Academic journal article Defense Counsel Journal

A Victim's Eye View of the September 11th Victim Compensation Fund: Despite the Inadequacies of the Fund for High Earners and the Collateral Source Deductions, the Fund Has Provided Most for Most Victims

Academic journal article Defense Counsel Journal

A Victim's Eye View of the September 11th Victim Compensation Fund: Despite the Inadequacies of the Fund for High Earners and the Collateral Source Deductions, the Fund Has Provided Most for Most Victims

Article excerpt

IN THE wake of the terrorist attacks September 11, 2001, the U.S. Congress enacted the September 11th Victim Compensation Fund of 2001 as Title IV of the Air Transportation Safety and System Stabilization Act and as part of a broad effort to, first, protect the financial viability of the airline industry by limiting air carrier liability arising from civil lawsuits to insurance coverage, and, second, by providing victims in effect no-fault insurance in which proof of liability would not be required. (1)

The legislation provided victims two options for recovery: (1) civil litigation with recovery capped at the airline's liability insurance coverage or (2) the fund, which offered compensation in exchange for release of claims against the airlines, airports and aircraft manufacturers. Victims (2) utilizing the fund had to submit applications by December 22, 2003. Victims pursuing litigation must adhere to state statutes of limitations, typically two years from the date occurrence--September 11, 2003.

In a press release of December 18, 2003, just a few days before the application deadline, Kenneth R. Feinberg, the special master administering the fund, said that 5,102 claims had been received as of that date, including 2,521 claims for decedents (85 percent of those eligible), and that the fund had disbursed nearly $1.5 billion. Individual death compensation amounts have ranged from $250,000 to $6.9 million, he stated, while those physically injured have received $500 to $7.9 million. (3)

In evaluating the fund, success may be equated with the number of victims that opt into the fund, providing an objective, ex ante, analysis. Why haven't all victims used the fund? The conclusion is that the fund will succeed because the largest group of victims--those in the World Trade Center--will seek recovery from the fund.

TWO COMPENSATORY REGIMES

A. The Fund

The rules governing the fund state that the relevant factors in calculating an award include the claimant's age, life expectancy income, marital status, and the number and ages of dependents. Economic losses include the decedent's lost earnings, employment, medical costs, lost business opportunities and burial costs. (4) Surviving victims are compensated based on the nature of the injury, medical bills, and temporary or permanent disabilities. Contrary to traditional tort law, punitive damages are not recoverable under the fund.

The fund quantifies "non-economic losses" for decedents at $250,000, plus an additional $100,000 for the spouse and each dependent of the deceased victim. These amounts are presumptive for everyone, regardless of whether the victim was in an aircraft, in the World Trade Center or at the Pentagon, and regardless of how long the victim lived after impact.

At minimum, a decedent who left a spouse or dependent is entitled to $500,000; if the decedent was single with no dependents, the minimum amount recoverable is $300,000. These minimums however, are before collateral source deductions. Contrary to traditional tort-based damage calculations, collateral sources, which must be deducted from fund awards, include life insurance, pension funds, death benefit programs, and payments by federal, state or local governments related to the terrorist attacks. (5) The rules make it plausible to envision situations in which 9/11 victims receive no award after collateral source deductions. Charitable benefits are not deducted from fund awards.

B. Litigation

If a victim elects to sue, the exclusive remedy is a federal cause of action, exclusively in the U.S. District Court for the Southern District of New York, and the liability of the airlines for both compensatory and punitive damages may not exceed the limits of the carriers' liability insurance coverage. State statutes of limitation apply. The legislation mandates application of the substantive laws of the state where the crashes occurred--New York, Virginia and Pennsylvania--including choice-of-law rules. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.