dojW000433.xml

dojW000433.xml

born-digital

email

yes

no

2001-11-20

Tuesday, November 20, 2001 5:19 PM
CU Comments to Civil Division


Attachment 1:
Kenneth L. Zwick, Director
Office of Management Programs
U.S. Department of Justice
Civil Division
Main Building, Room 3140
950 Pennsylvania Avenue, N.W.
Washington, DC 20530
via e-mail: victimcomp.comments@usdoj.gov

Comments of Consumers Union to
Civil Division of
The U.S. Department of Justice
On the
September 11th Victim Compensation Fund of 2001

The Department of Justice (DOJ) published in the November 5, 2001 Federal Register a Notice of Inquiry and advance notice of rulemaking on the establishment of the September 11 Victim Compensation Fund of 2001 [P.L. 107-42, Sept. 22, 2001] and requested public comment on that proposal. Consumers Union (CU), publisher of Consumer Reports, has reviewed the draft regulations and is submitting these comments in response to the DOJ proposal.

The establishment of the Victims Compensation Fund (hereinafter, "the Fund") provides a unique opportunity for the United States government to provide no-fault compensation to the many families who lost loved ones and the many individuals injured as a result of the horrific attacks of September 11. We believe that Congress intended to provide through the fund generous compensation to the families of those who were innocently flying in airplanes, working at their desks, or performing heroic services in the line of duty when they lost their lives or sustained their injuries.

We believe that the purpose of a no-fault compensation fund is entirely different from the purpose of the civil justice (tort) system. While both share the goal of adequately compensating victims, the civil justice system is designed to punish wrongdoers, ensure that the full cost to individuals and society for harm caused by those who inflict the harm are paid by the wrongdoer, and create incentives to promote safety and reasonable care in the future; in addition, the civil justice system is inherently adversarial in nature.

Since a no-fault system shares none of these goals and attributes of the civil justice system, our recommendations regarding this Fund would not necessarily be appropriate suggestions for the civil justice system. Because taxpayers are footing the bill for this fund and government funds are not infinite, we think it is critically important that compensation be provided equitably and reasonably and that taxpayer funds be spent wisely. For example, among the victims of the September 11 attacks, those at the lower end of the economic scale have likely suffered more severely in terms of relative economic harm than those at the top end, and to the extent that the government must balance the equities in making its
determinations, compensation provided under the fund should reflect that economic disparity.

Issuance of Interim Final Rules

P.L. 107-42 calls upon DOJ to promulgate regulations to carry out this title "not later than 90 days after the date of enactment. . . . " DOJ asks for comments on its intent to issue "interim final rules" within the 90 days. If interim rules are indeed promulgated, CU urges the Department to make them as comprehensive as possible. Claimants need to make critical determinations about whether to file under the Fund or bring a civil case, and they can only do so if they have a complete picture of how the fund will operate, any procedural hurdles they might face, their ability to appeal a hearing officers decision, and authority by the various hearing officers to settle claims.

Meetings with the Public

CU supports DOJs outreach to members of the public and groups representing a variety of interests and its openness to honoring the reasonable requests of groups wishing to meet with the Department. To the extent the Department continues meeting with outside groups during this comment period and after, we urge that such meetings be tape recorded and records of all such meetings be made available to the public upon request.

Waiving the 30-day rule normally required before Regulations to take effect

The Department asks for comments on whether to waive the rule that requires 30 days before new regulations may go into effect. Because it is in the interest of all claimants to get this program up and running as quickly as possible, there is good cause in this unique situation to waive the 30-day requirement and allow the regulations to go into effect on December 21.

Victims Waiving their Right to File Lawsuits

The Department asks whether the language in Section 405(c)(3)(B) limiting lawsuits for claimants eligible under the fund should preclude a claimant who never files with the Fund from withdrawing from a pending lawsuit and entering that lawsuit again at a later date. We believe that it does not. The Act only waives the right to file a law suit upon "submission of a claim." If a claim is never submitted, there should be no prohibitions on reentering a suit. Moreover, if a claimant files with the Fund and is found to be ineligible, she or he should not be precluded from filing a lawsuit. To do otherwise would work a hardship that we do not believe Congress intended.

Topics #1 & 2: The Forms To Be Used in Submitting Claims Under This Program and the Information To Be Included on the Claims Form

Consequences to claimants of filing claims with insufficient information

The Department asks whether the Special Master should determine that a claim has not been "filed" when there is insufficient information submitted with the claim. Congress clearly spelled out its intention in Section 403, which states that ". . . it is the purpose of this title 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."

While claimants should be encouraged to file all relevant paperwork to accompany the basic facts of their claim, the Department should recognize that in some cases backup documentation may have been destroyed or may be otherwise difficult to obtain. Further, English may not be the native language for many claimants. Unless a claimant has specifically requested so and has waived other due process rights, the Special Master should not rely solely upon the forms filed and the accompanying documentation to reach a decision in claimants case. Indeed, the Act defines the rights of claimants very clearly in 405(a)(b)(4): They include the right to be represented by an attorney; the right to present evidence, including the presentation of witnesses and documents; and any other due process rights determined appropriate by the Special Master.

