[Federal Register Volume 67, Number 49 (Wednesday, March 13, 2002)]
[Rules and Regulations]
[Pages 11233-11247]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-5923]
[[Page 11233]]
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DEPARTMENT OF JUSTICE
Office of the Attorney General
28 CFR Part 104
[CIV 104F; AG Order No. 2564-2002]
RIN 1105-AA79
September 11th Victim Compensation Fund of 2001
ACTION: Final rule.
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SUMMARY: Shortly after the September 11, 2001 terrorist attacks, the
President signed the ``September 11th Victim Compensation Fund of
2001'' (the ``Fund'') into law as Title IV of Public Law 107-42 (``Air
Transportation Safety and System Stabilization Act'') (the ``Act'').
The Act authorizes compensation to any individual (or the personal
representative of a deceased individual) who was physically injured or
killed as a result of the terrorist-related aircraft crashes on that
day. This final rule is the third and final step in the Department of
Justice's promulgation of regulations pursuant to Sec. 407 of the Act,
following the November 5, 2001 Notice of Inquiry and Advance Notice of
Rulemaking (``Notice of Inquiry'') and the December 21, 2001 interim
final rule.
After reviewing the extensive public comments and meeting with
numerous victims, victims' families, and other groups, the Department
of Justice, in consultation with the Special Master, is issuing this
final rule and associated commentary, which make certain clarifications
and changes that are designed to address issues raised by victims,
their families, and thousands of other Americans. Specifically, the
final rule clarifies, supplements, and amends the interim final rule
by, among other things: Clarifying how the Special Master will treat
certain ``collateral sources,'' including pensions, to lessen their
impact in reducing victims' awards; expressing the Special Master's
intention to assist claimants in understanding how certain types of
collateral offsets will be treated under the Fund before they decide
whether to participate; adjusting the ``presumed'' economic loss
methodology in a manner that should increase potential awards for most
claimants; increasing the ``presumed'' non-economic award in certain
cases; clarifying the Special Master's intention that most families of
victims who died should receive a minimum of $250,000 from the Fund;
and providing certain exceptions to the requirement that injured
victims received medical treatment within 24 hours of injury.
DATES: This final rule takes effect on March 13, 2002.
FOR FURTHER INFORMATION CONTACT: Kenneth L. Zwick, Director, Office of
Management Programs, Civil Division, U.S. Department of Justice, Main
Building, Room 3140, 950 Pennsylvania Avenue NW., Washington, DC 20530,
telephone 888-714-3385 (TDD 888-560-0844).
SUPPLEMENTARY INFORMATION:
Statement by the Special Master
Since December 21, 2001, the date of the promulgation of the
interim final rule, I have been engaged in meetings and conversations
with September 11 victims, their families, public officials,
representatives of private charities and interested concerned citizens
of our nation and foreign nations as well. I have listened carefully to
both supporters and critics of the interim final rule. I have
benefitted tremendously from their input. I believe that, as a direct
result of that varying input, this final rule constitutes a product
worthy of support by all those interested in a just, fair and efficient
compensation program.
No amount of money can right the horrific wrongs done on September
11, 2001. Nor can any of us who has not shared such immediate and
irrevocable loss fully understand the depths of suffering that families
and victims are enduring.
The September 11th Victim Compensation Fund is a unique federal
program created by Congress in recognition of the special tragic
circumstances these victims and their families confront. The Fund
provides an alternative to the significant risk, expense, and delay
inherent in civil litigation by offering victims and their families an
opportunity to receive swift, inexpensive, and predictable resolution
of claims. The Fund provides an unprecedented level of federal
financial assistance for surviving victims and the families of deceased
victims.
There has been significant public commentary regarding the Fund's
proposed structure. The plan has been described as ``about as fair as
it could possibly be'' (Newsweek, December 31, 2001), ``a good start on
the road to recovery'' (The New York Times, December 23, 2001), ``an
eminently fair plan'' (The New York Daily News, December 28, 2001), and
a program that ``offers speedy and rational compensation'' (The
Washington Post, January 18, 2002). I believe that--when compared to
the alternative of a protracted, uncertain lawsuit--the Fund provides a
vastly preferable method of assuring fair compensation to all eligible
claimants.
The comments submitted to the Department of Justice have been
starkly divided regarding the methodologies for calculating awards and,
in particular, the ``presumed award'' charts I released at the same
time as the interim final rule. Many have argued that the presumed
awards are too high, particularly for victims who had high incomes.
Others, in contrast, have argued, for differing reasons, that the high
end ``presumed awards'' should be even higher.
Under the ``presumed award'' methodology, presumed awards ranged
from several hundred thousand dollars to more than $3 million for
certain eligible applicants. We have spent considerable time carefully
evaluating the comments on the ``presumed award'' methodology and have
made certain adjustments that have the effect of increasing the
expected presumed awards. In addition, we have clarified the definition
of ``collateral source compensation'' in a manner that should have an
additional, upward impact on awards.
As I have repeatedly stated to the victims and their families,
there are many aspects of the Fund that are mandated by Congress and
cannot be changed by me or by the Department. Indeed, many of the most
controversial aspects of the Fund--such as the requirement that awards
be offset by life insurance and other collateral source compensation--
are specifically required by Congress. I have no power to usurp or
disregard congressional mandates. Rather, my goal has always been to
provide the most fair and appropriate compensation within the
parameters established by Congress.
Accordingly, within the discretion available, we have made the
following clarifications and improvements in the final rule:
Definition of Collateral Sources. As already indicated,
the final rule clarifies the definition of ``collateral source''
compensation by expressly stating that certain government benefits,
such as tax relief, contingent Social Security benefits, and contingent
workers' compensation benefits (or comparable contingent benefits for
government employees), need not be treated as collateral source
compensation. Also, because we do not believe that Congress intended to
treat a victim's savings accounts or similar investments as collateral
source compensation, the collateral-source offsets will not include
[[Page 11234]]
moneys or other investments in victims' 401(k) accounts.
Valuation of Collateral-source offsets. While Congress
left us little choice on whether to make certain collateral source
deductions, we have slightly more discretion in how to calculate the
appropriate deduction. For example, we will adjust the collateral
source offset for pensions and life insurance policies to ensure that
we are not counting ``self-contributions'' or premium payments as part
of the offset. In addition, for collateral source compensation that
claimants will receive through future payments, we will employ present
value methodologies to apply a proper discount to the amount actually
deducted from a victim's award. This obviously has the effect of
reducing offsets and, in turn, increasing awards. Finally, to ensure
that the impact of collateral-source offsets is clear to potential
claimants before they decide whether to participate in the Fund, we
will also make available an advisory service to provide additional
information for potential applicants as to how the Fund will treat
different types of collateral source compensation.
Discretion Where the Recipients of Collateral Source
Compensation Are Not Beneficiaries of Awards. In cases where the
recipients of collateral source compensation are not beneficiaries of
the awards from the Fund, the Special Master will have discretion to
exclude such compensation from the collateral source offset where
necessary to prevent beneficiaries from having their awards reduced by
collateral source compensation they will not receive.
Clarification of Definition of Charitable Donations. The
final rule clarifies that benefits from charities disbursing private
donations will not be treated as collateral source compensation, even
if such charities were created or managed by governmental entities.
Increase in Compensation for Non-economic Losses. The
amount of additional presumed non-economic loss compensation for the
spouse and each dependent of a deceased victim is doubled from $50,000
to $100,000. This increase is in addition to the $250,000 presumed non-
economic loss that is awarded on behalf of all decedents. This means
that a family of a victim who was survived by a spouse and two minor
children would be entitled to a presumed non-economic award of over
half a million dollars before collateral-source offsets.
Adjustments to the Presumed Economic Loss Methodology. The
Special Master has adjusted his methodology for determining presumed
economic losses in several respects that are described herein. As a
result, no presumed awards are lower than under the original
methodology, and most are higher.
Policy Toward Final Awards. The Act requires that
collateral source compensation be deducted from all final awards. The
Act, therefore, does not permit us to create a mandatory legal rule
requiring minimum payouts for all eligible claimants after collateral
source deductions. Nevertheless, the Special Master is permitted to
consider the individual circumstances of each claimant, including the
needs of the victim's family. Having personally met with thousands of
individual family members, discussing with them their various needs, I
anticipate that, when the total needs of deceased victims' families are
considered, it will be very rare that a claimant will receive less than
$250,000, except in unusual situations where a claimant has already
received very substantial compensation from collateral sources.
Physical Harm Requirements. The time period for obtaining
medical treatment under the definition of ``physical harm'' is
increased from 24 hours to 72 hours for those victims who were unable
to realize immediately the extent of their injuries or for whom
appropriate health care was not available on September 11. The Special
Master has discretion to extend the time period even further on a case-
by-case basis for rescue personnel who otherwise meet this requirement
but did not seek or were not able to seek medical treatment within 72
hours.
Time for Hearings. Under the interim final rule, claimants
had the option of requesting a formal hearing. This option remains part
of the final rule, but we have eliminated the suggested two-hour
hearing limitation.
Congress offered little guidance regarding the procedural framework
for resolving claims. Nevertheless, we have provided varied procedural
options for applicants because we know that one size and one system
will not fit all. Victims who so choose may take a simple and direct
route, filing forms and accepting payment within a matter of weeks.
Other victims may opt for a more detailed and lengthy process, electing
for a hearing and exercising their opportunity to present their cases
personally in greater detail.
Some have argued that it is essential that each claimant know how
much he or she will recover from the Fund before a formal application
is submitted, particularly in light of the congressional requirement
that each participating claimant waive the right to file a civil
lawsuit in connection with the September 11 attacks. Others, however,
have argued precisely the opposite--namely, that no formula can account
for all of a claimant's individual circumstances, and that recovery
should therefore be determined solely on the basis of an individualized
hearing.
