dojN002593.xml

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2002-01-13

January 13, 2002



Mr.Kenneth L. Zwick
Director, Office of Management Programs
Civil Division
United States Department of Justice
Main Building, Room 3140
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530-0001


Dear Mr. Zwick,


My name is . On September 11, 2001 my father, , was
killed in the North Tower of the World Trade Center. He was an independent consultant
for . I think about my dad everyday and have to live with haunting
reality that I will never get to speak or see him again.

I wish I did not have to write this letter but I need your help. The attacks of
September 11th have left thousands of families crippled both financially as well as
emotionally. The outpouring of support from so many charities as well as from fellow
Americans has helped ease some thepain. However, it is only short-term assistance.

The next, and most difficult step the families have to endure is the long-term aid
as well as adequate compensation for the murder of our loved ones.

The aid that I speak of is to be distributed from the September 11th Victim
Compensation Fund of 2001. I have been working with families of September 11 and
all of the families in this group feel completely betrayed by the policies set forth by the
Department of Justice (DOJ) and the Special Master, Mr. Kenneth Feinberg.

Families of September 11 is a non-profit organization of injured victims and
families of those killed in the recent terrorist attacks from 26 states. The group's mission is to
ensure that the victims' and families'
interests are protected and to advocate public policies that will improve the prevention of and
response to terrorism. More information is available at
www.familiesofseptember11.org.

Our primary concern with the interim final regulations is that DOJ has ignored
the fundamental mandate of the Act to provide full and fair compensation to victims and their
families and instead has concocted a bureaucratic response that bases compensation on
irrelevant federal programs. The purpose of the regulations appears to be to hold down
the amount of the awards, rather than to carry out the intent of Congress so clearly set
forth in the law.

We ask your help in urging DOJ to abandon its misguided proposal and to issue
new regulations that fulfill, rather than flout, the legislative mandate of Congress.

Background

The Victim Compensation Fund was created by Title IV of the airline bailout bill
passed by Congress shortly after the September 11 attacks. The Act gave the airlines $15
billion of taxpayers' money and capped the airlines' liability for the crashes at the limits
of their insurance coverage. Thus the airlines face no out-of-pocket expenses for the
widespread death and destruction caused by the crashes of their aircraft into the World
Trade Center, the Pentagon, and a field near Shanksville, Pennsylvania.

Acknowledging the fact that this airline liability cap severely restricted the
victims' right to sue the airlines, Congress created the Compensation Fund to provide
victims and their families with full payment for a wide range of specified non-economic
damages (e.g., pain and suffering, loss of enjoyment of life, loss of consortium between
husband and wife, and more) and full restitution for economic damages (e.g., lost future
income), minus collateral payments. In this way, Congress sought to ensure that the
airlines' bailout would not be funded by victims' families, who had already suffered
the most from the horrible tragedy of September 11.

Unfortunately, DOJ was unmoved by Congress' compassionate and reasoned approach
and, perhaps goaded by the Office of Management and Budget, determined that it could
abandon the statutory framework in favor of a bean-counting mentality that limits awards
with no basis in law. Congress' unmistakable intent was not carried out by DOJ, and we
need your help to correct these problems by January 22, 2002, the end of DOJ's comment
period on the regulations.

News media reports that families will receive an average of $1.65 million are
inaccurate, because this estimate fails to account for deductions of collateral payments,
such as life insurance and pension plans. Actual payments from the Fund would be
substantially less, and many families would get nothing under the parsimonious interim
final regulations because collateral payment deductions required by the statute would
wipe out their entire award. (A recent New York Times article quoting the Special Master
suggested that he was considering a minimum payment of $250,000, regardless of
collateral deductions. This amount is still far too low to compensate for the damages the
victims and their families have suffered.)

The three primary defects in the interim regulations concern the valuation of non-
economic damages, the calculation of economic damages, and the provisions for hearings.


1. Proposed Non-Economic Awards Are One-Tenth Those Made in Comparable Cases

The DOJ's proposed awards for non-economic damages ($250.000 per victim plus
$50,000 for a spouse and each dependent) are only one-tenth the level paid in comparable
cases. In other cases of airline crashes and terrorism, non-economic damage awards of $2
million to $5 million are typical, and much higher awards have been made in some cases.
Moreover, Congress explicitly enumerated a broad range of non-economic damages for
which victims and their families shall be compensated:

physical and emotional pain, suffering, inconvenience, physical impairment,
mental anguish, disfigurement, loss of enjoyment of life, loss of society and
companionship, loss of consortium (other than loss of domestic service), hedonic
damages, injury to reputation, and all other nonpecuniary losses of any kind or
nature. Sec. 402(7).

In the case of a victim killed in the attack, all of the above except physical impairment,
disfigurement, and injury to reputation are applicable and payable to the victim's estate or
(as in the case of loss of consortium and loss of society and companionship) to members
of a surviving family. Thus there at least eight relevant elements cited in the statute:
(1) physical pain, (2) emotional pain, (3) suffering, (4) inconvenience, (5) mental
anguish, (6) loss of enjoyment of life, (6) loss of society and companionship, (7) loss of
consortium, and (8) hedonic damages, in addition to the catch-all "all other non-
pecuniary losses of any kind or nature."

