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2002-01-18

January 18, 2002

By email to victimcompensation.comments@usdoj.gov
By fax to 301-519-5956

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

Re: Sept 11th Compensation Fund of 2001 Interim Final Rules

Dear Mr. Zwick:

We are writing to comment on the interim final rules(the "Rules")
implementing the September 11th Compensation Fund of 2001 (the "Fund"). In our
capacity as estate attorneys, we are representing the personal representatives and
surviving families of approximately ten victims of the World Trade Center disaster.
With limited exceptions, we are representing clients on a pro bono basis because
we have concluded they limited financial resources and are unable to pay for legal
counsel.

The victims whose estates we represent constitute a varied group. The victims,
all male, include both married an unmarried men, men who were childless and fathers
who left up to seven children. The victims range in age from 29 to 45, and represent a
wide rang of compensation, from $30,000 to well over $300,000 annually. The
victims include at least three firefighters, one construction worker, and several
individuals in the financial services industry.

We have estimated the potential awards that would be received by our clients
from the Fund under the Rules. It is noteworthy that over half of the families we
represent will receive virtually nothing form the Fund under the current Rules. None of
the survivors of the firefighters will receive anything from the Fund. Three of the
families will receive an amount between $500,000 and $1,000,000, in each case

Mr. Kenneth L. Zwick January 18, 2002
Page 2

Calculated before any offset for workers compensation. The distinguishing factor in
the amount of awards to the survivors of the victims(other than firefighters) is whether
or not, and in what amounts, the victims had life insurance.

With one exception (the family of a victim who was childless and had no
collateral source compensation), all of the surviving families strongly believe they will
be unfairly compensated by the Fund and are seriously considering the possibility of
legal action. They do not believe that the awards received under the Fund will be
sufficient to dissuade them from bringing suits against the parties whose negligence,
they believe, has deprived them from their loved ones.

Our comments are set forth in more detail as follows:

1. The Awards are too Low. We believe that the awards as calculated
under the Rules are too low, even prior to the reductions due to collateral source
compensation. Section 405(b)(1)(B) of the Air Transportation Safety and System
Stabilization Act(the "Act") requires that the Special Master determine "(i) the extent
of the harm to the claimant, including any economic and noneconomic losses; and(ii)
the amount of compensation to which the claimant is entitled based on the harm to the
claimant, the facts of the claim and the individual circumstances of the claimant."
"Economic loss" is defined in Section 402(5) of the Act as "any pecuniary loss resulting
from harm(including the loss of earnings or other benefits related to employment,
medical expense loss, replacement services loss, loss due to death , burial costs, and loss
of business or employment opportunities) to the extent recovery such loss is allowed
under applicable State law."

Most of the families that we represent(who, as stated, include families of
victims of different marital status, ages and income levels and families of victims
working in the private sector an deceased firefighters) are going to receive virtually
nothing from the Fund. They will therefore have little or no incentive not to sue the
airlines and others.

We respectfully submit that the Special Master is underestimating the potential
damages that would be available to the estates of the victims and to the victims'
families if they were to bring liability actions. In particular, we submit that the non-
economic losses- $250,000 plus $50,000 per dependent-are far too low given the
enormity of the tragedy on September 11 and the horrifying way in which these victims
died.

We also respectfully submit that there is no basis in the Act to limit the "loss of
earnings" component of economic harm for wage-earners in the top two percent. The
amount of compensation in the statute is supposed to be based on the harm to the


Mr. Kenneth L. Zwick January 18, 2002
Page 3

individual, "the facts of the claim and the individual circumstances of the claimant."
Nowhere is there a presumption in the statute that families of those earning in the top
two percent should not be able to recover for economic loss. Damages for wrongful
death suits are not similarly limited under New York State law.

The Special Master's concern that the awards not be too disparate is misplaced.
The Special Master's correct decision to include a minimum compensatory amount
eliminates the concern that a strict analysis of economic harm would leave the families
of low-earning individuals out in the cold.

2. "Collateral Source Compensation" Should be Interpreted Narrowly.
Section 104.47(a) of the Rules provides that the amount of an award "shall be reduced
by all collateral source compensation, including life insurance, pension funds, death
benefit programs, and payments by federal, state, and local governments related to the
terrorist-related aircraft crashes of September 11, 2001." (Emphasis added.) This
generally tracks the definition of collateral source compensation in Section 402(4R) of
the Act. Section 405(b)(6) of the Act requires a reduction for collateral source
compensation that a claimant receives "as a result of the terrorist-related aircraft crashes
of September 11, 2001." (Emphasis added.) The statutory language is not crystal clear.
It is respectfully submitted that it would be consistent with the Act to include as
collateral source compensation only life insurance and pension benefits that were
augmented or triggered by terrorists acts, such as the double indemnity provision for
accidental death of many life insurance policies. Furthermore, collateral source
compensation should not include social security and worker's compensation, because
these federal and state payments are not related to the terrorist attacks. In any case,
guidance is desperately needed as to the specific payments which will constitute
collateral source compensation, so that families will be able to calculate their presumed
awards in advance and determine whether or not to apply for the Fund. For example, it
is unclear under the current Rules whether workers' compensation will be an offset.

