CASE STUDY - 9/11 Victim Compensation Fund:

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CASE STUDY - 9/11 Victim Compensation Fund
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Air Transportation Safety and System
Stabilization Act (ATSSSA)

• Legislation designed to protect airlines from
  economic impacts of 9/11 attacks
• Creates the September 11th Victim Compensation
  Fund (VCF)

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VCF PROVISIONSPurpose

• It is the purpose of this title to provide
  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.

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VCF PROVISIONSEligibility

• A claimant is an individual or the personal
  representative of a deceased individual
  described in this paragraph if the individual
•         (i) was present at the World Trade
  Center, (New York, New York), the Pentagon
  (Arlington, Virginia), or the site of the
  aircraft crash at Shanksville, Pennsylvania at
  the time, or in the immediate aftermath, of the
  terrorist-related aircraft crashes of September
  11, 2001 and       (ii) suffered physical harm
  or death as a result of such an air
  crash     (B) an individual who was a member
  of the flight crew or a passenger on American
  Airlines flight 11 or 77 or United Airlines
  flight 93 or 175, except terrorists.

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VCF PROVISIONSSpecial Master

• The Attorney General, acting through a Special
  Master appointed by the Attorney General,
  shall--   (1) administer the compensation
  program established under this title   (2)
  promulgate all procedural and substantive rules
  for the administration of this title and   (3)
  employ and supervise hearing officers and other
  administrative personnel to perform the duties of
  the Special Master under this title.

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VCF PROVISIONSSpecial Master Powers

• The Special Master shall review a claimand
  determine--     (A) whether the claimant is an
  eligible individual     (B) with respect to a
  claimant determined to be an eligible
  individual--       (i) the extent of the harm
  to the claimant, including any economic and
  noneconomic losses and       (ii) the amount
  of compensation to which the claimant is entitled
  based on the harm to the claimant, the facts of
  the claim, and the individual circumstances of
  the claimant.

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VCF PROVISIONSNo-fault Liability

• With respect to a claimant, the Special Master
  shall not consider negligence or any other theory
  of liability.

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VCR PROVISIONSFund Not Capped

• This title constitutes budget authority in
  advance of appropriations Acts and represents the
  obligation of the Federal Government to provide
  for the payment of amounts for compensation under
  this title.

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VCF PROVISIONSLawsuit Waiver

• Upon the submission of a claim under this title,
  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.

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VCF PROVISIONSCollateral Source Rule

• The Special Master shall reduce the amount of
  compensation determined under paragraph
  (1)(B)(ii) by the amount of the collateral source
  compensation i.e. insurance, benefits the
  claimant has received or is entitled to receive
  as a result of the terrorist-related aircraft
  crashes of September 11, 2001.

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VCF PROVISIONSDeadline

• No claim may be filed under paragraph (1) after
  December 22, 2003.

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SPECIAL MASTER FEINBERG

• J.D., NYU
• Expert in mass tort and alternative dispute
  resolution
• Special Master in 1984 Agent Orange settlement
• It's a brutal, sort of cold, thing to do.

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FEINBERGS RULESEligibility

• Eligibility requires
• a physical injury to the body that was treated
  by a medical professional within 72 hours of the
  injury having been sustained or within 24 hours
  of rescue.
• 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 Special Master has discretion to extend the
  time period even further for rescue personnel or
  possibly others.

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FEINBERGS RULESEconomic Damages

• Presumed economic life cycle calculation based on
  statistical indices
• Only credits income up to 98th percentile of
  individual income in US
• Hearing by Special Master available to challenge
  award

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FEINBERGS RULESNoneconomic Damages

• Presumed non-economic loss awards for decedents
  250,000, plus an additional 100,000 for the
  spouse and each dependent of the deceased victim.
• Right to a hearing to argue for increase by
  Special Master

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CHRONOLOGY

• 09/22/01 ATSSSA signed into law
• 12/21/01 Interim Rule for VCF promulgated
• 03/13/02 Final Rule
• 12/22/03 Application Deadline

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CHRONOLOGYFiling activity
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RESULTS

• 2,880 successful claims for deceased victims
• 2,680 successful claims for personal injury
• Approx. 7 billion disbursed to claimants
• Mean compensation 2.1 million, median 1.7
  million, low 250,000, high 7.1 million
• 73 tort suits filed by those who opted out of VCF
• Total administrative cost 87 million

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RESULTSDeceased victim claims by income level
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RESULTSDeceased victim claims by location and
amount
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RESULTSPhysical injury claims by location and
amount
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ACADEMIC RESPONSEConstitutional attack

• Erin Holt, The September 11 Victim Compensation
  Fund Legislative Justice Sui Generis, NYU Ann.
  Surv. Am. L.
• The burdens of the ATSSSA and the VCF extend
  beyond the due process rights of the individual
  victims, threatening the balance of power within
  the federalist system in general and in the
  context of federal intervention in mass disasters
  in particular

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ACADEMIC RESPONSEEconomic analysis

• Posner, Sunstein, Dollars and Death, U. Chi. L.
  Rev.
• VCF awards were less variable than traditional
  tort awards due to the elimination of torts
  outlier verdicts
• Those aside, tort and the VCF seem largely
  consistent

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DISCUSSIONQuestions specific to VCF

• Did the VCF undercompensate noneconomic harms?
• Was its bias in favor of existing economic status
  acceptable?
• Did the Fund sacrifice accuracy for efficiency?
  Is that a reasonable trade-off?
• Too much discretionary authority for Special
  Master Feinberg?
• Was the VCF designed to protect potential
  defendants more than to provide an efficient and
  fair resolution?

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DISCUSSIONBroader questions

• Should VCF-type mass tort solutions be applied in
  other situations?
• Does the federal govt need to be involved?
• Can VCF-types be implemented efficiently without
  creating all-powerful Masters?
• Does perpetuating economic inequalities make
  sense in national disaster compensation?