LOOK BEYOND THE REGULATIONS
(For the changes in “9-11” Victim Compensation)


On Thursday 7 March 2002, the office of the Attorney General and Special Master, Kenneth Feinberg, responding to significant public commentary and criticism, released the “Final Rule” with respect to victim compensation for the victims of the 11 September 2002 terrorist attacks.  While making a handful of significant changes to the regulations themselves, much of the impact of the latest revisions lies “behind the scenes” in the new methodologies to be employed.  The methods for calculating consumption, present-value reductions, discount rates, and assumed work-life expectancies have all been revisited.  The result of this “basket” of revisions is higher potential presumed awards for the families of those who perished as a result of the 9-11 terrorist attacks.

What’s in the Regulations?  The revisions to the regulations themselves are relatively minor.  Most significantly, the presumed non-economic loss for spouses and dependents has been doubled from US$50,000 to US$100,000 (This is in addition to the presumed non-economic loss of US$250,000 per decedent).  28 C.F.R. §104.44.

The potential reduction for collateral sources has been reduced by excluding payments made by the decedent (e.g., life insurance premiums, pension plan contributions) and reducing the value of future payments to present value before deducting them from awards.  Collateral source reductions will be further reduced by excluding payments that will not go to the beneficiaries under the Victim Compensation Fund (the “Fund”) or that are contingent upon uncertain future events.  Finally, federal tax benefits will not be deducted as collateral sources nor will privately funded charities, even if administered or collected by a government or governmental agency.  28 C.F.R. §104.47.

In determining presumed economic loss, the Special Master may also now consider the pro-rated income for year 2001 and, for government employees, pay scales for year 2001.  28 C.F.R. §104.43.

The requirements for eligibility for physical harm has been extended.  Under the interim rule, a person had to seek medical assistance within twenty-four hours of injury.  This restriction has now been extended to 72 hours for victims with late-presenting injuries or who were unable to obtain earlier medical treatment.  28 C.F.R. §104.2(c)(1).
Despite the recent enactment of this “Final” regulation, the two-year period to file a claim under the Fund continues to run from the 21 December 2001 enactment date of the interim rule.

Changes in Methodology.  The more significant impact of the recent revisions to the Victim Compensation Act lies, perhaps, more in the methodology to be employed in applying the regulations then in the regulations themselves.

Among the changes in methodology are:


•    Work life expectancy data has been revised to utilize data for males (having the longer presumed work-lives) for all decedents regardless of gender. Previous calculations applied a male-female average;
•    More generous wage growth assumptions have been applied and wages are now assumed to maintain peak levels rather then tail off in later years;
•    Assumptions of personal consumption have been reduced; and
•    The applicable discount rate has been adjusted to mirror current yields on mid to long-term treasury securities.

Some examples:  So what does this all mean?  Shortly after the enactment of these revisions, new presumed economic/non-economic loss tables were published.  A sampling of these changes in the “presumed” recoveries for a thirty-five year-old decedent (before collateral source reductions) follows:


 
Annual Income
Dependent/ Marital Status    Award - Interim Tables    Award – Final Tables
$35,000    Single    $500,000    $534,000
$100,000    Single    $1.2 Million    $1.4 Million
$225,000    Single    $2.19 Million    $2.52 Million
$35,000    Married    $889,000    $1.02 Million
$100,000    Married    $1.92 Million    $2.29 Million
$225,000    Married    $3.56 Million    $4.18 Million
$35,000    M+1 child    $965,000    $1.15 Million
$100,000    M+1 child    $2 Million    $2.42 Million
$225,000    M+1 child    $3.56 Million    $4.18 Million
$35,000    M+2 children    $1.05 Million    $1.29 Million
$100,000    M+2 children    $2.09 Million    $2.57 Million
$225,000    M+2 children    $3.8 Million*    $4.54 Million
*Previous highest presumed award


The Special Master continues to restrict the highest published presumed awards to the top 98% of wage earners.  The Special Master will provide counseling to enable prospective claimants to gauge their potential recovery under the fund and the extent of collateral source reductions.  As you would expect, any such guidance is non-binding.

And on a Personal Note!  On 1 March 2002, Alimonti Law Offices celebrated its first anniversary.
Shortly after that, we took our first jury verdict.  On 6 March 2002, a jury returned a verdict in favor of our client, American Airlines, in Murray v. American Airlines, apparently believing that the plaintiff had just as likely spilled a hot beverage on herself rather than through the fault of the airline.  Obviously, we are delighted with the outcome.
Thank you for your support!

For additional information contact:
Alimonti Law Offices
Tel. 01-914-948-8044