N002548
January 18, 2002
Senator Hillary Rodham Clinton
United States Senate
Washington, D.C. 20510
Dear Senator Clinton:
I am an attorney in New York City and I have been asked by a friend, , a
resident of , Massachusetts, for advice with respect to the September 11th Victim
Compensation Fund (the "Fund"). 's husband, , was a passenger on American
Airlines Flight 11 on September 11 and died in the attack on the World Trade Center. was
seven months pregnant at the time, and has two other small children. , who was 33 years
old when he died, was a partner at a venture capitalist firm in Boston.
I write to express my serious concerns about the "Interim Final Regulations Governing
Payments Under the September 11th Victim Compensation Fund" issued by the Department of
Justice (the DOJ). My concerns and objections pertain specifically to 's situation, although
in most respects they apply to all families.
In short, post-September 11 legislation gave the airlines $15 billion in cash and loan
guarantees while capping the airlines' liability for the September 11 crashes at the limits of their insurance coverage (which I understand is $1.5 billion per airplane). This cap for all intents and
purposes, eliminates the right that would otherwise have to sue the airlines because, in
simple economic terms, the monetary damages for death and property loss at the WTC will
greatly exceed the available insurance coverage. (This may not be true, or as true, for victims of the flights that crashed in Pennsylvania and the Pentagon, since $1.5 billion would likely sufficiently cover those victims.)
Since is effectively losing her right to sue, she should be given fair compensation
in return. Congress, in setting up the Fund, sought to ensure that the bail out of the airlines would not come at the expense of victims, and the Act mandates full and fair compensation to victims and their families. However, the regulations, as currently drafted, do not appear to achieve that purpose in 's situation for at least the following three specific reasons.
First, the DOJ's formula allows for non-economic awards of $250,000 for the person
killed and $50,000 for the spouse and each dependent. This is only one-tenth the level paid in comparable cases. And this is so even though Congress explicitly enumerated a broader range of non-economic damages than could be recovered in Massachusetts, New York or any other single jurisdiction.
Second, the DOJ's method of calculating economic damages appears to seriously
underestimate bonuses, promotions and real increases in a victim's earnings. I attended a
discussion last night with Special Master Kenneth Feinberg at the New York City Bar
Association at which Mr. Feinberg attempted to address this issue. It is still not clear to me how
someone such as 's husband, who was making well over $200,00 at the time of his death at
age 33, and whose income was steadily increasing, will be treated. If David's income and earning
potential are not realistically assessed, including the major bonuses be stood to receive in his
particular line of work. 's family will receive only a small percentage of their actual
economic loss. was extremely successful and that should be part of any fair analysis with
respect to actually and fairly compensating his family for their loss.
Third, the deduction of "collateral source payments" from any award presents perhaps the
greatest unfairness and threatens to get any award might otherwise receive. The fact that
and had the foresight to take out high insurance policies, for which they of course
paid the high premiums, should not be held against them in a dollar-for-dollar sense with respect to recovery under the Fund. This issue is not, of course, unique to . At the discussion with Special Master Feinberg last night, a representative of a group of firefighters strongly asserted that the "collateral source" rule, if strictly applied, could very well leave moderate wage earners with high pensions with nothing from the Fund.
The following are suggestions as to how the problems identified above can be remedied:
(1) All families should be given a non-economic award at levels comparable to those
provided in the tort system the Fund was designed to replace. The current amounts are simply
too low and not consistent with the mandate of Congress.
(2) The earning potential of victims should reflect their real earning potential,
including a realistic assessment of a victim's bonuses and promotions, and it should be made
clear in the regulations that no "extraordinary" showing is necessary for those who earned over certain high amounts.
(3) The "collateral source" offset provision, while I understand it cannot be
completely eliminated since it is part of the Act, should be construed extremely narrowly.
Certainly the amounts paid to secure collateral source compensation--e.g., life insurance
premium payments, social security payments--should be deducted from any amount considered
to offset a potential Fund award. In addition, if collateral source payments trigger new income or estate tax liability, that new tax liability should be deducted from any amount considered to offset a potential Fund award. Finally, the "collateral source" reductions should be capped at a certain amount or a certain percentage relative to earnings.
Without these sorts of changes to the proposed regulations, and those like her
could be seriously under-compensated. Please contact Attorney General John D. Ashcroft and
Special Master Kenneth R. Feinberg and tell them of your concerns that the Interim Final
Regulations fail to conform to the language and intent of the Act, with respect to 's particular case and with respect to all victims. With the regulations soon to become final, I believe that swift efforts by Congress can guarantee that the Fund is regulated and administered in a way that is fair and consistent with the intentions of Congress.
Thank you for giving this matter your immediate attention.
Very truly your,
Individual Comment
New York, NY
cc: (Via Email)
President George W. Bush