The Act requires that the award be determined only after the
application is submitted and after a review of the requested economic
and other information. It would therefore be inappropriate for me to
provide any binding estimates of individual awards before we go through
that process. However, to ensure that potential applicants have the
ability to estimate roughly the possible ranges of their own
recoveries, we have produced tables of presumed awards, and our
consultants are available to provide additional guidance on the
methodology for valuing different types of pension benefits and other
collateral-source offsets. Accordingly, no claimant will be required to
waive litigation options before receiving some indication from the
Special Master as to how collateral-source offsets will be treated
generally.
The efforts that I have taken to inform potential claimants of the
likely range of their awards should not be mistaken for some sort of
``cap'' on awards. Although we still anticipate that awards in excess
of $3 or $4 million will be rare, we emphasize again that there are no
``caps'' under this program. To the contrary, each claimant has the
option to ask for a hearing at which he or she may assert additional
individualized circumstances and argue that the presumed award
methodology is inadequate to resolve his or her particular claim in a
fair manner. We will consider all such individual circumstances,
including, but not limited to, the financial needs of victims and
victims' families.
One final concern should be addressed. I have received during the
comment period, and have read in the newspapers, comments from a few
American citizens expressing the opinion that the victims and their
families are ``greedy'' in seeking additional compensation. As I have
repeatedly stated, both publicly and privately, I believe that such a
characterization is unfair. This Fund, and the comments of distressed
family members, are not about ``greed'' but, rather, reflect both the
horror of September 11 and the determination of family members to value
the life of loved ones suddenly lost on that tragic day. I believe the
American people understand this and in no way associate
[[Page 11235]]
the efforts of family members to secure compensation with any
characterization of ``greed.'' This Fund represents the best spirit and
compassion of the American people. I believe that America is unique in
creating such a Fund that expresses the compassion, concern and
determination of its people in coming to the aid of the victims of
September 11.
In sum, we believe the changes adopted in this final rule best
ensure that claimants will receive fair and appropriate awards. I
remain personally committed to ensuring that every claimant is
compensated fairly.
Background
This preamble discusses the public comments regarding the interim
final rule and the additions and amendments to that rule that have been
adopted through this final rulemaking. It does not purport to provide a
complete overview of the program or an explanation of all of the many
aspects of the interim final rule that remain unchanged. For an
explanation of those aspects that remain unchanged, the reader is
directed to the Department's interim final rule, published at 66 FR
66274 (Dec. 21, 2001). In addition, more detailed information regarding
the program, including a flow chart of applicable procedures, a revised
table of the Special Master's estimated or ``presumed'' awards, claim
forms, and answers to frequently asked questions are available on the
Victim Compensation Fund website at www.usdoj.gov/victimcompensation.
I. The Statute
The President signed the ``September 11th Victim Compensation Fund
of 2001'' (the ``Fund'') into law on September 22, 2001, as Title IV of
Public Law 107-42 (``Air Transportation Safety and System Stabilization
Act'') (the ``Act''). The purpose of this Fund is to provide
compensation to eligible individuals who were physically injured as a
result of the terrorist-related aircraft crashes of September 11, 2001,
and compensation through a ``personal representative'' for those who
died as a result of the crashes. Generally, eligibility is limited to:
(1) Individuals on the planes at the time of the crashes (other than
the terrorists); and (2) individuals present at the World Trade Center,
the Pentagon, or the site of the crash in Pennsylvania at the time of
the crashes or in the immediate aftermath of the crashes.
The Fund is designed to provide a no-fault alternative to tort
litigation for eligible claimants. Congress has determined that others
who may have suffered losses as a result of those events (e.g., those
without identifiable physical injuries but who lost employment) are not
included in this special program. Accordingly, compensation will be
provided only for losses caused on account of personal physical
injuries or death, even though the victims may have suffered other
losses, such as property loss. For this reason, the Department and the
Special Master anticipate that all awards from the Fund will be free of
federal taxation. See I.R.C. section 104(a)(2) (stating that damages
received ``on account of personal physical injuries or physical
sickness'' are excludable from gross income for purposes of federal
income taxation).
A claimant who files for compensation waives any right to file a
civil action (or to be a party to an action) in any federal or state
court for damages sustained as a result of the terrorist-related
aircraft crashes of September 11, 2001, except for actions to recover
collateral source obligations or civil actions against any person who
is a knowing participant in any conspiracy to hijack any aircraft or to
commit any terrorist act.
Determinations of eligibility and the amount of compensation are to
be made by the Special Master. After determining whether an individual
is an eligible claimant under the Act, the Special Master is to
determine the amount of compensation to be awarded based upon the harm
to the claimant, the facts of the claim, and the individual
circumstances of the claimant.
The law also provides that the Special Master make a final
determination on any claim within 120 days after filing of the claim
and, if an award is made, to authorize payment within 20 days
thereafter. The determinations of the Special Master are final and not
reviewable by any court. Claims with the Fund must be filed on or
before December 21, 2003, two years after the effective date of the
interim final rule. Payments from the Fund are made by the United
States Government, which in turn obtains the right of subrogation to
each award.
The Department is promulgating this final rule pursuant to section
407 of the Act, which provides that the Department, in consultation
with the Special Master, must promulgate regulations on the following
matters:
(1) Forms to be used in submitting claims;
(2) The information to be included in such forms;
(3) Procedures for hearing and the presentation of evidence; and
(4) Procedures to assist an individual in filing and pursuing
claims under this title.
In addition, section 407 authorizes, but does not require, the
Department to issue additional rules to implement the program. This
final rule addresses issues beyond the four specifically required by
the Act in order to create a program that will be efficient, will treat
similarly situated claimants alike, and will allow potential claimants
to make informed decisions regarding whether to file claims with the
Fund. Nonetheless, the Department recognizes that it cannot anticipate
all of the issues that will arise over the course of the program and
that there will inevitably be many difficult issues the Special Master
will have to resolve in the course of making determinations on
individual claims.
II. Rulemaking History to Date
On November 5, 2001, the Department requested public input on a
number of issues. See 66 FR 55901. The Department noted that, at that
time, the Special Master had not yet been appointed, but that it wanted
as much public comment as feasible before issuing the regulations by
December 21, 2001. On November 26, 2001, the Attorney General appointed
Kenneth R. Feinberg as Special Master.
The Department reviewed the more than 800 comments submitted in
response to the Department's Notice of Inquiry. On December 21, 2001,
the Department promulgated an interim final rule governing the Fund. 66
FR 66274. The interim final rule had immediate force of law and allowed
the Special Master to begin accepting applications and providing
``Advance Benefits'' to certain classes of eligible claimants. In
addition, the Rule provided for a 30-day public comment period on the
interim final rule.
The Department has received thousands of comments since the
December 21 publication of the interim final rule. The Department and
the Special Master's Office have reviewed each of these comments, and
the Special Master has met personally with more than 1,000 victims,
victims' advocates, public officials, and others. As was the case with
the interim final rule, the Department and the Special Master have
considered all comments in promulgating the final rule.
III. Comments on the Interim Final Rule
A. The Creation of the Fund
Congress created the Victim Compensation Fund to compensate those
injured or killed in the September 11 terrorist attacks. A number of
people
[[Page 11236]]
commented on whether or not Congress should have created this program
in the first place.
Scores of commenters--recognizing Congress' belief that the
airlines were facing imminent bankruptcy and could be effectively
judgment proof--described the Fund as a testament to Congressional and
taxpayer generosity. Many described the Fund as compassionate and
critical to meet the needs of victims of September 11. A few noted that
they wish Congress had enacted similar legislation prior to September
11 to care for the needs of those in previous tragedies, and voiced
their support for similar programs in the future.
Many others, however, expressed their disapproval of Congress for
creating the Fund. For example, several argued that Osama bin Laden and
his al Qaeda network are the sole responsible parties and that the
government should not expend taxpayer dollars to compensate those who
are not in immediate financial need. Several commenters indicated that
taxpayer revenue should instead be spent on the homeless and other
social programs ``that currently lack adequate funding.''
Others expressed their regret that victims of other tragedies were
not given the same benefit of compensation. These commenters raised
several questions, including: Why were not the victims of the Oklahoma
City bombing given the same opportunities? What about victims on the
U.S.S. Cole? Victims of anthrax? Those who died in the embassy bombings
in East Africa? Why are the soldiers in the United States military not
included? What about those who volunteered or were drafted to fight in
World War II, Vietnam, and other arenas of combat who died defending
the United States? What about those who perished in floods, hurricanes,
snowstorms, fires, tornados, earthquakes, and other domestic tragedies?
What about those persons who were murdered on September 10 and 12?
On the other hand, a number of commenters who indicated that they
are eligible to file a claim with the Fund voiced concerns that
Congress had inappropriately limited their right to sue potentially
liable third parties for their loss. Some of these commenters argued
that several companies and agencies ``contributed'' to the September 11
attacks and ``should be held responsible'' for their alleged
``negligence.''
While the Department and the Special Master have reviewed the many
comments both in favor and in opposition to the Fund, such comments
principally address Congress' legislation. The Department's regulations
are designed to implement the Act as written; we cannot rewrite the Act
or nullify Congressional intent. The goal in this final rule was simply
to create the best and fairest program possible within the requirements
set by Congress.
B. Amount of Compensation in the Special Master's Presumed Award Charts
The Act does not specify the amount of the awards for individual
claimants. Instead, the Act gives the Special Master discretion to
determine the amount of the award ``based on the harm to the claimant,
the facts of the claim, and the individual circumstances of the
claimant.'' Section 405(b)(1)(B)(ii). The Act further provides that the
Special Master's determination ``shall be final and not subject to
judicial review.'' Section 405(b)(3).
