dojN002022.xml

dojN002022.xml

born-digital

email

yes

no

2002-01-18

Friday, January 18, 2002 8:33 PM
compensation

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 fund 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 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 has ignored
this mandate and instead has written arbitrary
regulations that will result in compensation levels
far below the losses actual 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. In
effect, these families will not receive any of the
non-economic compensation required by the statute.
After collateral sources are deducted, as required by
the statute, some families would receive nothing from
the fund under the interim final regulations.

DOJ's formula allows for non-economic awards at only
one-tenth the level paid incomparable 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including use of outdated and inapplicable work life
and life-cycle earnings data. DOJ greatly
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. The interim final
regulations also arbitrarily cap a victim's
income at $231,000 a year. Combined with the faulty
methodology described above, the income cap would
result in some families receiving compensation for
less than 25% of their actual economic losses. 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.
Thank you for giving this matter your immediate
attention.


Individual Comment
NY NY

2002-01-18