W000626
Monday, November 26, 2001 3:31 PM
Comments re opposition to a charitable contributions offest for
Victim Compensation Fund awards.
Kenneth L. Zwick, Director
Office of Management Programs
Civil Division
U.S. Department of Justice
Dear Mr. Zwick:
Attached please find the Comments of the Nonprofit Coordinating Committee of
New York on the September 11th Victim Compensation Fund of 2001 pursuant to
the Notice of inquiry and advance notice of rulemaking, 66 Fed. Reg. 55901
(Nov. 5, 2001). The Comments urge the Department to adopt a rule providing
that awards shall not be reduced by the amount of any charitable
contributions.
If there are any questions about the comments, please e-mail me at the above
address or call me at . Thank you very much.
-----------------------------
Before the
UNITED STATES DEPARTMENT OF JUSTICE
Civil Division
950 Pennsylvania, Avenue NW
Washington, D.C. 20530
In the Matter of the )
Department of Justice )
Implementation of the )
September 11th Victim )
Compensation Fund )
COMMENTS OF
THE NONPROFIT COORDINATING COMMITTEE OF NEW YORK
THE NONPROFIT COORDINATING COMMITTEE OF NEW YORK ("NPCC"), on behalf of its members,1 files these Comments in response to the Notice of Inquiry and Advance Notice of Rulemaking published by the Department of Justice ("Department") in the Federal Register on November 5, 2001 ("November 2001 Notice"). 66 Fed. Reg. 55901. The November 2001 Notice concerns the administration of the September 11th Victim Compensation Fund ("the Fund"), created by Title IV of the Air Transportation Safety and System Stabilization Act ("the Act"), Pub. L. 107-42, 115 Stat. 230, and solicited views on, among other topics, whether to reduce a victim’s award from the Fund by the amount of any charitable contributions received by the victim. 66 Fed. Reg. at 55904. NPCC urges the Department to adopt a rule providing that awards shall not be reduced by the amount of any charitable contributions.
I. INTRODUCTION
The Act contains six titles; most concern assistance to the aviation industry. Title IV of the Act, of central importance here, establishes the Fund "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." Act § 403. Title IV authorizes the designation of a Special Master to review claims for compensation and to determine the size of any award to eligible individuals. Act §§ 404-06. Subject to certain exceptions, claimants waive the right to file any action for damages sustained as a result of the terrorist-related aircraft crashes. Act § 405(c)(3)(B)(i).
NPCC’s comments concern the proper interpretation of the provisions of Title IV governing "collateral source" compensation. The Act defines "collateral source" to mean "all collateral sources, including life insurance, pension funds, death benefit programs, and payments by Federal, State or local governments related to the terrorist-related aircraft crashes of September 11, 2001." Act § 402(4). Collateral source compensation affects both the size of an award and the scope of a claimant’s waiver of other remedies. With respect to the award’s size, Section 405(b)(6) of the Act directs the Special Master to "reduce the amount of compensation [to which the claimant is entitled] by the amount of the collateral source compensation the claimant has received or is entitled to receive as a result of the terrorist-related aircraft crashes of September 11, 2001." With respect to the scope of a claimant’s waiver of other remedies, Section 405(c)(3)(B) provides that a claimant does not waive the right to bring "a civil action to recover collateral source obligations."
Pursuant to the Attorney General’s rulemaking authority under Section 407 of the Act, the Department issued the November 2001 Notice to solicit comments on a variety of topics concerning the Fund’s administration, including "how to determine what constitutes a ‘collateral source’ for purposes of [Section 405(b)(6)]." 66 Fed. Reg. at 55904. Noting the "strong policy reasons for excluding charitable contributions from the definition of ‘collateral source,’" the Department has requested views on "whether the Act indeed permits the Department to exclude such contributions." 66 FR at 55904. NPCC submits that the Act does permit the Department to exclude charitable contributions from the definition of "collateral source compensation" and, thus, awards from the Fund should not be reduced by the amount of any charitable contributions.
II. COMMENTS
A. Congress did not intend to include charitable contributions within the meaning of "collateral source compensation" under Section 405(b)(6) of the Act.
When interpreting the Act, the Department’s ultimate goal should be to give effect to Congress’s intent. FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000). Several sources guide the search for that intent, including "the statute’s language, structure, subject matter, context and history." Almendarez-Torres v. United States, 523 U.S. 224, 228 (1998). In this case, those sources strongly support the view that Congress did not intend the Special Master to reduce victims’ awards from the Fund by the amount of charitable contributions.
1. The Act does not expressly reduce awards by the amount of charitable contributions; the best interpretation is that it was intended to reduce awards only by the amount of legal entitlements that constitute "compensation."