We believe that the proposed regulations submitted take a sensible approach, giving the Special Master 14 days after receiving the claim form to review it for completeness. If it is complete, it should be deemed filed. If it is not, the claim should be returned unfiled with a statement identifying why it does not comply with filing requirements, with the caveat that the "completeness" should not be defined as all documents needed to make a decision, but rather should go to whether the claim form includes the basic information the Special Master needs to open a case. Claimants should receive an acknowledgement that their claims have been received, be provided a claim number, and be given their official filing date. In addition, any statement sent to claimants stating that their claim is not complete and has not been filed should be made in plain and concise language. We recommend that this be offered in all languages in which claim forms are being accepted, and at the very least in English and Spanish.

Topic # 3: Procedures for Hearing and the Presentation of Evidence

Right of Appeal

Though the statute does not specifically discuss a right of appeal, the Fund will be perceived as more fair and equitable if the Department builds into the process a right of appeal within the Hearing Officer/Special Master structure. If the fund is seen as fair and equitable, more victims will take advantage of it, and the goal of sending fewer cases into the civil justice system will be more easily reached. CU suggests that the regulations provide claimants with the right to appeal a decision from a hearing officer to the Special Master, with claimants waiving the right to compensation within the strict time limits if she or he appeals a decision. If a case is sent back for review, there should be a finite period of time, e.g., 60 days, for a rehearing and decision by the hearing officer.

Topic #4: Procedures to Assist an Individual in Filing and Pursuing Claims Under This Title

Publicizing the Fund

CU supports DOJs intent to assist claimants in getting accurate information and assistance in filing claims. We urge the Department to use direct mail lists of charitable organizations already involved in assisting victims, set up a DOJ website for claimants to get filing information, establish a toll-free hotline, conduct outreach meetings, publish newsletters, and use the resources of state and local governments already involved in the relief effort to contact potential claimants. We also urge DOJ to make claimants aware that free legal assistance is being made available to all claimants who wish to file under the Fund.

All written requirements, such as the filing of claims forms, should be tested to ensure that they are accessible to those with a sixth-grade literacy level or lower. Outreach efforts must be broadly cross-cultural and multilingual; this is especially important considering the many nationalities represented among the September 11 casualties. The regulations must also ensure and all claims documents must state that there will be no adverse immigration consequences for any claimant filing for compensation under this Fund. For guidance on making information available in as many languages as possible, we recommend using the California Healthy Families program as a model. This program offers live customer service in ten languages.

Limiting Fees Charged for Professional Services to Claimants

Consumers Union shares the concern that the bulk of the compensation paid under the Fund go to the intended beneficiaries, not for professional services for those claimants. The Special Master may minimize the potential for inflated attorney fees by ensuring that claim forms indicate clearly that free legal services are available to all claimants wishing to file under the Fund and by making the process simple enough that attorney assistance is unnecessary.

In cases in which a claimant chooses to be represented by a fee-charging attorney, CU supports the lodestar method for determining appropriate attorneys fees. (See Consumers Union Amicus Brief, Bowling v. Pfizer, 1997 U.S. App. LEXIS 3782, 6th Circuit.) This method is based on the actual hourly work performed by counsel. After calculating the hours and the hourly rate at which the attorney should be paid, the lodestar calculation is normally subject to adjustment upward or downward through an application of a "multiplier" to take into account such factors as the contingent nature of the case, the results achieved, and lengthy time delays. However, the Special Master might well decide that a multiplier is not appropriate in these cases, given the funds obligation to resolve claims speedily and the no-fault nature of the Fund.

Among the goals that attorney award fees should serve are: providing assurances that those harmed have adequate representation; adequately compensating the attorneys for their work, taking into account the complexity and risk of the particular case; and maintaining incentives to others to take on cases. While awards should take into account the value of the professional services conferred, the fee awards should not be so high that the value to the claimant is unjustifiably diminished.

Consumers Union has endorsed the lodestar method for determining attorneys fees, and we see no reason why a similar evaluation could not apply to the fees of other professionals providing services to claimants under the Fund, including economists and accountants. Once again, the critical factors for evaluating the amount of any fee should be hours spent and the expenses incurred.

Improper Solicitation

The Department asks for guidance on actions it might take to ensure that claimants are not improperly solicited or influenced not to file with the Fund because an unscrupulous attorney has a financial incentive to urge claimants file lawsuits instead.

We recommend leaving this question to the state bar associations, which regularly discipline attorneys who engage in unethical behavior. DOJs resources would be better spent focusing on the smooth operation of the Fund, particularly since bar associations in every state are already set up to investigate and discipline lawyers for ethical violations.

