothing from the Fund. To prevent this injustice, the rules must clarify the distinction between "personal representatives," "beneficiaries" and "claimants." Here are two examples of how the collateral source payment provision can be interpreted to deny compensation to children who lost a mother or father in the September 11 tragedy:
EXAMPLE 1
1. On September 11, 2001, Mr. X was insured for $1.5 million. However, since Mr. X was an attorney in partnership with his brother, Mr. X named his brother as the beneficiary of the policy. Furthermore, since Mr. X's brother is an attorney, Mr. X named his brother as the executor under the will. Mr. X was forty-five years old; he had two minor children and he was earning $100,000.00 a year.
Under the Fund, the "presumed" award would be approximately $1.5 million. However, since his brother received $1.5 million in insurance, there would be no payment to the wife and no payment to the children under the Fund. Since the presumed award is zero, there is no "plan" to be submitted to the Special Master and therefore the Special Master would not even have an opportunity to step in and undo this injustice. However, if the regulations specified that the collateral source payment would be deducted only from the beneficiary who received the collateral source payment, then the $1.5 million "presumed" payment from the Fund would be payable to the brother as "executor." Under Massachusetts law the brother would not receive any of the money from the Fund. However, as executor, he would be required to pay one third to the wife ($500,000.00) and two thirds to the children ($1,000,000.00).
Obviously, Congress did not intend to deprive the victim's wife and children of any compensation under the Fund simply because the decedent had a life insurance policy payable to his brother. In these types of cases the provisions of the Fund and the regulations will force the wife and children to file suit against the airlines (as their only source of compensation).
EXAMPLE 2
2. Similarly, if the decedent's 1.5 million life insurance policy is payable solely to the wife, then the children will not receive any compensation from the Fund.
The current regulations could be construed as follows:
If the wife received $1.5 million in life insurance, then neither the wife nor the children would receive anything under the Fund. However, under Massachusetts's law, if the wife and children were awarded $1.5 million for the decedent's wrongful death, then the wife would receive $500,000.00 and the two children (through a court appointed guardian) would receive $1,000,000.00.
If the regulations clearly stated that the collateral source payment would be deducted only from the beneficiary who received the payment then the injustice would be corrected and the two minor children would receive $1,000,000.00 from the Fund. Since the wife received $1.5 million in insurance, she would not receive any payment from the Fund.
In other words, if we assume that the benefits from the Fund to be paid to a personal representative would be $1,500,000.00, then the deduction for collateral payments should work as follows:



Wife Child


"Presumed" benefit: $500,000.00 $1,000,000.00
Collateral payments: (- $1,500,000.00) No collateral payments
paid directly to child

Payment from the Fund: [Zero] $1,000,000.00
$500,000.00
(- $1,500,000.00)


As a nation, we must be certain that any child who lost a mother or father on
September 11, 2001 will be financially secure. These children will live their lives without the care,
comfort, guidance and support of a parent. Under the current regulations, just because the
decedent's brother or his wife received a payment from a life insurance policy, a young child may
not be able to collect any money from the Fund. As a result, the children of this tragedy may have
no choice but to file suit against the airlines and be forced to litigate and relive the death of a parent.

Please be certain that the regulations are clarified so that collateral benefits are deducted
only from the beneficiary who actually received the collateral source payment. We must protect
the children who are the true victims of the terrorists.

Very truly yours,

Individual Comment

2002-01-18