The Act does not expressly include "charitable contributions" within the definition of "collateral source." Section 402(4) of the Act explicitly lists "life insurance, pension funds, death benefit programs, and payments by Federal, State or local governments related to the terrorist-related aircraft crashes of September 11, 2001." Not only is charity omitted from this list, each item in the list refers to some form of legal entitlement. The entitlement arises either by operation of contract (in the case of life insurance, some pension funds, and some death benefit programs) or by operation of law (in the case of government programs). Moreover, Section 405(c)(3)(B) refers to "civil actions to recover collateral source obligations." The phrase "collateral source obligations" in that provision could not possibly refer to charity, but only to legal entitlements. This strengthens the conclusion that charity is excluded.
Charitable contributions do not fit within the language used to describe the Act’s scheme any more than help from parents or siblings would. Victims do not have a legal entitlement to receive charitable contributions. One cannot sue a charitable institution for failing to provide the desired level of assistance as one could an insurer or a pension fund. Instead, victims’ receipt of charitable contributions depends entirely on the donors’ munificence.
Moreover, and importantly, charitable contributions do not "compensate" their recipients, as Section 405(b)(6) requires. Cf., e.g., Benshoff v. City of Va. Beach, 180 F.3d 136, 145-46 (4th Cir. 1999) (municipal firefighters not "employees" for purposes of Fair Labor Standards Act because they had "volunteered their services . . . for personal and charitable reasons, without promise or expectation of compensation") (citation and internal quotation marks omitted); Thompson v. Sullivan, 928 F.2d 276, 277 (8th Cir. 1991) (man who suffered from violent seizures not engaged in "substantial gainful activity" for purposes of regulations governing Supplemental Security Income benefits because his earnings were a function of charity rather than compensation); Waco Lodge No. 166, Benevolent & Protective Order of Elks v. C.I.R., 696 F.2d 372, 374-75 (5th Cir. 1983) (beverages provided gratuitously by fraternal organization to bingo parlor workers not "compensation" under Internal Revenue Code because "it could not seriously be argued that the workers were induced to work for this ‘compensation’").
While it is true that Section 402(4) provides that "compensation" from "collateral sources" means "all collateral sources," Congress’s use of the term "all" does not demonstrate that it intended to sweep charitable contributions within the statute’s ambit. It merely means that, whatever Congress meant by "collateral source compensation," all such items must be deducted from a Fund award. The use of the word "all" does not mean that "collateral source compensation" includes every monetary resource that becomes available to a victim.
Nothing in the legislative history suggests that legislators believed that the awards from the Fund would be reduced by the amount of charitable contributions. To the extent that legislators did address the Fund, their comments reflect a concern with aiding the victims, not reducing their recovery by penalizing them for their receipt of charitable contributions. See, e.g., 147 Cong. Rec. S9594 (daily ed. Sept. 21, 2001) (statement of Sen. Hatch) ("We provide a generous administrative remedy for all victims who were physically injured or killed as a result of this attack. This will help ensure that injured people receive money and receive it faster than they otherwise would if left to pursue claims through litigation."). The only specific reference to the Act’s collateral source provisions is the floor statement of Senator Leahy, and his comments do not suggest that Congress believed it was directing that awards be reduced by the amount of charitable contributions. 147 Cong. Rec. S9599 (daily ed. Sept. 21, 2001) ("When making a determination, the Special Master will take into account any life insurance, death benefit, or other government payment received by the victims and their families."). In light of the absence of charitable contributions from the Act’s list of collateral source payments and the total absence of comments suggesting that Congress intended to reduce Fund awards by the amount of charitable contributions, the Department should not adopt an interpretation at odds with the Act and its legislative history.
A hypothetical application of Section 405(b)(6) demonstrates the absurdity of including charitable contributions under the Act. Under the Act, the Special Master reduces an award by the amount of "collateral source compensation" only if the victim "has received or is entitled to receive" the compensation. Act § 405(b)(6) (emphasis added). Consider two victims who have suffered the same amount of damage except one victim receives a charitable contribution one day before the Special Master renders an award while the other victim receives it one day after the Special Master renders an award. If the Act applied to charitable contributions, the Special Master would be forced to treat these two victims differently. Because the first victim had received the charitable contribution before the award had been rendered, Section 405(b)(6) would require the Special Master to reduce the first victim’s award by the amount of the contribution. But, because the second victim would not be "entitled" to receive the charitable contribution, the Special Master would not reduce the second victim’s award. Congress could not have meant for the size of an award to turn on the timing of a victim’s receipt of charity or the timing of the Special Master’s award. Thus, the statutory scheme makes sense only if "collateral source" does not include charitable contributions.
2. Congress did not expressly depart from the common-law rule prohibiting damages from being reduced by the amount of charitable contributions, and cannot reasonably be assumed to have done so silently.
