Aviation Update Vol. I No. 1

In response to the terrorist attacks of September 11, 2001, the President signed into law the Air Transportation Safety and System Stabilization Act (the “Act”) on September 22nd. The Act includes provisions to provide airline stabilization, reimbursement of insurance costs increases to air carriers, spending to increase airline safety and security, and victim compensation.

Title IV of the Act, “Victim Compensation,” will provide and fund “compensation to any individual (or relatives of a deceased individual) who was physically injured or killed as a result of the terrorist-related aircraft crashes of September 11, 2001.” The Attorney General, acting through a Special Master, will administer the “September 11th Victim Compensation Fund of 2001” (the “Fund”). Within ninety (90) days of enactment, the Attorney General will promulgate regulations to administer the Fund.

Three classes of individuals are eligible for compensation: 1) individuals who were present at the World Trade Center, the Pentagon, or the aircraft crash at Shanksville, Pennsylvania at the time, or immediately following the terrorist-related crashes of September 11th, and who suffered harm or death as a result of the crashes; 2) the flight crew and passengers on American Airlines flight 11 or 77 or United Airlines flight 93 or 175; and 3) the personal representative of a decedent who would otherwise be a member of the first or second class.

To apply for compensation, a claimant files a standardized claim form with the Special Master. The claim form requires information on the injury sustained, the economic and noneconomic losses suffered by the claimant, and any collateral sources of compensation. There is a two (2) year statute of limitations for filing claims, and claimants must waive their right to commence a legal action.

Within 120 days of filing a claim, the Special Master must review it and determine whether the claimant meets the eligibility requirements. Assuming eligibility requirements are met, the Special Master then determines 1) the extent of harm suffered by the claimant, including economic and noneconomic losses; and 2) the amount of compensation to which the claimant should be entitled. During this review process, the claimant has the right to be represented by an attorney, the right to present evidence (including witnesses and documents), and any other due process rights determined appropriate by the Special Master. The Special Master will authorize payment within twenty (20) days of a determination of the amount of compensation due a claimant. The compensation does not allow punitive damages and will be reduced by any collateral sources of compensation.

For victims opting not to file for compensation from the Fund, Section 408 creates an exclusive federal cause of action venued at the U.S. District Court for the Southern District of New York. Section 408 of the Act protects American and United Airlines by limiting their terrorist-related liability to the limits of their applicable insurance coverage.

Lastly, the United States government reserves a right of subrogation with respect to any claims paid from the Fund.