dojN002252.xml

dojN002252.xml

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2002-01-22

Tuesday, January 22, 2002 12:44 PM
Comments on Distribution of Sept 11th Fund


To Whom It May Concern:

I am writing on behalf of the families affected by the September 11th
Disaster. My daughter's grandparents were on
American Flight 77, that crashed into the Pentagon. No monetary award can
ever replace the great loss experience by all the families, however it is
not fair to "penalize" the families who are receiving additional monetary
compensation from other sources.

This "other monetary source" is there because of the years of hard work, and
financial planning in the event of their death. This money is due to the
families no matter what the circumstances are surrounding their death.


It is only fair that they should receive this money, plus the FULL
distribution from the September 11th fund.

I hope that you truly listen to the voices of those affected by this
tragedy.
============================================================================
==============================================
I am writing to express my serious concerns and objections to the
Department of Justice's (DOJ) "Interim Final Regulations Governing Payments
Under the September 11th Victim Compensation Fund."
=====================
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 in comparable 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.

Please contact Attorney General John D. Ashcroft and Special Master Kenneth
R. Feinberg and tell them of your concern that the interim final regulations
fail to conform to the language and intent of the act. With the regulations
soon to become final, I believe that only the swift and strong support of
Congress can avert unnecessary financial and emotional damage.
Thank you for giving this matter your immediate attention.

REP. MEEHAN'S 1/14/02 LETTER TO MR. FEINBERG:
Dear Mr. Feinberg:
I am writing to provide comment on the interim final rules for the September
11th Victim Compensation Fund ("the Fund").

I appreciate the hard work you, your staff, and the Justice Department put
into assembling the interim final rules. I also appreciate the fact that,
under the interim final rules, charitable contributions to persons injured
in the September 11th terrorists attacks or the relatives of those who lost
their lives in this tragedy will not offset Fund awards. I had weighed in on
that particular issue during the prior notice-and-comment period, in
correspondence dated November 26th, 2001.
At the same time, I strongly and respectfully request that the interim final
rules be modified to provide truly full and fair compensation for economic
and non-economic harm incurred by victims of the September 11th terrorist
attacks and their loved ones. I had emphasized the moral and practical
imperative of providing full and fair economic and non-economic damage
awards through the Fund during our meeting of December 13th, 2001.
Unfortunately, I do not believe the interim final rules achieve this
objective. More importantly, those directly affected by the September 11th
terrorist attacks consider the interim final rules to be seriously deficient
and are-quite understandably-angry, hurt, and frustrated.

A combination of unjustifiably low presumed non-economic damages awards, a
flawed presumed economic damages formula, the collateral source offset rule,
and an inappropriately steep evidentiary hurdle to securing modifications to
presumed Fund awards will operate in many instances to prevent victims and
their loved ones from receiving full and fair compensation-and, on occasion,
any compensation-through the Fund. This would frustrate Congress's intent,
deprive some families of resources critical to their economic security,
encourage litigation, and send entirely the wrong signal to these families
regarding our government's and society's estimation and appreciation of the
magnitude of their loss.

In the airline relief and airline security bills, Congress limited the
courtroom liability of airlines, the airline industry, the World Trade
Center, and other parties. It recognized that these liability
limits-operating alone-might deprive victims of the September 11th terrorist
attacks and their loved ones of full and fair compensation for the terrible
harms they have suffered. Thus, Congress created a government-funded program
to provide full and fair compensation for the economic and non-economic harm
suffered by victims and their loved ones, minus a narrow range of collateral
source payments. Notably, it did not subject the program to the annual
appropriations process. Rather, it funded the program through mandatory
spending. In other words, the manifest intent of Congress was to ensure that
the program fully and fairly valued the economic and non-economic harm
suffered by victims and their loved ones-federal budgetary and cost
considerations notwithstanding. Indeed, this would not only benefit victims
and their loved ones but also reduce litigation arising from the September
11th attacks.

Along these lines, the fact that courtroom litigation may be less attractive
to victims and their loved ones due to the liability limits imposed by
recently enacted federal law certainly does not support valuing economic and
non-economic damages incurred by victims or their loved ones for purposes of
the Fund at levels significantly lower than what one would secure in a
successful courtroom action. Those liability limits instead make it
particularly imperative that damages estimates under the Fund be full and
fair. Again, this is not only good policy but also the clear intent of
Congress.