The Act thus permits the Special Master to determine the amount of
awards on a case-by-case basis without giving any guidance to potential
claimants regarding the awards that they would likely receive if they
waived their rights to litigation and opted into the Fund. Further,
such case-by-case determinations would not be subject to judicial
review. As a practical matter, of course, the Special Master would need
some methodology to ensure a measure of consistency among awards to
similarly situated claimants, to give potential claimants some idea of
their likely range of awards, and to make the Fund administratively
feasible. The Department and the Special Master decided that the
interests of potential claimants would be best served by providing,
where reasonably possible, information concerning the Special Master's
methodology for calculating awards. The Special Master has not imposed
any ``cap'' on awards nor limited claimants from presenting evidence of
their individual circumstances.
On December 20, 2001, Kenneth R. Feinberg, the Special Master of
the Fund, publicly announced the completion of the interim final rule
and, along with the rule, unveiled several charts illustrating in a
general way presumptive, non-binding estimated awards available for
those eligible claimants filing on behalf of certain deceased victims.
Furthermore, in heeding the Attorney General's instruction to help the
neediest victims as quickly as possible, Mr. Feinberg also introduced a
means by which most eligible claimants could receive immediate, advance
benefits in the amount of $50,000 for decedents and $25,000 for most of
those with serious physical injuries. The interim final rule permitted
claimants either to accept the presumed award or to argue for a greater
award either at an individual hearing or, at the claimant's option, on
submitted documentation.
While the Special Master's presumed award charts are not part of
the Department's rulemaking, the amount of compensation reflected on
those charts received more public comments than any other subject. Both
the Department and the Special Master's office have considered those
comments, just as they have considered the comments regarding the
interim final rule.
The comments regarding the presumptive awards varied greatly. While
many described the presumptive awards as just and fair, others
criticized them as either too high or too low. These disagreements were
based in large part upon differing views regarding the purposes of the
Fund. Some commenters began with the presumption that the Act's
provision of recovery for both economic and non-economic losses,
accompanied by the requirement that claimants waive their right to
civil litigation, indicated that the amount of compensation under the
Fund should mirror past jury awards in airline litigation. Those
commenters, for the most part, concluded that the presumed awards were
insufficient, particularly for victims with the highest incomes.
Many other commenters took a very different view of the program.
These commenters viewed the program not as a replication of the tort
system, but instead as a government program designed to assist the
victims and their families. Those commenters therefore concluded that
there should not be a disparity among the awards based upon the income
of the victim. Some vigorously criticized the proposition that the
wealthiest victims should receive more from the taxpayers than many of
the public safety officers and Pentagon employees would receive.
Indeed, some commenters expressed frustration that people are demanding
more than the presumed awards, contending that the awards are ``more
than generous'' and that it is inappropriate for the federal government
to ``make victims' families millionaires with taxpayer money.''
Other commenters noted the competing goals of the Act and the
complexities of placing dollar figures on a life and determining awards
within the prescriptions of the Act. For example, one commenter stated
that ``[t]here is no way for distribution of
[[Page 11237]]
these funds to be totally fair in the eyes of everyone. That's just the
way it is.'' Those commenters, by and large, praised the efforts of the
Special Master.
The Department and the Special Master have thoroughly reviewed and
considered the differing views regarding the amounts of compensation
reflected in the Special Master's presumed award charts and have
concluded that no single analogy should dictate the compensation under
the Fund. Civil litigation often takes years, with awards varying
greatly from one claimant to another, particularly where the incomes of
the victims vary. Indeed, under the tort system, while many claimants
receive extremely large awards, many others walk away empty-handed due
to the requirement that plaintiffs prove fault. In contrast, the Fund
is a no-fault alternative to civil litigation designed to provide fair
compensation in a matter of months.
At the same time, the Department and the Special Master do not
believe that any other federal government program provides a perfect
analogy for determining the amount of awards. The Fund is a unique
program that provides compensation for both economic and non-economic
losses and requires that claimants waive their rights to civil
litigation.
The final rule makes some important changes that will increase the
amount of compensation in the Special Master's presumed award charts.
While the Department and the Special Master believe that the original
presumed award charts are entirely sound and are based upon neutral,
current data and generally accepted methodologies, the public comments
did suggest certain adjustments that we determined were appropriate to
implement. Specifically, as described in more detail below, the final
rule increases the amount of non-economic loss compensation by
providing that the presumed awards will include $100,000, rather than
$50,000, for the spouse and each dependent of a deceased victim (in
addition to the $250,000 presumed non-economic award for each deceased
victim). In connection with publication of this final rule, the Special
Master will also announce revised presumed award charts that modify
presumed economic loss in a manner that will further increase presumed
awards. In addition, as explained below, the definition of collateral
source compensation is clarified in a manner that will lead to higher
final awards than many in the public had assumed.
Of course, it bears repeating that the Special Master's ``presumed
award charts'' are estimates and do not determine the final award for
claimants who request individualized hearings. Rather, the Special
Master stands prepared to depart from the presumed awards for
individual claims based upon the extraordinary circumstances of the
claimants.
1. Economic Loss
Although prescribed by the Act, many commenters expressed
frustration that a victim's income is considered in calculating
economic loss. One commenter stated that ``rich people do not deserve
more because they are rich.'' Others believed that the distribution of
taxpayer dollars should be equal to all victims regardless of income
levels. At least one commenter noted that persons with substantial
incomes should not receive higher awards because they are the ones, he
argued, with the ``financial savvy'' to protect their loved ones with
life insurance.
Several commenters raised issues with respect to deriving a
victim's average annual income from the years 1998-2000 in determining
the foundation for calculating economic loss. One commenter noted that
only the last year of annual income should be included. Many comments
on this subject, however, contended that the three-year period used to
obtain the average encompasses the wrong period of years. These
commenters suggested the Special Master use the average income from
1999-2001 (rather than 1998-2000), arguing that 2001 is more indicative
of a victim's actual earning potential. In addition, several families
of victims of the Pentagon attack expressed concern that the
description of income in the interim final rule did not account fully
for income of employees of the military, which often uses terms of art
to describe various forms of compensation.
In response to these suggestions, the interim final rule is amended
to allow the Special Master discretion to consider on a prorated basis
a victim's income from 2001 as well as published salary scales for
government or military employees. In addition, the interim final rule
is amended to clarify that military service members' and uniformed
service members' compensation includes all of the various components of
compensation, including, but not limited to, basic pay (BPY), basic
allowance for housing (BAH), basic allowance for subsistence (BAS),
federal income tax advantage (TAD), overtime bonuses, differential pay,
and longevity pay.
Several comments also raised issues regarding the fact that the
Special Master's schedules, tables, and charts only identify presumed
economic determinations of economic loss up to a salary level
commensurate with the 98th percentile of individual income in the
United States. Commenters had mixed reactions to this component of the
calculations. Some complained that the program is inappropriately
``making millionaires'' of victims' families and that the high end
presumed awards for earners at the 98th percentile were inordinately
high when compared to the average or lower end awards. One commenter
stated that the percentile should be lowered because, as currently
implemented, it ``unfairly discriminates against lower-income
families.'' Other commenters, however, indicated that those same
presumed awards that many regarded as too high were actually too low--
that the amounts at the 98th percentile failed to fully redress losses
for the most successful of all victims (in the top 2% of annual
income). These commenters often inaccurately described the 98th
percentile as a ``cap'' on awards.
The final rule does not change the interim final rule's provision
that the presumed award charts will address incomes only up to the 98th
percentile of income in the United States. Many of the criticisms of
that provision were based upon the incorrect assumption that the
provision constitutes a ``cap'' on economic loss recovery. To be
absolutely clear: The fact that the ``presumed awards'' address incomes
only up to the 98th percentile does not indicate that awards from the
Fund are ``capped'' at that level. In extending the presumed awards
only up to the 98th percentile, we merely recognized that calculation
of awards for many victims with extraordinary incomes beyond the 98th
percentile could be a highly speculative exercise and that, moreover,
providing compensation above that level would rarely be necessary to
ensure that the financial needs of a claimant are met. Calculation of
an award beyond that point using the presumed award methodology without
a detailed record could very well produce inappropriate results.
Accordingly, we permitted applicants with extraordinary prior earnings
to accept awards at the 98th percentile or seek calculation of an award
based upon a more detailed record. We also note that the Special Master
has express authority under the Act to consider the ``individual
circumstances of the claimant'' in fashioning awards, including the
financial needs of victims and surviving families in rebuilding their
lives. As indicated, the Special Master will strive
[[Page 11238]]
to deliver a fair and equitable sum to each eligible claimant.
Many commenters argued for changes in other components of the
economic calculations, the effect of which would increase awards. Some
commenters stated that the wage growth rates used in the economic
calculations are too low. A few commenters noted their opposition to
consumption factors being used. Another stated that a person engaged to
be married should not be straddled with an unmarried person's
consumption rate. Some suggested that the work life estimates are
outdated and gender biased. One commenter stated that the promotion and
merit assumptions are inconsistent and unfair to particular age groups.
Another indicated that taxes should not be deducted from future lost
earnings. One commenter stated that economic loss for foreign nationals
should be calculated by percentages. She suggested that the Special
Master determine the percentile of the foreign national's income in his
or her own country (in light of national averages), and calculate the
economic loss in light of the income of the corresponding percentage in
the United States. Finally, some commenters were worried that victims
just out of school (but with degrees or professional licenses in
industries offering top-level salaries), and without any income
history, would be treated unfairly.
On the other hand, several commenters argued that the calculations
were too generous and suggested changes, the effect of which would
decrease awards. Some indicated that the wage growth rates are too
high. One commenter suggested that personal representatives of single
claimants should not be entitled to economic losses because they would
not have benefitted from the decedent's economic gain absent death.