Topic #5: Claimant Eligibility

Latent Injuries

If an injury occurred or was made worse as a result of the September 11 attacks and there is a reasonable basis to believe that there will be future manifestations of that injury, such evidence should be presented to the hearing officer and compensation for such injury should be provided.

Topic 6: Nature and Amount of Compensation

Section 405(b) of the statute dictates that the Special Master shall determine the amount of compensation based on "the harm to the claimant, the facts of the claim, and the individual circumstances of the claimant." Because of the large number of likely claimants and the short timeframe provided for deciding claims (Section 405(b)(3) gives the Special Master 120 days from the date the claim is filed to make a determination on that claim), a system for facilitating the processing of claims is needed.

Consumers Union supports efforts to ensure that similar claims are treated in a similar fashion, without resorting to mechanistic approaches that make it difficult or impossible to take individual circumstances into account. We note that Section 405(a)(b)(4) of the Act requires that claimants have the right to be represented by an attorney; the right to present evidence, including the presentation of witnesses and documents; and any other due process rights determined appropriate by the Special Master.

This Funds purpose is to compensate and provide for survivors of those who lost their lives or were injured in the attack. Because every life has value in our country, we strongly urge that a minimum value tied to annual median income and remaining earning years be used in valuations. Use of such a minimum value will help to promote fairness and prevent hardship to the families of those who were injured or killed. While a hearing officer may go into a hearing with a basic minimum figure for a claimants award in mind that is derived from a published standard prepared by the Special Master, he or she must also maintain the flexibility to adjust the award upward, subject to offsets, after hearing all the evidence in each individual case.

In addition, claimants should have the right to waive the 120-day time period if their cases prove more complicated and they desire more in-depth or lengthier hearings. We note that in comments submitted by a trial lawyers pro bono legal program for September 11th victims, the lawyers group indicates its "desire and intent to negotiate settlements of a large number of claims." Therefore, while some claimants may require longer, more involved hearings (and their desire to employ all of the due process protections laid out in the Act must be honored), many other claimants are likely to settle their cases quickly.

CU believes that there should be a uniform set of rules for determining both economic and non-economic damages, since this tragedy affected all victims without regard to the state in which they resided. We do believe, however, that the Funds Special Master should require that initial determinations about who is the rightful claimant or the appointment of a personal representative be made by the state courts.

Collateral Source Compensation

The Act states that some forms of payment to victims or their families count as collateral sources to be subtracted from any award paid by the Fund. The Act makes no mention of "charitable contributions" in the definition of "Collateral Source," while including very specifically ". . . life insurance, pension funds, death benefit programs and payments by Federal, State, or local governments."

Charitable compensation, either as in-kind or monetary awards, usually serves a different purpose from that which Congress intended in setting up the Victims Compensation Fund. Charitable contributions generally cover immediate needs such as food, clothing, shelter, immediate payment of mortgage, etc.; indeed, the American Red Cross states in a recent press release that its September 11 emergency grants to victims and their families "... help families of victims with near-term financial needs such as mortgage or rent payments, utility bills, funeral and related expenses as well as ... transportation, food, clothing, and other time-sensitive and uncovered expenses."1 These gifts are intended to cover 3 months of basic living expenses only.2

Charitable contributions, such as those offered by the American Red Cross, generally cover short-term, emergency services. In contrast, we believe that the Funds purpose is to provide victims and their families with long-term economic awards to compensate for the loss of a family member who in many cases was the primary breadwinner. Therefore, generally speaking, we believe that charitable grants should not count as a collateral source. However, if there are instances in which charities have made sizeable contributions to victims or their families - contributions for much more than immediate emergency needs - it may be appropriate for the Department to take such large payments into account in determining appropriate compensation, especially in relation to claimants of more substantial means. In this regard, it would be appropriate for the Department to establish reporting requirements for claimants to inform the Department of what charitable contributions have been received.

The Act clearly states that life insurance and pension funds are included as collateral sources. Because the government ultimately receives the benefit of these collateral sources (by paying less money to victims or their families), we urge the government to reimburse victims or their families for premiums and contributions made by victims to secure these benefits. For example, if a victim made $20,000 in payments for a $500,000 life insurance policy, the collateral source offset ought to be $480,000. In the event a claimant has not yet received the proceeds from a life insurance plan, we urge the Department to provide a full award to the claimant and with the claimant then assigning the right to receive the future proceeds to the government.

Periodic Payments

A claimant should have the right to elect to receive an award in periodic installments under the fund. Indeed, in the case of minor claimants, parents, or spouses of injured or deceased victims, who may well be dependent on the Funds compensation as a sole source of income for years to come, we believe it is critical to provide for a periodic payment schedule along with investment guidance from experts in the field.

Tracking System for Awards

CU strongly urges DOJ to set up a publicly-accessible system to report and track awards. While the privacy and confidentiality of claimants should be protected, it is also critically important that taxpayers have the ability to track the Funds awards and ensure that this unique and costly compensation system fulfills the goals Congress set for it.

Respectfully submitted,


Consumers Union
Washington, DC

2001-11-20