CASE STUDY - 9/11 Victim Compensation Fund:

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)

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.”

VCF PROVISIONS:Eligibility “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].”

VCF PROVISIONS:Special 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.”

VCF PROVISIONS:Special Master Powers “The Special Master shall review a claim…and 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.”

VCF PROVISIONS:No-fault Liability

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

VCR PROVISIONS:Fund 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.”

VCF PROVISIONS:Lawsuit 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.”

VCF PROVISIONS:Collateral 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.”

VCF PROVISIONS:Deadline

“No claim may be filed under paragraph (1) after [December 22, 2003].”

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.”

FEINBERG’S RULES:Eligibility

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.”

FEINBERG’S RULES:Economic 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

FEINBERG’S RULES:Noneconomic 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

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

CHRONOLOGY:Filing activity

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

RESULTS:Deceased victim claims by income level

RESULTS:Deceased victim claims by location and amount

RESULTS:Physical injury claims by location and amount

ACADEMIC RESPONSE:Constitutional 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”

ACADEMIC RESPONSE:Economic analysis

Posner, Sunstein, “Dollars and Death”, U. Chi. L. Rev.

VCF awards were less variable than traditional tort awards due to the elimination of tort’s outlier verdicts Those aside, tort and the VCF “seem largely

consistent”

DISCUSSION:Questions 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?

DISCUSSION:Broader questions

Should VCF-type mass tort solutions be applied in other situations?

Does the federal gov’t 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?