Another commenter generally agreed with that proposition, but stated
that economic loss should be limited to any amount a single deceased
victim was obligated or ordered to pay in child support. Other
commenters argued that economic awards should not assume that surviving
spouses or other family members will never work again. Lastly, one
commenter stated that divorce rates should be factored in to the
economic loss calculations.
The new presumed award charts released by the Special Master make
several changes that are designed to improve the economic loss
methodology in light of the comments. While this methodology is not
part of the Department's rulemaking, we believe it is helpful to offer
this explanation here. These changes will have the overall effect of
increasing presumed awards for all claimants. Specifically:
(1) The Special Master's original presumed economic loss
methodology relied upon expected work life data from the publication
``A Markov Process Model of Work-Life Expectancies Based on Labor
Market Activity in 1997-1998,'' by James Ciecka, Thomas Donley, and
Jerry Goldman in the Journal of Legal Economics, Winter 1999-2000.
Contrary to the assertions of some commenters, the Special Master did
not use data from the 1970s; rather, the study was conducted in 1997
and 1998. Also, the Special Master's original presumed award
methodology did not, as some suggested, discriminate against women.
Rather, the original methodology relied upon the same assumptions for
men and women--the combined average of All Active Males and All Active
Females. However, in order to increase awards for all claimants by
maximizing the duration of expected foregone earnings and accommodating
potential increases by women in the labor force, the Special Master's
revised presumed economic loss methodology uses the most generous data
available. Specifically, the new methodology uses the All Active Males
table for all claimants.
(2) To address concerns about wage growth assumptions and the
application of wage growth assumptions to different age groups, the
Special Master has adjusted the wage growth assumptions to growth rates
that incorporate annual adjustments for inflation, productivity in
excess of inflation and life cycle increases using data from the March
2001 Current Population Survey conducted by the Bureau of the Census
for the Bureau of Labor Statistics. For life cycle increases, the
Special Master is applying the higher age-specific life cycle increases
(those for males) for all claimants. For inflation and productivity
increases, the Special Master has applied rates of 2 percent and 1
percent, respectively. These rates are consistent with the long-term
relationship between wage growth and risk-free interest rates. The net
effect of this adjustment is to better represent the expected earnings
pattern of the victims over their expected careers as compared to the
original methodology, which based anticipated wage growth on the
victim's age at death. The original assumptions reflected and indeed
emphasized the fact that real increases are typically higher in the
earlier stages of a career but was subject to some criticism because it
did not adjust the growth continually throughout the work life and thus
created differentials at specific ages (particularly, age 31 and age
51). By adopting the revised assumptions, the Special Master adjusts
wage growth throughout the duration of the work life, thus reducing the
differences between age groups. In addition, although the data indicate
that wages actually fall at a certain stage in the career, the Special
Master has chosen to assume that peak earnings remain constant and do
not decline at any stage in the career.
(3) As with the original presumed award calculations, the Special
Master subtracts from the annual projected compensable income the
victim's ``consumption'' as a percentage of after-tax income instead of
before-tax income. While the consumption adjustment is standard, the
application of the adjustment to after-tax income lowers the amount of
the consumption offset below the amount that would typically apply in
an economic loss calculation. In addition, as with the initial model,
the Special Master's assumptions eliminate some of the components
typically used in estimating consumption, thereby further limiting the
consumption deduction.
(4) To better reflect typical life cycle earnings expectation, the
Special Master has incorporated into the calculation a factor to
account for risk of unemployment--again, a common factor in the
calculation of future lost earnings.
(5) Finally, the Special Master has elected to use three blended
after-tax discount rates to compute the present value of the award and
has adjusted the discount rate to reflect current yields on mid-to
long-term U.S. Treasury securities. Although this adjustment creates a
more complex computational process, the Special Master believes that
the effect will be to better reflect the different ages of the victims
and the fact that the survivors will receive awards reflecting
different assumed future years of work life.
Overall, it is important to understand that the basic factor that
affects the economic loss analysis is the victim's own data: each
presumed award will be calculated using the victim's data regarding
actual compensation, including fringe benefits and forms of
compensation and effective tax rate. It is also important to emphasize
that the presumed award methodology is intended to facilitate the
computation of a large number of awards without the detailed review
that might typically be employed in a lengthy economic loss analysis in
an individual case. To achieve this objective, the Special Master
specifically adopted assumptions that are intended to be favorable to
claimants and to enable prompt analysis and payment. Needless
[[Page 11239]]
to say, a case specific analysis that took into account the actual
consumption and savings rates of a particular individual could require
a substantial amount of time and could very well produce lower awards
in some cases.
It is also relevant to note comments suggesting that the economic
loss calculations fail to incorporate sufficiently replacement services
loss. The Special Master recognizes that such losses are variable, and
thus claimants may present at a hearing individualized data to support
a departure from the presumed award.
2. Non-Economic Losses
After extensive fact finding, public outreach, and review of public
comments, the Special Master and the Department concluded that the most
rational and just way to approach the imponderable task of placing a
dollar amount on the pain, emotional suffering, loss of enjoyment of
life, and mental anguish suffered by the thousands of victims is to
assess the non-economic losses for categories of claimants. The
regulations, therefore, set forth presumed awards for non-economic
losses sustained. The presumed non-economic loss awards for decedents
in the interim final rule were $250,000, plus an additional $50,000 for
the spouse and each dependent of the deceased victim. Notably, the
regulations further provide the option of a hearing for those claimants
who feel the presumed awards do not take into account their
extraordinary circumstances.
While many lauded the decision not to distinguish (at least
presumptively) between the pain and suffering of victims or loved ones,
many others voiced their disapproval and urged that all presumptions be
removed. Many of the comments addressing this topic focused on the pain
and suffering of those left behind, while others referred to the pain
and suffering experienced by the victims who lost their lives.
Those in favor of presumed equality pointed out the alleged
difficulty in drawing distinctions. For instance, one commenter
(speaking of the pain and suffering she has experienced) focused on
another commenter's assertions that he deserved more money for pain and
suffering because he spoke to his wife (who was in the World Trade
Center) after one of the planes hit her building but before she lost
her life. She stated that--although she did not talk to her husband
prior to his death--she experienced just as much (if not more) pain and
suffering because she never had the opportunity to say goodbye to him.
Other commenters, however, expressed their views on how
distinctions should be made. For example, one family member (speaking
of his son's pain and suffering) proposed the creation of a separate
category of pain and suffering that differentiates between those
victims who were trapped above the impact area of each World Trade
Center building from those who were physically located below it. He
believes his son's pain and suffering was greater than those who died
below the respective impact zones. Moreover, proposed distinctions were
made depending on whether someone was an emergency worker or not. Some
argued that emergency workers should receive more by way of non-
economic losses because they sacrificed their lives to save victims. In
contrast, others argued that emergency workers should receive less
because ``they knew [the] risks when they pursued their careers in
public service.''
Further, some argued the presumed awards as a whole were
inadequate, while others stated they were too high. Many commenters
stated that a victim's life is priceless and suggested that the non-
economic presumptions be raised to acknowledge the grief suffered by
family members. At least one commenter stated that non-economic losses
usually are not available for wrongful death actions and, therefore,
should be minimal under the Fund, if recognized at all.
One commenter urged that consequential and incidental damages be
included in the non-economic calculations. Another indicated that non-
economic losses should not be comparable to military benefits. Finally,
at least one commenter argued that those who died without children are
being ``forgotten'' or ``penalized.''
It is important once again to emphasize that the final rule
specifies only the presumed non-economic losses award, and any claimant
may request a hearing to present individualized evidence. However, the
Special Master believes that it is important to have some measure of
consistency among awards, so that he does not have to ``play Solomon''
by attempting to place a value on human lives on an ad hoc basis.
The selection of a dollar value for non-economic losses is
inherently subjective. The Department and the Special Master concluded
that an appropriate starting point is the compensation that Congress
has made available under existing federal programs for public safety
officers who are killed while on duty and members of our military who
are killed in the line of duty while serving our nation. See 38 U.S.C.
1967 (military personnel); 42 U.S.C. 3796 (Public Safety Officers
Benefit Program). That amount ($250,000) is not a cap.
The Department and the Special Master also decided to include an
additional component for the spouse and each dependent of deceased
victims. The interim final rule set that amount at $50,000 for the
spouse and each dependent. After reviewing the public comments and
meeting with numerous families of victims, we have decided to double
that amount to $100,000 for the spouse and each dependent. Obviously,
this will have an upward impact on the amount of the awards for many
families of victims. In addition, the definition of ``dependents'' is
modified to include those who meet the IRS'' definition of
``dependent'' even where the victim did not include the individual as a
dependent on his or her most recent federal tax return.
C. Collateral Source
In enacting the Fund, Congress required that awards be offset by
``collateral source compensation'' such as life insurance benefits,
employer death benefits, and benefits from other government programs.
Under the law, the Special Master must make these offsets.
Nevertheless, the law does give the Special Master some measure of
discretion regarding charitable donations, and the interim final rule
states that such donations will not be deducted from victims' awards.
Many commenters focused on issues that are beyond the Department's
authority to regulate. For example, many commenters addressed the
appropriateness of reducing final awards by collateral compensation at
all. Many commenters suggested that it was inappropriate to reduce
awards for the families of victims who planned ahead by purchasing life
insurance or other means of ensuring financial compensation to their
families. On the other hand, those comments in favor of maintaining
collateral-source offsets shared a similar theme; namely, in their
opinion, the intent of the Fund was to ``make sure that nobody's loss
is compounded by sudden destitution,'' not to enrich those who already
have the financial means to make ends meet.
