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2001-12-21

Friday, December 21, 2001 2:49 PM
September 11 Victim Compensation Fund Analysis

I am the husband of , one of the victims of the attack of
September 11. I have never sent out a press release and I am not sure if
there are any procedures to follow so I ask for a little patience on this.
The attached analysis was origionally written a few weeks ago and submitted
to the Justice Department as part of the comment taking procedure. It has
since been revised in light of the press conference yesterday and the
release of the interim rules. If you would like to contact me I can be
reached at:


Individual Comment
Brooklyn, NY
________________________________________________________________________September
11 Victim Compensation Fund- Revised
An analysis of the actual legislation and regulations from the point of view
of a potential claimant.

On September 22nd, President George W. Bush signed into law the Airline
Stabilization Act, providing for a bailout and protection to the airline
industry effected by the terrorist attacks of September 11th. As part of
this act, Congress included a provision called Title IV: The September 11
Victim Compensation Fund. Shortly after the passage of the Airline
Stabilization Act, some media outlets mentioned that Congress did include a
provision for compensating those who were physically injured or lost loved
ones in the attack, but few of these sources have provided details of this
provision, partly because of all it does not say. Only the barest outline
of the actual plan was spelled out by the legislation, the rest to be
created as regulations by the Justice Department and the Special Master for
this fund. The Special Master is Kenneth Feinberg, selected by the Attorney
General, and the decisions regarding the final regulations rest solely with
him. The interim regulations for the Victims Compensation Fund were
released December 20th.

As part of the overall legislation, both United and American Airlines were
protected from any legal damages incurred above the amount of their
liability insurance, assumed to be about $3 Billion each. Similar wording
has been inserted in the form of an amendment to the recently signed airline
security legislation that would give the same protection (liability only to
the limit of insurance coverage) to every other potential lawsuit target
except for the airline security companies and Osama Bin Ladin himself.
Those who wish to file suit against the airlines for property damage losses,
business interruption, or costs associated with relocation and clean up,
must all be adjudicated from this amount. After the insurance money is
distributed, any and all further claimants are out of luck, and due to the
legislative language regarding the government?s right to subrogate claims
arising from the fund, this will happen very quickly. In short, if some
one does decide to file suit against the airlines or anyone else, they have
a 2 year window to collect a judgment before the pool of insurance liability
proceeds are taken by the Federal Government.

The legislation also makes it impossible to sue for punitive damages in the
event of a court proceeding because under New York State law, insurance
monies may never be used to pay for punitive damages. So, no matter what
should be discovered during the course of the investigation and trial,
neither the airlines nor any other party are actually financially liable for
anything at all.

So while the legislation was touted as a choice of filing a lawsuit or
entering into the fund, the choice is in fact only an illusion. There will
be no money left to collect from insurance funds once the government takes
its share as part of the subrogation clause.

Victims and their families are expected under this scheme to receive monies
from the fund quickly, as the law states that the office of The Special
Master must give a ruling on any determination no later than 120 days after
the claim is filed. Payment must be authorized in no more than an
additional 20 days. Compared to a traditional lawsuit, the system is
faster, potentially cheaper and does not force the claimant to proved proof
of any wrongdoing on the part of anyone. But there may be a catch or two.
And they may be huge.

In order to make a claim, claimants must first waive all right to be
involved in any suit anywhere against anyone regarding the attacks. And
that leads to another problem. There are no appeals allowed in the claim
process. If claimants file and do not like the decision, claimants are
already locked in to the system, and have no further recourse.

An addendum to the Aviation and Transportation Security Act clarifies this
point and now does allow for a person to file lawsuit against any ?knowing
participant? and still file a claim with the fund. One caveat is that the
President may, at the request of the State Department, unilaterally quash
any money judgments against foreign entities if they believe that it is in
our national security interest. This is exactly what is happening right now
regarding the judgments already entered against Iran for the terrorist
kidnappings in the 1980?s.

Collateral Sources. The law states that any amount that the victim or their
family would receive from the fund would be offset by any collateral
sources. Among the sources specifically listed in the law are life
insurance, death benefits and pension funds. So for the families of
victims who have passed away in the tragedy of September 11, this would
result in the very clear possibility that if they did advanced planning for
the future, they would receive less than those that did no planning at all.

This begs a few questions: Why should those who did plan ahead be penalized
for doing so? What about the money paid for the insurance? Would the
premiums be allowed as an economic loss, and added to the award? Why would
pension funds, which were monies saved over time by the victim, be a
collateral source? Wasn?t this already the victims own money? What about
payments made over time to the victims and their families? How will this be
calculated? Will this be considered a collateral source? What about Social
Security? Is it fair to deduct any amount from what is in effect the
settlement of a lawsuit using an Alternative Dispute Resolution system?

The regulations and laws governing New York State Workers Compensation state
that any payments made by the insurance companies would also be offset by
collateral sources, though in that case the law refers to medical payments
made directly by insurance or litigation settlements. Will these companies
expect to be able to reduce their awards based on the amount received from
the fund? Will the Special Master consider that a death benefit? Will both
parties, the insurance companies and the government attempt to reduce the
amount provided for? While the regulations state that the monies received
from the fund are not subject to subrogation from any other party, has the
government received waivers from the insurance companies underwriting the
workers compensation benefits for their right of subrogation under state
law? If not this could lead to victims? families being sued for the amounts
paid by the insurance companies or suits regarding the illegal taking of
property rights.

Please also note that due to the generous pension and death benefits
provided by the government, the families of firefighters and police officers
are effectively barred by the collateral source rule from filing for any
economic damages. Due to the wording of the collateral source rule, unlike
CPLR 4545, collateral sources can be used to offset non-economic damages as
well.

There is no provision regarding the concerns of domestic partners or
undocumented aliens. This fact could reduce the number of potential
claimants.

The mechanism and procedures required for filing are now being finalized.
The Justice Department is currently reviewing suggestions and comments.
These comments can be reviewed on their web site.

In the announcement of the release of the interim rules, many claims were
made regarding the amount people would be awarded, but these numbers are
gross amounts before collateral source are deducted which could lead to
little or no money going to victims families from this system. Payouts from
the fund will be far lower than was announced at the press conference.

From here we can go in one of two directions. Steps can be taken before the
final rules and regulations go into effect in January. The government can
be generous and take into account the feelings and concerns of the families,
and in the process make substantial monies available to the victims and
their families. If this was done, the claimants would have positive and
compelling reasons for not suing the airlines, the goal of the overall
legislation and everyone would feel that they were dealt with fairly.

On the other hand, it could become a morass where victims and their families
may be left with no legal recourse or form of redress, a settlement that is
at best inadequate and at worst no compensation at all for their loss. The
image of the fund, its principals and sponsors would then be that this fund
is nothing but a way for the government to protect the airlines, their
shareholders and lobbyists, the port authorities, security firms, and
airports at the expense of the innocent victims and their families.


The writer is the husband of , a victim of the attack of
September 11.

2001-12-21