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The September 11 Victim Compensation Fund of 2001

Report No. 04-01
October 2003
Office of the Inspector General


Appendix IV
Auditee's Response to the Draft Report

 
    U. S. Department of Justice

Civil Division
 
 
 
  Office of the Assistant Attorney General Washington, D.C. 2053-0001  
    September 15, 2003  
 
  MEMORANDUM  
  TO: Domenic A. Zazzaro
Regional Audit Manager
Washington Regional Audit Office
Office of the Inspector General
 
  FROM: Kenneth L. Zwick
Director, Office of Management Programs
Civil Division
 
  SUBJECT: Comments on Draft Audit Report - September 11th Victim Compensation Fund  
  Thank you for the opportunity to comment on the Draft Audit Report, in accordance with Guy K. Zimmerman's August 14, 2003 memorandum to Peter D. Keisler. Our major comments pertain to (a) the fact that the Special Master, rather than PricewaterhouseCoopers (PwC), makes the determination of claim eligibility and award amount. PwC merely makes recommendations; and (b) the fact that we now anticipate substantially more injury claims than stated in the Draft.

Our comments are set forth below. For your convenience, we are also including an copy of the Draft Audit Report with labels in the right hand margin corresponding to the comments.

The Draft discusses a number of suspected fraudulent claims that the Special Master referred to the Of~Ice of the Inspector General and the FBI. It may interest you to know that on September 12th the Associated Press reported that a federal jury convicted Todd Altschul on five counts of mail fraud for attempting to defraud the Fund. He faces up to five years in prison and a $250,000 fine for each count.

Our comments follow. Please contact me at 202-514-4552 should you need additional information.
 
 

 

A - Reported Claim Volumes (pg i)

The number of death claims that had been filed as of June 16, 2003 is slightly different from what appears in the report. Per the daily scorecard report as of June 16, 2003, the VCF Claims Processing Center (CPC) had received 1,829 claims in total - 928 death claims and 901 personal injury claims.

B - Receipt of Claims before Filing Deadline (pg ii)

Special Master Kenneth Feinberg projects that the number of claims filed could reach a total of 6,000. lIe has estimated that we will receive 3,000 death claims and 2,500 to 3,000 personal injury claims. As of August 19th, we had received 1,190 death claims and 1,032 personal injury claims. If the Special Master's estimate is accurate, we may see an influx of more than 3,500 claims in the remaining four months of the program's filing period.

C - Determination of Eligibility (pg ii)

The PwC staff at the CPC review each claim for eligibility. The PwC staff then makes a recommendation regarding the Claimant's eligibility. The Special Master (or one of his representatives) makes the eligibility determination for every claim.

D - Number of Calculation Models (pg ii)

When the auditors conducted their interviews at the beginning of the year, PwC personnel had developed six models. PwC now has seven models for the different categories of death Claimants: (1) military personnel, (2) employees of the New York City Fire Department and the New York City Police Department, (3) federal employees under the Federal Employees Retirement System (FERS), (4) federal employees under Civil Service Retirement System (CSRS), (5) federal employees covered by both CSRS and FERS, (6) F.RS Port Authority Civilians, and (7) everyone else.

E - Evaluation of Collateral Sources (pg iii)

PwC personnel review the collateral source benefit information provided by Claimants. Ideally, all information needed to complete the identification and evaluation of collateral sources is included on the submitted claim forms.

F - Fraud Detection Check at Eligibility Review (pg iii)

The PwC staff at the CPC begins fraud detection at the eligibility review as personnel ensure that names of Claimants and other recipients of the award are not on the list of terrorists.

G - Receipt of Original Death Certificate (pg iv)

For death claims, PwC staff at the CPC request the Claimant to submit an original death certificate and at least one other document to corroborate the reported death. They also check that those original documents, including the death certificate and original letters of administration appointing the personal representative, are submitted with the claim application.

H - Source for Claim Sample (pg iv)

Claim statuses are tracked in the Victim Claims Management System (VCMS). a highly customized web-enabled database application, developed with extensive input by the Office of Litigation Support, Civil Division and the Special Master's Office. This system is used by all members on the September 11th Victim Compensation Fund (VCF Fund) team, including the Special Masters office and the DoJ. This system does not solely belong to PwC.. It is the virtual meeting place and centralized information repository for all team members to review and process claims.

I - Paid Claims (pg v)

Claims are considered paid once PwC staff has confirmed payment - either through receipt of a fax from the Department of Treasury or through telephonically verifying receipt of funds with the bank.

J - Copies of Wills (pg v)

Under Section IV (Supporting Documentation Checklist) of the Compensation Form for Deceased Victims, the Special Master does request a certified copy of the Victim's will, if it exists. This Section also includes suggestions for documentation if there is no will.

K - Reported Claim Volumes (pg vii)

As of June 16, 2003, the CPC had received 928 death claims and 901 personal injury claims (i.e., 1,829 claims in total).

L - Receipt of Claims hefbrc Filing Deadline (pg vii)

As mentioned above, Special Master Kenneth Feinberg has estimated that the Fund will receive 3,000 death claims and 2,500 to 3,000 personal injury claims by the filing deadline, December 22, 2003.