Despite the unequivocal language in the Act that mandates the
Special Master deduct life insurance proceeds from awards, a
substantial percentage of comments focused on this issue. While the
majority of those comments urged that such proceeds not be deducted--a
course that only Congress can prescribe--several commenters had
[[Page 11240]]
more limited suggestions. For instance, a few commenters suggested that
premiums that were contributed by the policyholder should be subtracted
from the proceeds in calculating offsets. Other commenters similarly
insisted that ``cash values'' not be included in the deductions.
Additionally, a few commenters were worried that life insurance
proceeds that are not paid to a victim's personal representative (or
any member of the decedent's current family) would be deducted from the
award paid to the personal representative. One commenter proposed that
``[l]ife insurance proceeds should only be offset to the extent they
were payed to those persons who are the beneficiaries or distributees
of the estate of a deceased victim.''
There also was a high volume of comments regarding workers'
compensation. Several commenters stated they are uncertain whether or
not workers' compensation benefits constitute a collateral source under
the rule. Many argued that such benefits should not be deducted. Others
argued they should. Some suggested that offsetting workers'
compensation benefits would be impracticable because several
``unknowns'' exist. For example, survival benefits, under certain state
laws, are forfeited if and when the recipient remarries, and such
benefits, they contend, ``cannot accurately be reduced to present
value.'' One organization specializing in New York workers'
compensation law raised important technical issues and proposed
preemptive solutions.
Although the topic of private charitable awards (as a potential
component of collateral source) provoked a large percentage of the
comments submitted in response to the Department's Notice of Inquiry,
scant mention was made of it in response to the interim final rule. At
least one commenter insisted that charities be deducted. Others sought
further clarification on the scope of the definition of ``charity''
under the rule.
An important point needs to be made here regarding the differences
between the private and federal compensation efforts arising out of the
attacks of September 11. Many commenters confused this Victim
Compensation Fund, which was created by Congress and is financed by
taxpayer revenue, with the private charities (e.g., American Red
Cross). For example, some were upset with the Special Master because
their private charitable donations were not being divided equally.
Others were angry at the Special Master for not disseminating private
charitable donations in a more timely fashion. It should be reiterated
that the Special Master administering this Fund is not in charge of,
nor does he maintain any control over, the private charitable
organizations or the money they have collected.
Many comments raised additional collateral source issues. These
comments consisted of proposals that, if adopted, would either increase
or decrease the amount of offsets. Those wanting decreased offsets
argued that pension funds, 401(k) plans, and IRAs essentially are
``savings plans'' and, therefore, should not be offset. Others
contended that collateral offsets should affect only the amount of
economic loss, rather than economic and non-economic losses combined.
At least one commenter urged that money paid into Social Security on
behalf of a victim (over his or her lifetime) be subtracted from any
offset. One commenter asked that collateral offsets not be considered
over $500,000.
Similarly, some commenters argued that pensions and other forms of
retirement are, in fact, compensation (or incentives) for either
accepting higher risk (in the case of emergency workers) or lower
salaries (in the case of government employees). Others proposed that
the regulations include a floor whereby every claimant, notwithstanding
the amount of collateral-source offsets, is entitled to receive a
considerable amount of compensation. These commenters expressed concern
that--after collateral-source offsets--they could end up receiving
nothing under the Fund.
The public's questions and comments make it clear that the
determination of the appropriate collateral source offset will in many
situations involve an individualized case-by-case review. It also
appears from questions and from reports in the media that some
individuals may be over-valuing the collateral source compensation and
therefore assuming a much greater offset than would likely be
applicable and that there is a great deal of uncertainty regarding the
types of compensation that would be subject to the offset. Indeed, many
commenters over-valued their particular collateral source compensation
by failing to reduce future periodic payments or benefits to present
value, a calculation that in many circumstances has a substantial
effect on offset amounts. It is both necessary and appropriate
therefore to provide more detailed guidance to the victims and their
families so that they can make educated choices regarding participation
in the program. The following clarifications regarding the
interpretation and application of the collateral source compensation
provisions of the Act should allow potential claimants to make more
informed choices.
The Act defines collateral sources to mean all such 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. The Act and
the rule require the Special Master to reduce the total amount of
compensation by the amount of the collateral source compensation the
claimant (or, in the case of a Personal Representative, the victim's
beneficiaries) has received or is entitled to receive as a result of
the terrorist-related aircraft crashes. In administering the Fund,
consistent with the purpose and terms of the Act, the Special Master
will exercise discretion in valuing the appropriate deductions for
collateral offsets, including by determining: (1) Whether the
particular offsets fall within the definition of collateral sources;
(2) whether beneficiaries of the Fund are ``entitled'' to receive
compensation from those collateral sources; (3) whether the collateral
source compensation is certain or can be computed with sufficient
certainty to enable its deduction while ensuring that the beneficiaries
receive the total compensation that is appropriate; and (4) the
appropriate amount of the compensation that should be deducted, taking
into account the time value of money and contributions made before
death by the victim in the nature of investment or savings.
1. Definition of Collateral Source Compensation Offset
While it is not possible to define in advance every possible
collateral source deduction, a few general illustrations should provide
guidance: First, the Special Master has discretion to exclude from
consideration life insurance proceeds that are distributed to persons
other than the beneficiaries of this Fund; second, the Special Master
has discretion to adjust the amount of offsets to exclude premiums or
assets that were accumulated by the victim through self-contributions
paid into a life insurance program to build up a tax-deferred cash
value; third, the Special Master may reduce the amount of the offset
for a pension to take account of self-contributions to that plan over
the decedent's lifetime.
In addition, the final rule provides that tax benefits received
from the federal government as a result of the enactment of the Victims
of Terrorism Tax Relief Act of 2001 ( Pub. L. 107-
[[Page 11241]]
134) will not be treated as collateral source compensation. The Victims
of Terrorism Tax Relief Act of 2001 provides income and estate tax
relief to the families of victims of terrorism. The law waives the
income tax liability of a victim who died in one of the attacks for
both the year of the attack and the previous year, and ensures that a
minimum benefit of $10,000 is provided to the family of each victim. In
addition, the law shields the first $8.5 million of a victim's estate
from the federal estate tax. For example, prior to the new law,
citizens or residents of the United States who died in the September
11, 2001 terrorist attacks, were able to utilize the maximum state
death tax credit allowed for federal estate tax purposes, and had made
no prior taxable gifts would have had federal estate tax liabilities as
follows: a decedent with a federal taxable estate valued at $2,000,000
would have had a federal estate tax liability of approximately
$460,650; a decedent with a federal taxable estate valued at $4,000,000
would have had a federal estate tax liability of approximately
$1,339,850; and a decedent with a federal taxable estate valued at
$8,000,000 would have had a federal estate tax liability of
approximately $3,047,050. As a result of the new law, no estate tax
would be due in each case. The Victims of Terrorism Tax Relief Act of
2001 therefore provides very substantial tax relief to many victims,
and that relief will not be treated as collateral source compensation
for purposes of determining awards from the Fund. Nevertheless,
substantial income tax rebates could bear on financial need, and
therefore could conceivably be considered by the Special Master in the
context of a hearing.
2. Guidelines for Determining Offset Where Benefit Is Uncertain
Some survivors may be eligible for benefits or payments from
certain programs that provide periodic payments subject to adjustment
or termination depending on potential future events that cannot be
predicted. Examples include Social Security survivor benefits paid to
the spouse of a victim. Such benefits are paid only under certain
conditions and only for certain periods of time. Further, the benefits
are paid periodically over a period of years.
Where the benefits to be paid due to death of the victim are
uncertain, unpredictable, or contingent on unknown future events, the
amount of the compensation to which the survivor is entitled can be
impossible to compute with reasonable certainty. In those instances,
the Special Master has discretion not to require a full deduction where
the amount of the collateral source compensation cannot be determined
with reasonable certainty. Thus, for example, the Special Master has
determined that workers' compensation benefits that are payable only if
the spouse does not re-marry will only be offset to the extent they
have already been paid. Likewise, Social Security and similar benefits
payable to a surviving spouse only if the spouse does not re-marry or
does not earn income above a certain threshold will be offset only to
the extent they have already been paid. By contrast, survivor benefits
from the Social Security Administration and from the military to
children of victims--who generally are entitled by law to periodic
payments until they reach the age of 17 or 18--can be reasonably
computed and will be offset.
3. Computation of Collateral Source Offset
In light of numerous questions regarding the valuation of
collateral source compensation, it is important to clarify that in
computing the offset for any collateral source that is to be paid over
a period of time, the Special Master will only offset the present value
of that collateral source compensation. This has the effect of
decreasing offsets and, thus, increasing the amount of awards. As an
example, in the case of Social Security children's benefits, the
Special Master would determine the monthly benefit to the child,
multiply that benefit by the number of months remaining until the child
reaches age 17 (taking into account possible limits such as maximum
family benefits available), include--if consistent with Social Security
guidelines--a factor for inflation, and then discount the total to
present value to determine the amount of the offset.
4. Clarification Regarding Charitable Contributions
The interim final rule provides that charitable donations
distributed to beneficiaries of the decedent, to the injured claimant,
or to the beneficiaries of the injured claimant by ``private charitable
entities'' are not collateral source compensation. Sec. 104.47(b)(2).
The interim final rule further provides that the Special Master may
determine that funds provided through a private charitable entity
constitute, in substance, a payment described in the definition of
collateral sources, and therefore should be used to offset the award.
Some commenters have expressed concern that the interim final
rule's definition could require that privately funded charities would
be treated as collateral sources if a governmental entity created or
manages the charity. In order to avoid this confusion, the provision is
amended to provide that money received from ``privately funded
charitable entities'' do not constitute collateral source compensation,
subject to the same exception described above.