Congress does not depart lightly from well established common-law traditions. Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501 U.S. 104, 108 (1991) ("Congress is understood to legislate against a background of common-law adjudicatory principles."). As a result, Congressional enactments should not be construed to upset those traditions (and citizens’ expectations built on them) unless Congress has spoken clearly on the subject. Ibid. ("[W]here a common-law principle is well-established courts may take it as given that Congress has legislated with the expectation that the principle will apply except when a statutory purpose to the contrary is evident.") (citation and internal quotation omitted).
At common law, courts did not reduce a victim’s damages by the amount of any compensation received from third parties. See generally Restatement (Second) of Torts § 920A. While the typical case involved payments by the victim’s insurer, courts also refused to reduce a victim’s damages where the victim had received gratuitous benefits or payments from third parties. See, e.g., Dewitz by Nuestel v. Emery, 508 N.W.2d 334, 340-41 (N.D. 1993) (declining to reduce damages by amount of gift); Johnson v. Baker, 719 P.2d 752, 756 (Kan. Ct. App. 1986) (refusing to reduce plaintiff’s damages by amount received in grants and scholarships); New Found. Baptist Church v. Davis, 186 S.E.2d 247, 249 (S.C. 1972) (refusing to reduce plaintiff’s damages by amount equivalent to value of gratuitous services); see generally 1 Dobbs Law of Remedies § 3.8 (1) at 373 (2d ed. 1993) (collecting cases); 4 Harper, James & Gray, The Law of Torts § 25.22 at 661 (2d ed. 1986) (collecting cases); Werner v. Lane, 393 A.2d 1329, 1335 (Me. 1978) (collecting cases).
The history surrounding the Act’s passage counsels special caution in this case. As noted above, nothing in the legislative history suggests that Congress believed that the Act was modifying the treatment of charitable contributions under traditional principles of damages law. Moreover, Congress passed the Act a mere ten days after the terrorist attacks on the United States. Congressional committees did not produce any reports on the bill. While general hearings on the financial state of the airline industry took place, none of these hearings addressed compensation to victims. Consideration of the Act on the floor of Congress was similarly limited. Only one hour of general floor debate was allowed in both Houses. According to one Congressman, the "bill itself was drafted in the dead of night and [had] not been available to most members until a few hours before the vote." 147 Cong. Rec. H5914 (daily ed. Sept. 21, 2001) (statement of Rep. Conyers). Congress could not have intended to override a centuries-old principle of damages law without a moment of debate or recorded consideration.
B. Including charitable contributions within the meaning of "collateral source" would thwart the Act’s purposes.
Interpreting the Act to reduce awards from the Fund by the amount of charitable contributions would undermine the Act’s purposes in at least three respects. First, it would discourage individuals from using the claims adjudication process. Second, it would discourage future acts of charity. Third, it would complicate the claims adjudication process.
1. Reducing awards by the amount of charitable contributions would discourage use of the claims-adjudication process.
The Act’s claims procedure is optional, and victims who do not opt into it remain free to pursue private litigation. Section 405(c)(3)(B)(i). The Fund is simply put in the place of the airlines themselves as a source of payment of liability claims. Also, Congress obviously wanted to encourage victims to participate in the claims-adjudication process. In addition to the general benefit of reduced litigation, widespread participation in the claims-adjudication process would limit the airlines’ financial exposure because participants would waive any civil actions against them. Act § 405(c)(3). A high participation rate in the fund also would enable the United States to serve as subrogor for a greater portion of the victims’ claims. Act § 409. As subrogor, the United States could decide whether a particular claim against a particular defendant, such as an airline or a foreign state, impedes particular political, diplomatic, or economic prerogatives. See, e.g., 147 Cong. Rec. S9594 (daily ed. Sept. 21, 2001) (remarks of Sen. Hatch) ("[T]he Federal Government can recoup, to the extent possible, any money from responsible parties, including the terrorists whose assets we may be able to recover in the future.").
Interpreting the Act’s definition of "collateral source" to include charitable contributions, however, would undermine those congressional purposes. As noted above, courts traditionally have not reduced damage awards by the amount of charitable contributions. If charitable contributions did reduce recoveries from the Fund, victims would be less likely to opt into the Fund and, instead would pursue civil litigation where their recovery would not be offset by any charitable contributions. The consequent decline in participation would reduce the government’s ability as subrogor to regulate litigation against particular states, companies, and individuals. To avoid these perverse effects on participation in the Fund, the Department should not interpret the Act to reduce awards by the amount of charitable contributions.