To achieve this objective, I respectfully urge you to modify the interim
final rules to increase presumed non-economic damage awards to amounts that
fully reflect the damages that Congress listed as compensable, correct any
and all methodological and statutory interpretation flaws in the setting of
presumed economic damages, and allow increases to presumed awards based
simply upon a showing that such awards do not accurately reflect the damages
incurred by victims and their loved ones (as opposed to requiring a showing
of "extraordinary circumstances" for increases to presumed awards).
First, the presumed non-economic damages awards provided under the interim
final rules are substantially lower than those paid in comparable cases.
Non-economic damage awards in considerable excess of $1 million are typical
for other airline crashes and terrorism cases, but in this instance,
presumed non-economic damages awards are limited to $250,000 per victim and
$50,000 for a spouse and each dependent. This dramatic undervaluation of
presumed non-economic damages runs contrary to Congress's general intent to
provide full and fair compensation and, significantly, to the specific
language of the law establishing the Fund, which lists an extremely broad
array of non-economic damages for which victims and their loved ones are to
be compensated (regardless of what may be allowable under state law). This
problem bears considerable responsibility for the fact that many victims or
their loved ones would reportedly be severely under compensated or even
receive no compensation under the Fund - potentially driving them to pursue
litigation which, due to statutorily imposed liability limits, may
shortchange them as well. The interim final rules can and should be fixed
to increase presumed non-economic damages awards to amounts which properly
reflect Congress's intent and are a more realistic assessment of the
considerable pain and suffering endured by the victims of the September 11th
terrorist attacks and their loved ones.

Second, a number of economists or experts have pointed out flaws in the
interim final rules' methodology for calculating presumed economic damages.
The use of outdated and improperly aggregated federal government data and
the underestimation of household services performed by victims and of real
increases in earnings by administrative support and clerical workers, among
other things, has resulted in the unjustified and unnecessary undervaluation
of presumed economic damages. The interim final rules' cap on the level of
income a victim may be considered to have earned per year for the purpose of
calculating presumed economic damages awards serves to exacerbate this
problem. I strongly urge you to provide interested parties with all
information that is necessary and useful to further evaluate the propriety
of the interim final rules' presumed economic damages methodology and then
correct all flaws that would tend to undervalue such damages.
The fact that these are merely presumed economic and non-economic damages
amounts - purportedly subject to upward adjustment based on specific
evidence of loss presented at hearings or through supplemental evidentiary
submissions by victims or their loved ones - does not excuse flaws in their
calculation. Rather, presumed awards should be based on the best available
data and methodologies regardless of the hearing or evidentiary submission
option. Indeed, the goal of providing accurate compensation expeditiously
through the Fund is furthered by having properly justified presumed Fund
awards, as this may diminish the need for hearings or supplemental
evidentiary submissions in each and every case. It also may be overly
optimistic to assume that each Fund claimant will be able and willing to
present evidence at a hearing to correct inaccuracies in the presumed Fund
awards in light of their individual circumstances. Indeed, one can
reasonably expect that some victims or their loved ones may, upon viewing
inadequate presumed Fund awards, have little faith in the ultimate fairness
of the hearing or supplemental evidentiary submission process and decide to
forsake the Fund altogether.
More importantly, the misplaced requirement contained in the interim final
rules (though not contained in the statute establishing the Fund) that a
Fund claimant demonstrate "extraordinary circumstances" through supplemental
evidentiary submissions or at a hearing to justify increases to presumed
Fund awards could serve essentially to "lock in" the unfair presumed
economic and non-economic damage awards in any given case. Whether or not
the presumed awards are fair, upward adjustments should be possible simply
upon a showing by a claimant that a presumed award does not accurately
reflect the economic and non-economic damages he or she has endured. But
this degree of flexibility is particularly essential if the presumed
economic and non-economic damage awards would in many cases provide less
than fair and full compensation. The "extraordinary circumstances"
threshold, however, may prevent the accurate and individualized Fund awards
intended by Congress, because while all victims and their loved ones have
endured extraordinary hardships, it may be difficult for a single Fund
claimant to establish that his or her circumstances are "extraordinary"
relative to all other victims and their loved ones.
The hearing or supplemental evidentiary submission opportunities for victims
and their loved ones must certainly be structured so as to afford them ample
time and a convenient way to make their case. But even a properly structured
hearing or evidentiary submission process would not remedy the difficulties
arising from the inappropriately stringent "extraordinary circumstances"
standard. Congress did not erect or envision any such obstacle to the award
of accurate and individualized compensation to victims and their loved ones.
Indeed, as Congress has considered bankruptcy reform legislation over the
past few years, it has moved away from using an "extraordinary
circumstances" threshold for permitting deviations from a grid of allowable
expenses for debtors in favor of a standard that more readily accounts for
debtors' particular economic circumstances. Accordingly, the "extraordinary
circumstances" threshold should be modified.
I do appreciate the fact that the interim final rules will not offset Fund
awards by the amount of charitable contributions received by a victim or his
or her loved ones. I believe the collateral source offset provision of the
law is misguided. To the extent the final rules do offset Fund awards by
virtue of certain collateral source payments, I strongly urge that you
construe the collateral source offset provision of the law narrowly,
consistent with the tenets of proper statutory interpretation. In
particular, amounts paid by victims or their loved ones to secure certain
types of collateral source compensation-for example, life insurance premium
payments- should be deducted from any amount considered to offset a
potential Fund award. Likewise, where collateral source payments trigger new
income or estate tax liability, that new tax liability should be deducted
from any amount considered to offset a potential Fund award.
Thank you as always for your consideration and attention to these matters.
Marty Meehan
Member of Congress

Sincerely,
Individual Comment
Herndon, VA

2002-01-22