5. Availability of Information Regarding Collateral-Source Offsets
Through this preamble, the Special Master announces his intention
to permit applicants to meet with the Special Master or his
representative consultants in order to advise such applicants whether
particular types of collateral source compensation will fall within the
definition of ``collateral source compensation,'' and how such types of
collateral sources will be valued. This service is an attempt to deal
with an issue raised during the comment period; namely, that potential
claimants should not be required to waive their right to sue without
having some indication of how particular types of collateral offsets
will be treated. The final rule attempts to deal with this problem by
striking a careful balance.
The Act does not permit the Special Master to provide claimants any
precise estimate of their award prior the claimant opting into the
Fund. Indeed, the Special Master and his staff will carefully review
the information submitted in any claim before reaching any conclusions
regarding an award. Nevertheless, by permitting applicants to inquire
as to how the offsets will be calculated for differing types of
collateral sources, this provision of the final rule should assist
applicants to make a considered election concerning whether to
participate in the Fund or not. To be clear, this consultation will
focus on broad categories of benefits and will not provide applicants
with a precise estimate of their eventual award. The determination of
an appropriate award requires a deliberative review of a victim's file,
including the types of detailed financial records that the application
requires. The Special Master cannot, and will not, give a precise
computation of an award before a claim is filed. This provision helps
to assure claimants a better understanding of their award without
requiring the Special Master to engage in individual computation not
permitted by the Act.
Finally, some commenters expressed concern that their collateral-
source deductions could eliminate their awards altogether. The Act
requires that
[[Page 11242]]
collateral source compensation be deducted from all final awards. The
Act, therefore, does not permit us to create a mandatory legal rule
requiring minimum payouts for all eligible claimants after collateral
source deductions. Nevertheless, the Special Master is permitted to
consider the individual circumstances of each claimant, including the
needs of the victim's family. The Special Master has announced his
expectation that, when the total needs of deceased victims' families
are considered, it will be very rare that a claimant will receive less
than $250,000, except in unusual situations where a claimant has
already received very substantial compensation from collateral sources.
D. Eligibility.
The Act requires the Special Master to determine whether a claimant
is an ``eligible individual.'' ``Eligibility,'' in turn, is defined by
the Act to include: (1) Individuals (other than the terrorists) aboard
American Airlines flights 11 and 77 and United Airlines flights 93 and
175; (2) individuals who were ``present at'' the World Trade Center,
the Pentagon, or the site of the aircraft crash at Shanksville,
Pennsylvania at the time or in the immediate aftermath of the crashes;
or (3) personal representatives of deceased individuals who would
otherwise be eligible. Moreover, to be eligible for an award, an
individual must have suffered physical harm or death as a result of one
of the terrorist-related air crashes. The rule addresses eligibility by
defining the terms ``present at,'' ``immediate aftermath,'' ``physical
harm,'' and ``personal representative.''
Many commenters submitted comments regarding eligibility issues.
However, although the rule defined several terms important to
eligibility requirements, the majority of comments concerning this
topic discussed the scope of the terms ``physical harm'' and ``personal
representative.''
1. Physical Harm
To be eligible for compensation under the Fund, victims who did not
lose their lives in the terrorist attacks of September 11 must
demonstrate that they suffered physical harm. ``Physical harm'' is
defined in the interim final rule as ``a physical injury to the body
that was treated by a medical professional within 24 hours of the
injury having been sustained or within 24 hours of rescue.''
Additionally, such injury must have: (i) Required hospitalization as an
in-patient for at least 24 hours; or (ii) caused, either temporarily or
permanently, partial or total physical disability, incapacity or
disfigurement.
The Act does not extend eligibility to those who suffered emotional
distress without physical injury. A few commenters therefore urged that
the Act be rewritten to include such harm, or that regulations be
drafted to interpret emotional distress as a physical injury. At least
one commenter stated that those suffering from post-traumatic stress
disorder should be eligible under the Fund. Another lauded the program
for its restrictions on eligibility based on physical injury.
Several commenters stated that the rule's definition of ``physical
harm'' strikes an appropriate balance between compensating victims and
preventing fraud or abuse. A few, however, indicated they were severely
injured in the immediate aftermath of the terrorist attacks, yet would
not be eligible for the Fund because they were not ``treated by a
medical professional within 24 hours of the injury having been
sustained.'' These commenters urged that the rule be adjusted to allow
a longer period of time for treatment by a medical professional. At
least one commenter indicated that--despite being seriously injured--he
spent more than 24 hours trying to locate his family members and
friends who worked in the World Trade Center. Another commenter
described how many individuals with serious physical injuries either
were reluctant to seek immediate treatment or were persuaded not to
seek treatment in the 24 hours following the attacks in order to allow
physicians to care for those suffering potentially life-threatening
injuries.
The final rule expands the time period in which victims must have
obtained medical treatment from 24 hours to 72 hours for those victims
who were unable to realize immediately the extent of their injuries or
for whom appropriate medical care was not available on September 11.
The Special Master has discretion to extend the time period even
further for rescue personnel or possibly others who otherwise meet this
requirement but did not seek or were not able to seek medical treatment
within 72 hours. Of course, the Special Master will continue to require
evidence that victims suffered physical injury at the time of, or in
the immediate aftermath of, the aircraft crashes, as defined in
Sec. 104.2 of this rule.
2. Personal Representative
The Act provides that in the case of an individual who is deceased
but who otherwise meets the other criteria for eligibility, a claim may
be filed by the personal representative of the decedent. In many or
most cases the identity of the personal representative will not be in
dispute. Where disputes exist, however, at least two issues arise: (1)
What are the rules for determining who is the personal representative;
and (2) who should apply the rules and resolve the dispute?
As to the first issue, the regulations rely upon state law. With
respect to the second issue, the regulations provide that the Special
Master is not obligated to arbitrate, litigate, or otherwise resolve
disputes as to the identity of the personal representative. The
regulations do provide, however, that the disputing parties may agree
in writing on a personal representative to act on their behalf--who may
seek and accept payment from the Fund--while those disputing parties
work to settle their dispute. Further, in appropriate cases, the
Special Master may determine an award, but place the payment in escrow
until the dispute regarding the personal representative is ultimately
resolved.
While several commenters agreed that state law should govern
personal representative issues, others did not. Most commenters who
were dissatisfied with the rule's reliance upon state law in this area
expressed concern that state law determinations would preclude recovery
by particular individuals who lost loved ones in the terrorist attacks.
Others, however, expressed concerns regarding possible uncertainty and
the lack of uniformity among different states' laws. Consequently,
several commenters contended that the rule should provide eligibility
requirements that displace state law.
One of the topics receiving the most comments was the eligibility
of domestic partners. Many comments submitted on behalf of members of
Amnesty International urged that there be ``equal access to benefits
under the Fund for all victims, regardless of sexual orientation or
marital status.'' Members of this organization, and several other
individuals, stated that eligibility should be extended to surviving
partners of gays and lesbians. Others urged that partners in common law
marriages be eligible. Another group of commenters suggested that
eligibility should be construed more broadly to include all partners
``in long standing stable relationships * * *.'' In contrast, scores of
comments were submitted by those who feel ``funds should be limited to
spouses and other family members * * * and should not extend to
domestic partners, including surviving partners of gays and lesbians.''
In addition to fiancees who may be part of a domestic partnership,
many other fiancees (and those commenting
[[Page 11243]]
on their behalf) similarly expressed frustration they are not (or may
not be) eligible under the Fund. Some noted that their state of
domicile does not place fiancees in the line of intestate succession.
One asked, rhetorically, ``Why am I eligible to recover money from
certain private charities, but yet am ineligible under the Fund?'' On a
related note, more than one commenter indicated that ex-spouses should
be eligible.
The final rule continues to rely upon state law for the
determination of the personal representative. Reliance on state law is
necessary in part because those who file for recovery under the Fund
waive their rights to recover through litigation, in which state law
would determine the identity of the appropriate representatives of the
decedent, or the decedent's estate, to bring suit. Thus, if the
identity of personal representatives for purposes of this Fund were
determined by federal regulation, there could be many situations in
which the representative as defined by state law would choose
litigation while the personal representative as defined by federal
regulation would seek to recover from the Fund. While many have voiced
criticisms of some of the potentially applicable state laws, those
criticisms are more properly directed toward state officials. It is
important to note, however, that state intestacy laws are relevant only
in the absence of a valid will. Thus, to the extent that some or all of
the award would pass by will, the will may determine the identity of
some or all of the beneficiaries.
3. Other Eligibility Issues
Many commenters stated they are angry that men and women in the
United States armed forces who have died (or may die) fighting
terrorism in Afghanistan are not eligible under the Fund. One commenter
noted that ``military victims bleed and die like everyone else.'' One
commenter argued that more than one claim per family should be allowed
under the Act. At least one commenter suggested that the term
``dependent'' be construed more broadly to include all children,
including sons and daughters who have reached the age of majority.
Another commenter stated that siblings who lived in the same household
of the decedent should be compensated. A few commenters urged that all
parents and siblings be compensated, even when state law does not
provide for it. Last, one commenter noted that those who are found
ineligible to recover from the Fund should not have to waive their
rights to sue in a court of law.
Congress explicitly provided that only those who suffered physical
harm as a result of the air crashes and the personal representatives of
those who were killed as a result of the air crashes are eligible
claimants. Congress did not, however, address who could ultimately
receive compensation. Indeed, the 120-day statutory deadline for
adjudicating claims on the Fund could in many instances preclude the
Special Master from fairly determining how best to disburse awards
among family members. Because state laws routinely serve that type of
function, it makes the most sense that they generally provide the bases
for distribution. Thus, issues regarding whether siblings and adult
offspring of victims can receive part of the award will generally be
determined by reference to state (or relevant foreign) law.
