A.     GENERAL The horrendous events of September 11, 2001 raised a number of questions about exactly what are the legal rights of victims and survivors, given the fact that the immediate cause, of course, were acts of terrorists. There are all sorts of interesting aspects due to this dilemma, and we will comment briefly on a number of them which have been the subject of numerous inquiries to Sterns and Walker.      1.     Would the fact that were "at war," according to the President, change any of the insurance coverage obligations or ordinary civil procedures? No. Notwithstanding the comments of the President, or his actions as Commander-in-Chief of the Armed Forces, only Congress can declare war and that has not been done. Therefore, contracts and all of the civil rules and regulations, except those which may have been legally modified by Congress, remain in effect.      2.     Liability of the Airlines? Under the United States law, the FAA’s security program is mandated to be carried out by the airlines, thus the duty to provide screening security falls on them. Theoretically, an airline could be sued because of the security breaches that took place, but the cases would not be easy. Sterns and Walker have been involved in other security and terrorist cases over the years, with mixed results. For instance, a jury found that Pan American Airways was guilty of willful misconduct for its security lapses in the Lockerbie disaster; but turned down another claim against Pan Am arising out of a Karachi/Pakistan hijacking. The crash of the PSA Los Angeles to San Francisco flight some years ago caused by a disgruntled employee who got aboard the plane with a weapon and shot the flight crew, was settled after four weeks of trial. The jurors had mixed feelings about the case.      3.     In the September 11th situation, however, Congress has enacted as part of the "Airline Bailout Bill" a provision which purports to extend immunity to the Airline for any damages over and above the insurance coverage carried on each aircraft. This provision, whether valid or otherwise (and there is some significant question about whether Congress can so legislate, ex post facto, does not grant the airlines immunity from being sued or prosecuted); it simply limits any damage liability to any available insurance coverage. That is what would be available to pay any judgments rendered against the airlines; airline assets cannot be sought.      4.     Security Companies: In like manner, as with the airlines, the security companies could be held liable for any negligence in the screening operation. They are carrying out a non-delegable duty of the airlines. The airlines in turn would be responsible for any default of the security companies. Congress refused to extend any immunity, however, to the security companies and theoretically their assets are exposed over and above their insurance coverage. The merits of the case against security companies are hard to assess; the box cutters that were allegedly used by the hijackers were not illegal under the then existing FAA guidelines, but there is some serious question about the failure to pick up on other information, particularly "profiling," which is supposed to be part of the screening process.      5.     Other Potential Defendants. Congress has also extended limited liability or immunity to the Massachusetts port authority, the City of New York and New York port authority with respect to any potential liability it may have. The FAA itself , which is responsible for the overall security plan and screening and other matters pertaining to aviation is of course fully immune from any kind of suit for damages in a situation like this, by virtue of several United States Supreme Court decisions. In like manner, any agency of the administrative branch of the Federal Government, such as the INS, CIA, FBI or whatever, who may or may not have mishandled pre-911 information and/or failed to give warnings, are also totally immune from any civil liability or suit. B.     THE VICTIMS COMPENSATION FUND OF SEPTEMBER 11, 2001. With unprecedented haste following the attacks, the Congress enacted, and the President signed into law just ten days later, the Victims Compensation Act. This is a wide ranging Act which basically applies a no-fault administrative approach to the victims of the 09/11 disaster, and sets up a Fund paid for by the U.S. Treasury and guidelines for compensation. The general parameters of the Congressional Bill were very broad, and the Special Master, Kenneth Fineberg, appointed by the Attorney General, has spelled out specific rules and regulations, many of which are still in serious controversy. We examine briefly some of the key points of the Victims Compensation Bill, and what it covers and what it does not.      1.     The Bill is a no-fault approach, and is an exclusive remedy, i.e., once a claim is filed in the fund, the claimant gives up the right to make any civil claim in court. It is not clear, however, whether the reverse is true. Once a claim is filed, no fault or responsibility needs to be proven, and there is no issue concerning airline or security company negligence.      