The families that we represent believe it is particularly unfair that the award
from the Fund will be offset by life insurance. These families believe they are being
penalized for sound financial planning. The awards of some of our clients are
completely offset by life insurance. The family of a victim who was highly
compensated and left seven children will receive virtually nothing from the Fund,
simply because the victim made a substantial investment in life insurance to protect his
family in the event of his death. If this victim had invested instead in the stock market
or in real estate, the amount of those assets would not be an offset to the amount of the
award from the Fund. Moreover, none of these sources would offset a settlement or
jury award in the case of a tort liability action.

We respectfully submit that, at the very least, collateral source compensation


Mr. Kenneth L. Zwick January 18, 2002
Page 4

should not offset the amount of the award intended to compensate non-economic losses.
The funds provided by life insurance, pensions, social security and workers'
compensation are intended solely to provide income to a decedent's survivors. The
victims had earned or paid for these assets. These assets have no connection to the
events of September 11, and survivors would have received these assets upon the
victim's death under any circumstances. Certainly these assets were not intended to
reimburse the pain and suffering and other non-economic losses of the decedent who
provided these assets for his or her survivors. As stated. offsetting the awards by these
assets causes the majority of our clients to receive little or nothing from the Fund. It is
an indignity for the survivors to receive nothing for pain and suffering simply because
their loved one worked to provide them with economic protection in the event of his
death.

In short, the broad interpretation of the "collateral source" offset will leave
many of our clients with no real choice but to seek redress from the courts. This is
certainly not the result intended by the spirit -- or, we assert, the text - of the Act.

3. Offsets Should Reflect Taxes on Collateral Source Compensation. Any
offset of collateral source compensation should take into account the fact that th e
collateral source compensation, unlike the Fund award, will be subject to income or
estate taxes. Consider, for example, a victim with substantial pension benefits which
are payable after death either in lump sum or over a number of years. The pension
benefits will be subject to income tax as they are paid, and thus will represent
substantially less value, dollar-for-dollar, than an award from the Fund. Alternatively,
consider a victim who was domiciled in the United States and married to a non-U.S.
citizen. If the victim had substantial life insurance payable to his or her spouse( or
children), some or all of the insurance proceeds will be subject to U.S. estate tax, which
should be considered in determining any offset. Several of our clients will be penalized
if their awards will be offset by the gross amount of collateral source compensation
which will be subject to income and or estate taxes. Section 104.47 of the Rules should
indicate how such taxes will be taken into account in determining offsets.

4. Gifts from Private Charities Should Not Constitute Collateral Source
Compensation. Section 104.47(b)(2) of the Rules provides that charitable donations by
private charitable entities do not constitute collateral source compensation that must be
offset against the amount of the award. However, the same section then authorizes the
Special Master to "determine that funds provided to victims or their families through a
private charitable entity constitute, in substance," collateral source compensation. This
proviso undermines the basic policy determination not to offset charitable contributions
as collateral source compensation. It will also create substantial uncertainty concerning
the amount of the award, thus will make it impossible for a family to make an informed
decision as to whether to apply to the Fund or proceed with tort litigation. The


Mr. Kenneth L. Zwick January 18, 2002
Page 5

preamble to the Rules states that in order for a claimant to make an informed decision
whether or not to apply to the Fund and thereby waive the right to file a tort action, the
claimant should have "some understanding of how their award will be calculated and
how much they should receive from the Fund should they decide to file a claim."
Section 104.47(b)(2) of the Rules totally undermines this principle.

5. The Presumed Economic and Non-Economic Loss Tables Provide
Insufficient Guidance. The Presumed Economic and Non-Economic Loss Tables do
not provide sufficient guidance to enable victims' personal representatives and families
to determine their presumptive awards. The Special Master should publish the formulas
that are used to calculate the presumed economic and non-economic loss amounts. We
have observed that the increment in the award per dependent child varies with the
victim's compensation but not the victim's age. It also appears to vary based upon the
ages to the dependent children. The increment for the first dependent child (assumed to
be 9 years old for both married and single victims) is markedly different for a single
victim than for a married victim. Thus, for a victim who earns $150,000 a year, the
increment in the award for one dependent child for a single victim is more than
$400,000; for a married victim, the increment for the first dependent child is
approximately $89,300, but the increment for the second dependent child is
approximately $110,300. These disparities make any attempt to extrapolate from the
published tables perilous for victims with more than two dependent children. Ideally,
the Special Master should add to the website a calculator that would allow a family to
input the marital status, ages of dependent children, age and salary of the victim, and
thereby to obtain a guideline presumed award that would reflect the victim's
circumstances. At the very least, more tables are essential to allow families with larger
numbers of children or children of different ages to assess their situation.

* * * * *

We respectfully urge you to amend the Rules to address the issues set forth
above. As currently drafted, the Rules operate in such a way that many victims will
receive little or nothing from the Fund. This result subverts the purpose of the Act- to
provide fair, predictable and consistent compensation to the victims of September 11
and their families, in an expedited, efficient manner, thereby offering them a viable
alternative to the tort litigation which would have extremely negative economic and
non-economic consequences for the American people.

Respectfully Submitted,
Individual Comment
New York, NY

2002-01-18