E. Distribution of Awards
The interim final rule allows the Special Master to issue awards in
a lump sum to eligible claimants. One commenter implied that the rule
was not clear on how funds will be distributed once a lump payment is
made to a personal representative. She stated her concern that certain
distributees under state law may be left out. One organization stated
its concern that absent a regulation creating the option of structured
awards, the tax-free status of awards may be compromised. Finally, at
least one commenter indicated that the option to create a trust is
necessary to prevent beneficiaries from squandering lump sums.
The interim final rule provided that the Special Master has
discretion to provide claimants with information regarding annuities or
other financial planning devices or to offer structured awards with
periodic payments. The Special Master is encouraged to provide
information to claimants regarding the availability of annuities and
other financial planning devices and services. The Special Master
strongly recommends that personal representatives or beneficiaries
consider annuities and structured settlements.
It has come to the Department's attention that the classification
of awards as ``pain and suffering'' awards or as ``wrongful death''
awards will affect the distribution of the awards under the laws of
some states. Some, including the judges of New York's Surrogate's
Courts, have explained that it would be difficult to determine the
appropriate distribution without some guidance from the Special Master
regarding the nature of the awards. Therefore, the Special Master has
discretion, where appropriate, to specify the amount of the final award
that is attributable to economic loss and the amount that is
attributable to non-economic loss and other relevant information
necessary in order to provide guidance to personal representatives and
state courts in determining the proper distribution of awards or in
reviewing the distribution plan.
F. Procedural Rules
Certain commenters proposed substantive changes to the interim
final rule. A few commenters, however, raised concerns with the
procedural framework it envisioned. Most of these commenters criticized
the use of presumed awards. Specifically, they contended that
presumptive awards should be eliminated altogether, and that all awards
made under Fund should be decided primarily on evidence presented at a
mandatory hearing. These commenters contended there should exist no
rebuttable presumption whatsoever or, in the alternative, surmised that
the ``extraordinary circumstances'' burden was too high to have any
practical effect on increasing awards. In order to effectuate these
proposed changes, a few commenters proposed that hearings not be
limited to two hours. Rather, in their opinion, there should exist an
unlimited time period at the hearings to discuss each case and present
oral testimony or other evidence. One commenter stated that the rule
needs to be clear as to whether or not there is risk of receiving less
than the presumed award when someone opts for a hearing under Track B.
The final rule leaves intact the ``presumed award'' approach, under
which claimants may choose to receive the presumed award and seek
review if appropriate, or instead proceed directly to an individualized
hearing. With regard to the suggestion that the Special Master jettison
the presumed awards altogether in favor of a purely individualized,
case-by-case adjudication, we do not believe that such a ``black box''
approach would serve the best interests of the claimants. While the
regulations are designed to provide claimants an opportunity to present
their individual circumstances, claimants should not waive their rights
to litigation without some indication of what they might recover under
the Fund.
At the same time, it is important that the Special Master have an
opportunity to consider circumstances that are not accounted for in the
presumed award charts. The term ``extraordinary
[[Page 11244]]
circumstances'' is not intended to signal that there is an
unsustainable burden to justify departure from the presumed award.
Instead, it reflects the Special Master's sense that the presumed award
methodology should be fair and appropriate for a substantial majority
of claims. A number of factors could support a determination to depart
from the presumed award methodology. For victims who had extremely high
incomes (beyond the 98th percentile of individuals in the United
States), the Special Master may consider any relevant individual
circumstances, including whether the financial needs of those victims'
families are being met.
In addition, the final rule explains that there will be no firm
time limit for hearings.
Application of Various Laws and Executive Orders to This Rulemaking
Administrative Procedure Act, 5 U.S.C. 553
This rule provides for compensation to eligible individuals who
were physically injured and to the personal representatives of those
who were killed as a result of the terrorist-related aircraft crashes
of September 11, 2001. On December 21, 2001, the Department published
its interim final rule and provided a thirty-day period for public
comments.
The Department finds ``good cause'' for exempting this rule from
the provision of the Administrative Procedure Act providing for a
delayed effective date. 5 U.S.C. 553(d). Delaying the opportunity for
eligible claimants to avail themselves of the final rule's changes to
the regulations would be contrary to the public interest. The interim
final rule is already in effect, and it is in the public interest to
minimize the amount of time during which nonfinal rules are in effect.
In addition, potential claimants may prefer to have their claims
resolved under the final rule, and it is in the public interest to
allow them to file and, if eligible, receive awards as soon as
possible.
Congressional Review Act
The Administrator of the Office of Information and Regulatory
Affairs of the Office of Management and Budget has designated this
final rule as a ``major rule'' as that term is defined by the
Congressional Review Act (``CRA''), 5 U.S.C. 801 et. seq. Pursuant to
section 808(2) of the CRA, the Department finds that ``good cause''
exists for making this rule effective upon publication because delay
would be contrary to the public interest favoring prompt disbursement
of benefits.
Paperwork Reduction Act of 1995
The Department of Justice (DOJ), Civil Division has submitted the
following information collection request to the Office of Management
and Budget (OMB) for review and clearance in accordance with the
emergency review procedures of the Paperwork Reduction Act of 1995. OMB
approval has been requested by March 6. The proposed information
collection is published to obtain comments from the public and affected
agencies. Two associated information collections, the Registration/
Eligibility Form and Application for Emergency Benefits from the Victim
Compensation Fund (OMB 1105-0073, SM-001) and the Victim Compensation
Fund Objection Form (OMB 1105-0077, SM-002) have already received OMB
approval. The Death Compensation Form for the September 11 Victim
Compensation Fund (SM-003) and the Personal Injury Compensation Form
for the September 11 Victim Compensation Fund (SM-004) are currently
under OMB review. If granted, the emergency approval is only valid for
180 days. Comments should be directed to OMB, Office of Information and
Regulatory Affairs, Attention: Department of Justice Desk Officer,
Washington, D.C. 20530.
During the first 60 days of this same review period, a regular
review of this information collection will be undertaken. All comments
and suggestions, or questions regarding additional information,
including obtaining a copy of the proposed information collection
instrument with instructions, should be directed to Office of the
Special Master, U.S. Department of Justice, 950 Pennsylvania Avenue,
NW., Washington, DC 20530. We request written comments and suggestions
from the public and affected agencies concerning the proposed emergency
collection of information.
Your comments should address one or more of the following four
points:
(1) Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of
the proposed collection of information, including the validity of the
methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to
be collected; and
(4) Minimize the burden of the collection of information on those
who are to respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology, e.g., permitting electronic
submission of responses.
Overview of This Information Collection
(1) Type of Information Collection: New Collection
(2) Title of the Form/Collection: Death Compensation Form for the
September 11 Victim Compensation Fund and Personal Injury Compensation
Form for the September 11 Victim Compensation Fund.
(3) Agency form number, if any, and the applicable component of the
Department of Justice sponsoring the collection: Form Number: SM-003
(Death Compensation Form) and SM-004 (Injury Compensation Form), Office
of the Special Master, Department of Justice.
(4) Affected public who will be asked or required to respond, as
well as a brief abstract: Primary: The primary affected public will be
individuals who were physically injured and the Personal
Representatives of those killed as a result of the terrorist-related
aircraft crashes of September 11, 2001. Abstract: Physically injured
victims as a result of the terrorist-related attacks of September 11,
2001 will use the Injury Compensation Form and Personal Representatives
of those killed as a result of September 11 will use the Death
Compensation Form. Both forms will be used to provide information
needed to determine eligibility for the program and to calculate
compensation awards.
(5) An estimate of the total number of respondents and the amount
of time estimated for an average respondent to respond: 5,000 claimants
with an average of 15 hours per response.
(6) An estimate of the total public burden (in hours) associated
with the collection: 75,000 hours.
If additional information is required contact: Robert B. Briggs,
Department Clearance Officer, Information Management and Security
Staff, Justice Management Division, United States Department of
Justice, 601 D Street NW., Suite 1600, Washington, DC 20004.
Privacy Act of 1974
The Department of Justice, Civil Division (CIV) has established a
new Privacy Act system of records entitled ``September 11th Victim
Compensation Fund of 2001 File System,'' JUSTICE/CIV-008. By law,
regulations addressing certain administrative matters for the September
11th Victim Compensation Fund of 2001 were to be issued within
[[Page 11245]]
the 90-day period established by Congress. In compliance with that time
period, the Privacy Act notice was published on December 21, 2001 at 66
FR 65991, with no routine uses, and was effective on the date
published. It is likely that amendments to this notice, including
routine uses, will be published at a later date, with the opportunity
to comment. In the interim, disclosures necessary to process claims are
being made, and will be made, only with the prior written consent of
claimants or as otherwise authorized under 5 U.S.C. 552a(b).
Regulatory Flexibility Act
These regulations set forth procedures by which the Federal
government will award compensation benefits to eligible victims of the
September 11, 2001 terrorist attacks. Under 5 U.S.C. 601(6), the term
``small entity'' does not include the Federal government, the party
charged with incurring the costs attendant to the implementation and
administration of the Victims Compensation Fund. To the extent that
small entities, including small government entities, will be
economically affected by the promulgation of these regulations, such
effects will likely be minimal. Further, the number of entities that
will be affected will, in all probability, fall short of a
``substantial number'' of small entities. In fact, the Department
believes that the promulgation of these rules will play a considerable
role in reducing the amount of complex, private litigation, wherein a
substantial number of small (and large) entities would undoubtedly be
significantly impacted.
Accordingly, the Department has reviewed this rule in accordance
with the Regulatory Flexibility Act (5 U.S.C. 605(b)) and by approving
it certifies that this rule will not have a significant economic impact
on a substantial number of small entities because it provides
compensation to eligible individuals who were physically injured as a
result of the terrorist-related aircraft crashes of September 11, 2001,
and compensation through a ``personal representative'' for those who
were killed as a result of those crashes. This rule provides
compensation to individuals, not to entities.