2. Reducing awards by the amount of charitable contributions would discourage future acts of charity.
This country enjoys a longstanding tradition of charitable activity. Countless laws embrace that tradition and encourage that activity. See, e.g., 26 U.S.C. § 170 (permitting individual income tax deductions for charitable contributions); see also Arambula v. Wells, 72 Cal. App. 4th 1006, 1012 (Ct. App. 1999) ("The concept of charity is embedded in basic notions of civic virtue, finding expression in legislation ranging from tax laws to wills and estates and many others."). The outpouring of support in the wake of the September 11 terrorist attack provided compelling evidence that many Americans believe strongly in that tradition.
Reducing victim awards by the amount of charitable contributions would fly in the face of that tradition. Donors might well be more reluctant to give if they believed that their donations actually might reduce a victim’s ultimate recovery. See Hotel & Rest. Employees Local 25 v. JPR, Inc., 136 F.3d 794, 805 (D.C. Cir. 1998) (noting that damages are not reduced by the amount of charitable contributions "to ensure that the benefit of the gift accrues to the donee, not to the tortfeasor"); Glorious Church of God in Christ v. Aetna Cas. & Sur. Co., No. LC-1227-3, 1998 WL 972132 at *3 (Va. Cir. Ct. Mar. 9, 1998) (noting the "chilling effect" on donations if evidence of contributions could be used to reduce a plaintiff’s recovery).
NPCC recognizes that the Fund presents an unusual application of collateral source principles. The Fund does not involve payment to a single plaintiff but, instead, distribution of a common pool of resources to multiple claimants. Additionally, some contributors conceivably might object to the possibility of paying twice for a victim’s injuries, first by means of a contribution and later through general revenues.
Nonetheless, these distinctions should not cause the Department to reduce Fund awards by the amount of charitable contributions for two reasons. First, reducing awards by the amount of charitable contributions would undercut the theory behind the common-law rule on charitable contributions. The theory underpinning the rule is that tortfeasors should not benefit from the munificence of third-parties. While, in this case, the tortfeasor is absent from the claims-adjudication process, the Fund effectively satisfies a judgment that the tortfeasor ordinarily would pay and so stands in the tortfeasor’s shoes. As a result, the policy reasons underpinning the common-law rule should apply to the Fund. A contrary rule -- permitting damage reductions for charitable contributions -- would undermine the stability of the common-law rule and set a dangerous precedent for future cases. Second, as noted, permitting a reduction in awards from the Fund by reason of the receipt of charitable contributions would simply encourage victims to bypass the Fund and sue the airlines, a result directly contrary to Congress’ intent in creating the Fund. Third, reducing awards by the amount of charitable contributions would undermine the government’s ability to operate as subrogor. The Act grants the government a right of subrogation with respect to any claim paid under the Act. Act § 409. A rule that reduced a claimant’s recovery would reduce the scope of the government’s subrogation right and, thereby, would limit the government’s ability subsequently to recover funds from the responsible parties.
3. Reducing Fund awards by the amount of charitable contributions would complicate the claims adjudication process.
Congress recognized that time is of the essence in adjudicating Fund claims. Thus, the Act prescribes a maximum period of 120 days for the Special Master to act once a claim has been filed. Act § 405(b)(3); see also 147 Cong. Rec. S9599 (daily ed. Sept. 21, 2001) (Statement of Sen. Leahy) ("We have devised a plan that means prompt filing, quick review, and prompt payments to victims and families."). It also requires the Special Master to authorize payment within twenty days of a determination about the compensation due. These deadlines are easy to meet if collateral sources include only the types of legal entitlements listed in the statute. In the case of life insurance, pensions, death benefits, and other government programs, the amount of the entitlement often is readily ascertainable by reference to a policy value or program criteria. Moreover, even where there is some doubt over the victim’s eligibility, the Act preserves the victim’s ability to file an action to recover on a collateral source obligation. Act § 405(c)(3)(B).
Including charitable contributions in the calculation of the damage award would complicate the adjudicative process. First, it may be difficult to establish whether a particular contribution was given due to the terrorist attacks or for an independent reason. If the Special Master makes an erroneous determination about the victim’s receipt of a charitable contribution, the victim lacks any legal recourse -- the Special Master’s decision is not subject to any judicial review, Act § 405(b)(3), and, unlike the case of insurance or a pension, a disappointed victim cannot sue a donor or charitable institution. Second, administrability problems are particularly acute when the victim has received in-kind assistance. The Special Master would be forced to make special efforts to try to ascertain the value of such donations. This additional delay and complexity in the claims process would frustrate Congress’s expressed goal of speedy claims adjudication.
III. CONCLUSION
For the foregoing reasons, NPCC respectfully urges the Department to exclude charitable contributions from the definition of "collateral source" under Section 405(b)(6) of the Act.
Respectfully submitted,
Comment By:
THE NONPROFIT COORDINATING COMMITTEE OF NEW YORK