September 11th Victim Compensation Fund
Department of Justice and Special Master Issue Interim Final Rules

Some Questions and Answers

On 21 December 2001, the U.S. Department of Justice and Special Master Kenneth R. Feinberg published an “Interim Final Rule” setting out some of the details for claims from the Victim Compensation Fund and how the fund  will be administered.  We outline below how some of the early questions about the fund and the claims process have been answered.  The full text of the Rule begins at 66 Fed. Reg. 66274.

Q.  What are the limits on the deduction of “collateral sources”?
A. All collateral sources other than gifts, in-kind benefits, and charitable donations will apparently be deducted from recoveries from the fund.  28 CFR § 104.47.
Q. How are Worker’s Compensation awards and liens considered?
A. The regulations do not address this issue.  Worker’s Compensation benefits are not excluded as collateral sources.  Accordingly, such benefits will apparently be deducted from any recovery from the fund.  Assuming they are so deducted, there should be no lien on the recovery.
Q. Will there be a cap on recovery?
A. There may be a de facto cap of approximately US$3 Million per person    Statement by Special Master, 66 Fed.Reg. 66274 (December 21, 2001).
Q. Is there a minimum recovery?
A.The regulations set minima in death cases at US$500,000.00 for a decedent with dependents and US$300,000.00 for decedents with no dependents before collateral source deductions.  28 CFR § 104.41.
Q. Does the fund cover latent injuries (e.g., inhalation injuries that have not manifested themselves)?
A. No.  Only “Physical Harm” that required medical attention within twenty four hours of the injury or rescue AND required at least twenty four hours of inpatient care are covered. Strictly emotional trauma (e.g., PTSD) is not covered.  28 CFR § 104.2(a).
Q. Is there advance emergency compensation?
A. Yes.  A victim or eligible representative of a decedent may apply for up to US$50,000.00 (in the case of death) or up to US$25,000.00 in (the event of injury).  28  CFR § 104.22 (1) & (2).
Q. Will there be “standard recoveries”?
A. As a practical matter, yes.  The interim rules require the Special Master to publish “Schedules, tables, or charts of presumed determinations for economic and noneconomic losses.”  However, there may be deviation from these presumptions depending upon individual circumstances.  28 CFR § 104.43(a).
Q. Will there be extraordinary awards for extremely high wage earners?
A. Not necessarily.  The regulations only require presumptive calculations for economic loss up to the top 98% of wage earners.  Those above this percentile may not necessarily recover an award greater than the highest listed presumed award.  28 CFR § 104.43(a); Statement by Special Master, 66 Fed.Reg. 66278 (December 21, 2001).
Q. How will awards differ from traditional tort damages?
A. In addition to the collateral source deduction, there will be a practical cap on damages beyond those necessary to afford a “strong economic foundation” for the family of a decedent.  A person who might be entitled to an award in the tens of millions of dollars on an economic basis alone should not expect an award near this level, even with economic and noneconomic loss combined.  Statement by Special Master, 66 Fed.Reg. 66278 (December 21, 2001).
Q. Will there be standardized recoveries for noneconomic loss in wrongful death cases?
A.Yes.  In the event of wrongful death, the non-economic compensation is fixed as US$250,000.00 plus US$50,000 per dependent.  28 CFR § 104.44.
Q.Is there more than one track to recovery?
A.  Yes.  Under the first track (“Track A”) the claimant files for the presumed award with a right to appeal the determination by presenting evidence at a hearing.  Under the second method (“Track “B”), the claimant proceeds directly into the hearing process.  The presumed award plays a dominant role in the hearing under either method, with the burden on the victim to show extraordinary circumstances to recover beyond the presumed award.  28 CFR § 104.31 (a) & (b).
Q. Will the hearing be an adversarial process?
A. No.  Although the Special Master or Hearing Officer retains the right to examine the credentials of any experts, the process is “nonadversarial.”  Statement by Special Master, 66 Fed.Reg. 66280 (December 21, 2001); Attorney representation is permitted, but not required.  28 CFR § 104.33 (d)
Q. Are there limits on attorney’s fees?
A.  Although there is no express limitation on attorneys’ fees, the Special Master’s statement suggests a cap of five percent.  Statement by Special Master, 66 Fed.Reg. 66280 (December 21, 2001).
Q. What is the extent of administrative appeals?
A. For an eligible claimant, there are no appeals beyond the hearing for both track A and Track B proceedings.  28 CFR § 104.33 (g).
Q. Do the regulations incorporate mandatory structured settlements or annuities?
A. No.  The Special Master retains the right to inform claimants of the various structures available to them, but no particular structure is mandated.  Statement by Special Master, 66 Fed.Reg. 66280 (December 21, 2001).
Q. What are the initial filing requirements?
A. A claimant files an eligibility form and, with eligibility determined, a compensation form.  These forms, as well as the advance compensation form, were not published with the initial regulations of 21 December 2001.  28 CFR § 104.21.
Q. What law will apply to compensation?
A. The Special Mater will apply the same law that a court would apply were the claimant commencing a tort claim.  Thus, a choice of law analysis may be required and will likely yield different results depending upon such factors as the claimant’s domicile.  28 CFR § 104.42.
Q. How are personal injury awards to be determined?
A. Because the claimant in an injury may be capable of presenting more evidence of actual damages, the process is understandably more flexible.  The Special Master will examine out-of-pocket losses, such as medical costs, actual past and future projected lost earnings.  A determination by the Social Security Administration that a claimant has suffered “total permanent disability” may be deemed conclusive.  Such determinations by other agencies and private insurance companies may also be relevant.  28 CFR §104.45.
As this outline went to press, presumed recovery tables were published.  The highest listed presumed recovery is approximately US$3.8 Million.  It represents the wrongful death recovery for a married individual, thirty-five years old, with two dependent children, making US$225,000.00 per year at the time of death.
For additional information contact:
Alimonti Law Offices
Tel. 01-914-948-8044