Unfunded Mandates Reform Act of 1995
This rule will not result in the expenditure by State, local and
tribal governments, in the aggregate, or by the private sector, of
$100,000,000 or more in any one year, and it will not significantly or
uniquely affect small governments. Therefore, no actions were deemed
necessary under the provisions of the Unfunded Mandates Reform Act of
1995.
Executive Order 12866--Regulatory Planning and Review
This regulation has been drafted and reviewed in accordance with
Executive Order 12866, ``Regulatory Planning and Review,'' section
1(b), Principles of Regulation. The Department of Justice has
determined that this rule is a ``significant regulatory action'' under
Executive Order 12866, section 3(f), Regulatory Planning and Review,
and accordingly this rule has been reviewed by the Office of Management
and Budget.
Executive Order 13132--Federalism
This regulation will not have substantial direct effects on the
States, on the relationship between the national government and the
States, or on distribution of power and responsibilities among the
various levels of government. Therefore, in accordance with Executive
Order 13132, it is determined that this rule does not have sufficient
federalism implications to warrant the preparation of a Federalism
Assessment. However, the Department of Justice has worked cooperatively
with state and local officials in the affected communities in the
preparation of this rule. Also, the Department individually notified
national associations representing elected officials of the initial
Notice of Inquiry and the subsequent interim final rule, and the
Department will be taking similar action in connection with the final
rule.
List of Subjects in 28 CFR Part 104
Disaster assistance, Disability benefits, Terrorism.
Accordingly, for the reasons set forth in the preamble, the interim
rule amending Part 104 of chapter I of Title 28 of the Code of Federal
Regulations that was published on December 21, 2001 at 66 FR 66274 is
adopted as a final rule with the following changes:
PART 104--SEPTEMBER 11TH VICTIM COMPENSATION FUND OF 2001
1. The authority citation for part 104 continues to read as
follows:
Authority: Title IV of Pub. L. 107-42, 115 Stat. 230, 49 U.S.C.
40101 note.
2. Section 104.2 is amended by revising paragraph (c)(1) to read as
follows:
Sec. 104.2 Eligibility definitions and requirements.
* * * * *
(c) * * *
(1) The term physical harm shall mean a physical injury to the body
that was treated by a medical professional within 24 hours of the
injury having been sustained, or within 24 hours of rescue, or within
72 hours of injury or rescue for those victims who were unable to
realize immediately the extent of their injuries or for whom treatment
by a medical professional was not available on September 11, or within
such time period as the Special Master may determine for rescue
personnel who did not or could not obtain treatment by a medical
professional within 72 hours; and
* * * * *
3. Section 104.3 is amended by revising paragraphs (a) and (b) to
read as follows:
Sec. 104.3 Other definitions.
(a) Beneficiary. The term beneficiary shall mean a person to whom
the Personal Representative shall distribute all or part of the award
under Sec. 104.52 of this Part.
(b) Dependents. The Special Master shall identify as dependents
those persons so identified by the victim on his or her federal tax
return for the year 2000 (or those persons who legally could have been
identified by the victim on his or her federal tax return for the year
2000) unless:
(1) The claimant demonstrates that a minor child of the victim was
born or adopted on or after January 1, 2001;
(2) Another person became a dependent in accordance with then-
applicable law on or after January 1, 2001; or
(3) The victim was not required by law to file a federal income tax
return for the year 2000.
* * * * *
4. Section 104.6 is revised to read as follows:
Sec. 104.6 Amendments to this part.
Claimants are entitled to have their claims processed in accordance
with the provisions of this Part that were in effect at the time that
their claims were submitted under Sec. 104.21(d). All claims will be
processed in accordance with the current provisions of this Part,
unless the claimant has notified the Special Master that he or she has
elected to have the claim resolved under the regulations that were in
effect at the time that the claim was submitted under Sec. 104.21(d).
5. Section 104.21(d) is revised to read as follows:
Sec. 104.21 Filing for compensation.
* * * * *
[[Page 11246]]
(d) Submission of a claim. Section 405(c)(3)(B) of the Act provides
that upon the submission of a claim under the Fund, the claimant waives
the right to file a civil action (or to be a party to an action) in any
Federal or State court for damages sustained as a result of the
terrorist-related aircraft crashes of September 11, 2001, except for
civil actions to recover collateral source obligations and civil
actions against any person who is a knowing participant in any
conspiracy to hijack any aircraft or commit any terrorist act. A claim
shall be deemed submitted for purposes of section 405(c)(3)(B) of the
Act when the claim is deemed filed pursuant to Sec. 104.21, regardless
of whether any time limits are stayed or tolled.
* * * * *
6. Section 104.33 is amended by revising paragraphs (c) and (g), to
read as follows:
Sec. 104.33 Hearing.
* * * * *
(c) Location and duration of hearings. The hearings shall, to the
extent practicable, be scheduled at times and in locations convenient
to the claimant or his or her representative. The hearings shall be
limited in length to a time period determined by the Special Master or
his designee.
* * * * *
(g) Determination. The Special Master shall notify the claimant in
writing of the final amount of the award, but need not create or
provide any written record of the deliberations that resulted in that
determination. There shall be no further review or appeal of the
Special Master's determination. In notifying the claimant of the final
amount of the award, the Special Master may designate the portions or
percentages of the final award that are attributable to economic loss
and non-economic loss, respectively, and may provide such other
information as appropriate to provide adequate guidance for a court of
competent jurisdiction and a personal representative.
7. In Section 104.43, paragraph (a) is amended by:
a. revising the second and third sentences; and
b. adding at the end thereof two new sentences, to read as follows:
Sec. 104.43 Determination of presumed economic loss for decedents.
* * * * *
(a) * * * The Decedent's salary/income in 1998-2000 (or for other
years the Special Master deems relevant) shall be evaluated in a manner
that the Special Master deems appropriate. The Special Master may, if
he deems appropriate, take an average of income figures for 1998-2000,
and may also consider income for other periods that he deems
appropriate, including published pay scales for victims who were
government or military employees. * * * For victims who were members of
the armed services or government employees such as firefighters or
police officers, the Special Master may consider all forms of
compensation (or pay) to which the victim was entitled. For example,
military service members' and uniformed service members' compensation
includes all of the various components of compensation, including, but
not limited to, basic pay (BPY), basic allowance for housing (BAH),
basic allowance for subsistence (BAS), federal income tax advantage
(TAD), overtime bonuses, differential pay, and longevity pay.
8. Section 104.44, is amended by revising the first sentence to
read as follows:
Sec. 104.44 Determination of presumed noneconomic losses for
decedents.
The presumed non-economic losses for decedents shall be $250,000
plus an additional $100,000 for the spouse and each dependent of the
deceased victim. * * *
9. Section 104.47 is amended by:
a. revising paragraphs (a) and (b)(2); and
b. adding paragraph (b)(3), to read as follows:
Sec. 104.47 Collateral sources.
(a) Payments that constitute collateral source compensation. The
amount of compensation shall be reduced by all collateral source
compensation, including life insurance, pension funds, death benefits
programs, and payments by Federal, State, or local governments related
to the terrorist-related aircraft crashes of September 11, 2001. In
determining the appropriate collateral source offset for future benefit
payments, the Special Master may employ an appropriate methodology for
determining the present value of such future benefits. In determining
the appropriate value of offsets for pension funds, life insurance and
similar collateral sources, the Special Master may, as appropriate,
reduce the amount of offsets to take account of self-contributions made
or premiums paid by the victim during his or her lifetime. In
determining the appropriate collateral source offset for future benefit
payments that are contingent upon one or more future event(s), the
Special Master may reduce such offsets to account for the possibility
that the future contingencies may or may not occur. In cases where the
recipients of collateral source compensation are not beneficiaries of
the awards from the Fund, the Special Master shall have discretion to
exclude such compensation from the collateral source offset where
necessary to prevent beneficiaries from having their awards reduced by
collateral source compensation that they will not receive.
(b) * * *
(2) Charitable donations distributed to the beneficiaries of the
decedent, to the injured claimant, or to the beneficiaries of the
injured claimant by privately funded charitable entities; provided
however, that the Special Master may determine that funds provided to
victims or their families through a privately funded charitable entity
constitute, in substance, a payment described in paragraph (a) of this
section.
(3) Tax benefits received from the Federal government as a result
of the enactment of the Victims of Terrorism Tax Relief Act.
10. Section 104.52 is amended by revising the third sentence to
read as follows:
Sec. 104.52 Distribution of award to decedent's beneficiaries.
(a) * * * Notwithstanding any other provision of these regulations
or any other provision of state law, in the event that the Special
Master concludes that the Personal Representative's plan for
distribution does not appropriately compensate the victim's spouse,
children, or other relatives, the Special Master may direct the
Personal Representative to distribute all or part of the award to such
spouse, children, or other relatives.
11. Section 104.61(a) is amended by revising the first sentence to
read as follows:
Sec. 104.61 Limitation on civil actions.
(a) General. Section 405(c)(3)(B) of the Act provides that upon the
submission of a claim under the Fund, the claimant waives the right to
file a civil action (or be a party to an action) in any Federal or
State court for damages sustained as a result of the terrorist-related
aircraft crashes of September 11, 2001, except that this limitation
does not apply to recover collateral source obligations, or to a civil
action against any person who is a knowing participant in any
conspiracy to hijack any aircraft or commit any terrorist act. * * *
* * * * *
[[Page 11247]]
Dated: March 7, 2002.
John Ashcroft,
Attorney General.
[FR Doc. 02-5923 Filed 3-12-02; 8:45 am]
BILLING CODE 4410-12-P