M - Estimate of Personal injury Awards (pg viii)

It appears that the estimated outlays for award payments assume that no additional personal injury claims will he awarded after November 2002. As of August 19, 2003, 141 personal injury claims were authorized for payments totaling $27,465,357.88.

N - Estimated Fund Surplus (pg viii)

The estimated 5800 million surplus does not appear to include any personal injury claims that have been awarded since November 2002. It also does not seem to allow for the 2,500 to 3,000 personal injury claims that are projected to be received by the filing deadline.

O - Determination of Eligibility (pg 1)

PwC staff at the CPC review each claim for eligibility and then provide the Special Master's office with a recommendation for the Claimant's eligibility.

P - Calculation Models (pg 6)

PwC has developed calculation models based on the presumed award methodology established by the Special Master in accordance with the Fund's rules and regulations. These models were provided to the auditors in addition to the actual presumed award amounts determined by the Special Master's office.

Q - Estimate of Personal injury Awards (pg 10)

The estimated outlays for award payments do not appear to account for additional personal injury claims that have been awarded after November 2002, nor those eligible personal injury claims that may be awarded. As of August 19, 2003, authorized payments for personal injury claims totaled $27.465,357.88.

R - Estimated Fund Surplus (pg II)

The estimated $800 million surplus does not appear to include any personal injury claims that have been awarded since November 2002. As of August 19, 2003, we bad received 1,032 personal injury claims, of which 195 have been issued an award letter, 182 were denied, 15 were voluntarily withdrawn, and 15 have been placed on an inactive status.

S - Timing of Advertising (pg 11)

The Special Master has arranged for major advertising of the Fund and its deadline. Advertisements are scheduled to appear in newspapers beginning September 2003.

T - Documentation Required (pg 11)

Please note that VCF officials - not PwC - require primary documentation (e.g.. an original death certificate) along with secondary documentation (e.g., an employer's affidavit stating a Victim's presence at a specified incident site). VCF officials review both the Victim's IRS W-2 forms amid the Social Security Administration's benefit histories. During the claim review, the Victim's tax returns and family structures reported in obituaries are used to confirm the number of dependents.

U - Guilty Pleas (pg 12)

Mr. Darks last name was misspelled.

V - Office in Arlington (pg 14)

The Claims Processing Center (CPC) is located in Arlington, Virginia. This office building is not leased to PwC. Please refer to the Arlington location as the Claims Processing Center, or CPC, in Arlington, Virginia.

W - Approval of Final Awards (pg 15)

Awards become final through two methods: 1) the Claimant accepts a presumed award, or 2) the award is determined through a hearing. Track A claims proceed to a hearing when a Claimant appeals the issued Presumed Award. Track B claims proceed directly to a hearing, after which the final award is determined.

X - Presumed Awards for Track A (pg 16)

Please clarify this definition by noting that presumed awards are determined by the Special Master.

Y - Determination of Eligibility (pg 17)

PwC staff at the CPC review each claim for eligibility and then provide the Special Master with an eligibility recommendation.

Z - Review of Eligibility Recommendations (pg 17)

Two PwC staff members at the CPC review each claim before PwC makes a recommendation to the Special Master's office regarding the Claimant's eligibility. Actual eligibility is determined by the Special Master.

1 - Issuing Presumed Awards (pg 18)

Please note that under the Funds rules and regulations, the Special Master (not PwC) has 45 days to determine a Claimant's presumed award and 120 days to make a final award determination.

2 - Presumptive Awards (pg 18)

The presumptive award amount is computed using a calculation model and data taken from the file. Using the presumptive award, the Special Master determines the presumed award.

3 - Number of Calculation Models (pg 18)

PwC has now developed seven models to calculate the presumptive awards for the different categories of death Claimants: (1) military personnel, (2) employees of the New York City Fire Department and the New York City Police Department, (3) federal employees under the Federal Employees Retirement System (FERS), (4) federal employees under Civil Service Retirement System (CSRS), (5) federal employees who switched from CSRS to FERS, (6) fiRS Port Authority Civilians, and (7) all others.

4 - Number of Calculation Models (pg 20)

Again, please note that the 92 presumed awards were determined by the Special Master. PwC computed the presumptive awards, which the Special Master's office considered in making their presumed award determinations.

5 - Estimate of Personal Injury Claim Submissions (pg 21)

The reference to 300 eligible personal injury claims appears to be based on what had been received as of November 2002. Based on estimates provided to us by the Special Master, we are now anticipating receiving 2,500 to 3,000 personal injury claims by Decembcr 22, 2003.

6 - Filling Out Claims (pg 22)

Claims Assistance Sites (CAS) staff assist Claimants in completing their claim forms. They do not complete the claim forms on behalf of the Claimants.

7 - Timing of Advertising (pg 22)

As we approach the claim filing deadline, the Special Master has made arrangements for many outreach activities to take place during the Fall of 2003, including advertisements and town hail events. Newspaper ads will be published beginning September 2003. These ads will alert Claimants of the program's deadline and direct them to the Helpline and CAS sites for assistance. The VCF web site provides information to Claimants on the minimum claim tiling requirements for the December 22, 2003 deadline.

 

Attachment - Annotated Draft Audit Report