In fact, Congress enumerated more kinds of non-economic damages than are
normally paid in any single state jurisdiction. Thus, it would be reasonable to expect that
payments made under the Victim Compensation Fund would be at least as high, if not
higher, than previous awards for non-economic damages. As one example, in the case of
the Pan Am 103 bombing, a spouse was awarded $5 million in non-economic damages.
Under DOJ's plan for the September 11th Fund, a widow and two surviving dependent
children would receive only $400,000, subject to reduction by the collateral offset
provision.

Shockingly, DOJ tacitly admits that it did not even look at the elements of non-
economic damages that Congress required to be compensated. Rather, in the only
justification for the presumed award, DOJ's notice states that "the $250,000 figure is
roughly equivalent to the amounts received under existing federal programs by public
safety officers who are killed while on duty, or members of our military who are killed in
the line of duty while serving our nation." The regulation then cites to the statutory
provision for a group life insurance program under which service members can elect to
purchase policies with death benefit up to a maximum of $250,000, commonly known
as the Service members' Group Life Insurance (SGLI) program, and a newly amended
federal statute under which the government pays to the families of fallen public safety
officers $250,000 -on top of any other amounts they may receive from other sources.


Neither of these programs was intended to, nor does, compensate a victim's
family for the full range of non-economic damages identified by Congress in the statute
establishing the Fund. DOJ flouted Congress' specific mandate and instead replicated
existing, inapposite, and limited federal death-benefit programs.

The absurdity of DOJ's approach is illustrated by its reliance on SGLI as the basis
for the amount awarded. If a serviceman killed at the Pentagon had elected the SGLI at
$250,000, the offset of life insurance proceeds required by the Act would wipe out the
non-economic damages entirely (unless there were a spouse or other dependents, at
$50,000 each under the DOJ scheme). DOJ's approach therefore assumes that Congress
intended the non-economic damages to be merely illusory - to be given with one hand
and then taken away with the other. Not only is this clearly incorrect -it flies in the face
of basic principles of statutory construction. In short, it is the epitome of an arbitrary and
capricious approach to implementing the Act.

Presentations made at a recent meeting of the National Association of Forensic
Economists support our contention that DOJ's presumed non-economic damage awards
are unreasonably low.

Another problem with respect to non-economic damages is the Special Master's
insistence on using the probate laws of the various states to determine the distribution of
the entire award among family members and other claimants. While appropriate for some
damages (e.g., pain and suffering of the victim), this approach fails to recognize that
other non-economic losses are incurred by specific claimants, not by the estate. For
example, the surviving spouse suffers loss of consortium. Under the DOJ plan, payments
for loss of consortium could be divided among the heirs and, where there is a will, might
be awarded entirely to a claimant other than the spouse. While the Special Master
reserves the right to overrule the probate courts, it is unreasonable to force a claimant to
plead extraordinary circumstances and appeal to the Special Master to prevent such an
inappropriate distribution of funds.


2. DOJ's Plan Significantly Undervalues Economic Damages

DOJ's proposed awards for economic damages significantly underestimate actual
economic losses. We have asked DOJ and the Special Master for all of the assumptions
and methodology used in calculating the "presumptive awards," in order to better
understand and analyze them, because DOJ has provided only general guidance on how it
determined these award levels. Even before we receive this detailed information,
however, it is clear that there are major problems with DOJ's approach.

The National Association of Forensic Economists recently participated in a
conference at which experienced economists pointed out significant flaws in DOJ's
methodology. For example, DOJ unnecessarily relied almost exclusively on federal
government data that was out of date and inapplicable to the groups to which DOJ
applied it. One forensic economist with experience in air crash cases (for both plaintiffs
and defendants) indicates that actual life-cycle earnings for firefighters are 27% higher tha
n the DOJ estimate, the actual life-cycle earnings growth of college-
educated Securities and Financial Services workers is more than 100% higher than the
DOJ estimate. Moreover, DOJ also seriously underestimates "real" (beyond inflation)
increases in earnings by administrative support and clerical workers.

Rather than utilizing aggregated national data, this experienced economist stated
that the Special Master could use readily available data to create 8-12 prototype earning
patterns, based on occupation and education, that would much more closely match the
expected earnings patterns of the victims.

In the case of high-income victims, the under valuation of increases in
compensation is exacerbated because the regulations arbitrarily cap a victim's income at
$250,000 a year. Thus, DOJ starts off with an artificially depressed earnings level, and
then uses unrealistically low models for projecting increases from that level. This cap, for
which there is no justification in the statute, would result in some families receiving
severely reduced compensation for their actual economic losses. The only justification
DOJ has offered for capping incomes is that not doing so would result in awards greater
than what the families "need." But DOJ has provided to explanation of how it
determined these needs. The human cost of the income cap is that many widows and
some widowers will have to sell their homes, deplete their children's college funds, give
up their plans of being full-time parents while their children are young, and make other
wrenching adjustments at a time when they already have more than enough burdens to
bear.

