Victims of Sept. 11 Have Decision To Make

The New Jersey Law Journal
January 21, 2002

Litigation

By Gerald H. Baker

Those who lost loved ones can file claims with the Victim Compensation Fund. Or should they sue?

Regulations are in place for victims of the terrorist attack of Sept, 11 to begin to file claims with the Victim 'Compensation Fund. But whether to file with the fund, or to file a lawsuit in the U.S. District Court, is a difficult decision that is personal to each family.

On Sept. 22, 2001, Congress creat­ed the September 11th Victim Compensation Fund to provide mone­tary damages for the physical injury or death of a person resulting from the ter­rorist attacks on the World Trade Center and the Pentagon.

The act permits any person or the personal representative of a decedent to make a claim for injuries sustained at the World Trade Center, the Pentagon, or while a member of the crew or a pas­senger on any of the four flights that crashed.

The statute empowers the attorney general to appoint a Special Master to promulgate regulations and to adminis­ter all claims. The Special Master will not consider negligence or any other theory of liability and may not award punitive damages.

The Special Master is required to make a written determination within 120 days after the claim is filed. All payments will be authorized within 20 days of the award.

On Dec. 21, 2001, the Special Master promulgated regulations for the submission of claims. The regulations provide that a claimant must submit an eligibility form within two years to the Victim Compensation Fund, P.O. Box 18698, Washington, DC 20036.

An eligible claimant will include any individual who was physically harmed and the personal representative of any person who died at the World Trade Center, the Pentagon or while a passenger or a crewmember aboard the American Airlines and United Airlines flights. A personal representative is the person named as executor in the dece­dent's will or the person appointed to act as administrator by the Surrogate. Only one claim may be submitted for 'each decedent.

The eligibility form must include proof that the claimant or decedent was present at the World Trade Center or the Pentagon or was on board one of the aircraft.

In addition, the claimant must pro­vide proof of physical harm or proof of the decedent's death.

Claim Review

A claimant has two options for claim review. Under Track A, the claimant may request the Special Master to compute the ''presumed award⁷' based on a chart of benefits. The Special Master must notify the claimant of the presumed award within 45 days, The claimant has 21 days to file a sup­plemental submission and may request a review by the Special Master.

Under Track B, the claimant may request a hearing before the Special Master. The claimant may present wit­nesses and documents at the hearing and may be represented by counsel. In either event, the Special Master must make a final determination within 120 days from the date that the claim was deemed filed. The award is final and is not subject to review,

A claimant may request an advance payment. Individuals who were physically injured may receive an advance benefit of $25,000 as long as the payments they have received from other sources (such as government pro­grams and employer benefits) do not exceed their lost wages and medical expenses.

The personal representative of a single decedent with no dependents may receive an advance payment of $50,000 if they have not received $250,000 from other sources. The per­sonal representative of a decedent who had a spouse or dependents may receive $50,000 if they have not received $450,000 from other sources.

Presumed Losses

The regulations provide tables of presumed economic and noneconomic ¹ loss. Economic loss includes any pecu­niary loss such as earnings, employ­ment benefits, medical expenses. replacement services, funeral expenses and loss due to death, Noneconomic loss means any nonpecuniary loss such as physical and emotional pain and suf­fering, physical impairment, loss of enjoyment of life, loss of society and companionship, and loss of consortium.

The calculation of economic loss starts with the victim's pretax earnings for the past three years including base salary, bonuses and employer benefits. The Special Master will apply a wage increase of 4.2 percent to 6.6 percent due to inflation and promotions and will deduct the taxes that would have been paid. The net loss of income will be cal­culated for the average expected work life and reduced to present value at a rate of 5.13 percent. Finally, the eco­nomic loss will be reduced by the amount of income that the decedent would have consumed for food, cloth­ing and transportation.

The noneconomic loss is presumed to be $250,000 for each decedent plus $50,000 for each spouse or dependent. This amount is added to the economic loss to determine the presumed award. However, the award will be reduced by any collateral sources of compensation received by the claimant, such as life insurance, pension funds, death benefit programs and payments by federal, state and local governments. Payments received from charities will not be deducted.

The regulations include five tables: single decedents with no dependents; single decedents with one dependent child; married decedents with no dependent children; married decedents with one dependent child; and married dece­dents with two dependent children. The charts are calculated by age (from 25 to 65) and for income (from $10,000 to $225.000).

The number in the box that intersects the decedent's age and income shows the presumed economic and noneconomic loss. The charts are intended to illustrate an average award. Each individual award will depend on the victim's exact income, benefits, other compensation, effective tax rate and household size. The Special Master will probably consider other evidence including the age and medical condition of the decedent and each dependent.

The tables for presumed economic and noneconomic loss vary by age, income and number of dependents. For example, a single person age 30 who earns $50,000 will receive an award of $816.000 with no dependents, and $1,048,000 with one dependent. At age 40, the single person would receive $576,000 with no dependents, and $807,000 with one dependent. A single 'person who earns $100,000 will receive about twice as much.

A married person age 30 who earns $50,000 will be awarded $1,540,000 with no dependent children, Sl.614.000 with one dependent child and S1.700,000 with two dependent children. A person earning $100.000 will receive about 60 percent more.

Carrier's Liability Limited

A person who submits a claim against the fund waives the right to file a civil action in any federal or state court for damages (other than first-party claims for collateral source benefits). Those who do not submit a claim against the fund may file a suit exclusively in the U.S. District Court for the Southern District of New York for dam­ages arising from the hijacking and crashes of the four flights. However, the total liability against any air carrier for all claims — whether for compensatory or punitive damages — will not exceed the limits of the carrier's liability cover­age.

Whether to file with the compensation fund or in court is a difficult decision; however, most people will proba­bly put claims in with the fund in order to receive a prompt administrative remedy and to avoid years of litigation.

However, many family groups have protested that the amounts of the presumed awards are insufficient, especial­ly for decedents with a spouse and dependent children who must rely on the lump-sum payments for a lifetime of benefits. The Special Master estimates that the average payout will be $1,650,000. However, although this might seem to be a large amount, as a lump sum, a 40-year-old widow will receive only $40,000 a year, which is certainly not enough to support her and a young child.

In addition, some families may receive nothing from the fund after the deduction of life insurance and pension benefits, especially the widows of firefighters and police who are receiving full pay and a federal payment. These families may have to file a lawsuit in order to achieve a fair measure of com­pensation.

The author is a partner at Baker, Pedersen & Robbins o/Hoboken.

New Jersey Law Journal
Vol. CLXVII
No. 3
Index 184