2.     In death claims, the wrongful death law elements are supposed to be as allowed by state law according to the language of the statute, but the Fineberg regulations pretty much follow the federal approach, i.e., any award with respect to future loss of earning capacity will be reduced to present value and also subject to a reduction for potential taxes that would have been supposedly paid on that earned income. Special Master Fineberg has also indicated that he will probably not consider incomes above the 98th percentile (approximately $231,000 U.S. per year), and that any award in excess of $4,000,000 would have to based on "extraordinary circumstances."      3.     Collateral Source: This is a major change in the law, specifically enacted by the Congress. The Special Master is required to deduct from many calculated awards any benefits obtained from the family through certain collateral sources which include, most importantly, life and accident insurance and certain forms of retirement plans. This has been a major stumbling block to many families filing claims in the fund, theoretically with enough life insurance and a $4,000,000 cap on any damage award, a claim could zero out or go "negative."      4.     In addition to the economic calculations, the family of the decedent is entitled to damages for non-economic losses. This includes $250,000 per victim for pain and suffering; and $100,000 for a spouse and each dependent child who survives. There is no provision as such for a well-known and common component of wrongful death claims under state law, a loss of society; presumably, the $250,000 award covers that as well.      5.     Personal injury claims. In order to make a claim for a survivor, a person must sustain a "physical injury" "at the time of the attack" or in its "immediate aftermath." The Special Master has defined "present" to mean close enough to be hit by falling "debris at the time" and "immediate aftermath" to mean within 24 hours or 96 hours in the case of rescue personnel. Query whether being engulfed in toxic smoke some blocks away is the equivalent of "debris."      6.     In what probably is the most limiting feature of this provision of the Bill, the Special Master has defined "physical injury" to mean an objectively verifiable injury that was both diagnosed and treated within 24 hours (96 in the case of rescue personnel). In his comments, the Special Master particularly notes areas of potential exclusion of a large number of claimants: First, the so-called latent injury claims, that are people who inhaled the various toxins enveloped in the smoke clouds (may or may not be classified as debris) and are suffering various sorts of respiratory symptoms, but many of whom who don’t even have a diagnosis much less treatment. As the Bill presently stands, as interpreted by Special Master Fineberg, these potential claimants are out, unless the language or his interpretation is modified.      7.     The next large group excluded by this definition are the mental or post-traumatic stress disorder cases, which reports say there are literally thousands at the sites of these attacks, especially in Manhattan. Post-traumatic stress disorder is a known and serious malady that can be both diagnosed and treated, but according to Special Master Fineberg, it does not qualify as a "physical injury" and therefore none of these victims will be eligible for compensation under this fund as it presently stands. C.     OVERVIEW AND SUMMARY Many perplexing questions have been asked concerning the latent injuries and the respiratory problems, since the group most impacted by this are the fire, police and rescue personnel, ironically the ones that Congress most likely wanted to protect with this fund. Sterns & Walker have been looking and this issue and meeting with a number of police groups and experts concerning the physiology and chemistry of the problems faced by the respiratory victims. The Nassau Medical Center on Long Island has set up a special screening program for the police and fire victims and hopefully they will be enlisted in either getting the regulations changed or perhaps dealing with the Congress to clarify the law. It is anticipated that a special approach will be made to convince Mr. Fineberg to accept the respiratory injuries as "physical injury" within the meaning of congressional intent. The teaching lesson with respect to the special fund is that very careful consideration has to be given to all parameters of any given claim to determine whether or not it would be better off in the fund or better off attempting a civil remedy. The question of collateral offsets, the professed desire to reduce any award by future taxes and the limitations discussed above require careful analysis and thoughts in all cases before a decision is made, most likely once a claim is filed in either civil court or in the fund, it will constitute an irrevocable election. Sterns & Walker are handling some of those cases on a selective basis.  Legal fees are not set or regulated by the statute or regulations for fund cases, but the Special Master has indicated that 10% would be reasonable.