In general, there is a significant underestimation of promotions and other
increases in earnings for victims. DOJ apparently relied on the Board of Actuaries of the
federal civil service and military retirement systems, which track federal worker incomes
and pension requirements, not the higher-paying private sector career paths. Experts at
the NAFE conference pointed out that data on federal workers is irrelevant for assessing
private sector earnings projections. DOJ's error, coupled with its emphasis on past 3
years of income (which the Special Master "may average"), makes it appear that DOJ
used a federal pension approach to ascertaining economic damages, rather than
considering the likely income-earning potential of the decedent, as is routinely done in
wrongful death cases. Sadly, this DOJ/OMB approach appears to be an attempt to distort
the tort-based provisions of the Act into just another bureaucratic, formulaic, federal
program based on concepts the agencies are already familiar with, rather than what the
law requires. One economist dubbed the failure of DOJ to tailor its economic loss model
to the actual circumstances of the victims the "Reverse Cinderella Effect" -- where DOJ
is trying to make one shoe fit all of the feet.

Other problems pointed out by the economists are the fact that the work life
estimate used by DOJ are seriously outdated, particularly for women. DOJ's aggregation
of this outdated data means that its work life estimate are low for both men and women,
thus underestimating awards for both genders. There is also a serious underestimation of
the economic value of household services performed by victims, particularly women.
These, along with the use of pre-tax discount rate, further widen the gap between DOJ's
flawed approach and a proper valuation of economic loss.



3. DOJ Makes a Mockery of the Right to a Hearing

A particularly insidious notion inherent in the interim final regulations is that 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 makes the hearing or appeal to the Special Master a mere charade. DOJ has
constructed a scheme that provides extremely low awards to those who lost loved ones
due to the extraordinary events of September 11, and then declares that only in cases that
are extraordinary, beyond those already extraordinary events, will awards be increased.
This is virtually an impossible standard to meet, especially in light of the Special
Master's statements that he cannot and will not make "Solomon-like" distinctions
between the suffering of individuals or families. The problem is that the presumptive
award levels are so low, they do not compensate the families adequately for the
extraordinary suffering they and their loved ones endured and continue to endure. Absent
a change in the regulations, these award levels will not be increased to reflect
the compensation contemplated by the Act for the actual damages suffered by each victim
and family.

What is extraordinary is the suffering inflicted on all of the victims and their
families on September 11-not differences in degrees of suffering among them. Victims
aboard airplanes suffered through a kidnapping/high jacking and horrific plane crashes.
Victims at the World Trade Center suffered through the trauma of the plane crash and a
raging fire (so intense and unbearable that some victims thought it better to jump 100
stories to their certain death than to endure the fire), and others suffered from the
unthinkable collapse of the massive towers upon them. Victims at the Pentagon suffered a
horrible death from the impact of the plane into their "secure" offices or burning in the
raging inferno of jet fuel. Family members themselves have had to endure the inescapable
coverage and regurgitation of these events on TV, in the newspapers, and even in
ordinary discourse with neighbors, acquaintances, and others.

It is fundamentally unfair for DOJ to trivialize the extraordinary suffering of each
victim and family (for example, by valuing non-economic damages at 10% of the level of
compensation in comparable cases and valuing economic damages at less than 50% in
some cases) and then to state that only upon distinguishing a claim from all of the other
claims that are also undervalued by DOJ will an award be increased. Instead, the standard
should be that DOJ compensate each victim and family for the types of damages
enumerated by Congress at levels comparable to those recoverable in the tort system the
Fund was designed to replace.

Conclusion

During the 30-day comment period, Families of September 11 will work with
DOJ and the Special Master to try to improve the payment levels to reflect the provisions
of the Act. Your assistance will be most helpful in persuading DOJ and the Special
Master to follow the Act. If the interim final regulations are not substantially changed by
DOJ, the victims' families may have to challenge the regulations in court in order to
ensure compliance with the law. And many families, seeing no adequate remedy from the
Fund, may decide to sue the airlines and others, despite the handicap of the liability
limits.

DOJ can and should avoid such unfortunate confrontations by recognizing the
need to make significant revisions to conform the regulations to the statutory
requirements. Please urge DOJ to do so, and eliminate the need for the families to go to
court in order to implement the clear congressional intent for fair, compassionate
compensation. Specifically, we want DOJ to (1)increase its non-economic loss award by
an order of magnitude (from 10% to 100%), to properly reflect the damages that
Congress has determined are compensable, (2) correct the methodological flaws in its
calculation of economic damages and use accurate, up-to-date data in making these calculations,
and (3) recognize that a claimant should not have to show "extraordinary
circumstances" to increase the "presumed award," but rather, should only have to show
that the"presumed award" does not accurately reflect the damages incurred by the victim
and his or her family.

We strongly believe that if the nation can find $15 billion to bail out the airlines,
which may have been responsible for the attacks because of lax security, it can provide
the full amount necessary to fairly compensate the families of the innocent victims of the
attacks.

Thank you in advance for your assistance on this pressing matter.




Sincerely Yours,

Individual Comment
Park Ridge, NJ

2002-01-13