VCF Economic Loss: How the Fund Calculates What You Are Owed
The September 11th Victim Compensation Fund compensates eligible 9/11 responders and survivors for two categories of loss: non-economic loss (pain and suffering) and economic loss (financial harm). Most claimants focus primarily on non-economic loss because the concept is more immediately understandable. You suffered, and the VCF pays for that suffering. However, for many claimants — particularly those who worked in high-earning professions, or who retired early because of a 9/11-related condition — the economic loss component can be the larger part of the award. As a result, understanding how the VCF calculates economic loss is essential to maximizing your recovery. That calculation involves many inputs, offsets, and adjustments.
The Dearie Law Firm, P.C. has handled thousands of VCF economic loss claims. Our clients include FDNY and NYPD disability retirees, construction trades workers, office professionals, business owners, and retirees. Here is how the calculation works.
The Two Components of Economic Loss
VCF economic loss has two primary components: replacement income loss and unreimbursed medical expenses.
Replacement income loss is the larger component for most claimants. In short, it compensates for the income you lost, or will lose, because a 9/11-related condition kept you from working. It also covers reduced earning capacity and early retirement tied to your condition.
Unreimbursed medical expenses compensate for out-of-pocket medical costs connected to your certified condition. Specifically, these are costs that insurance, Medicare, Medicaid, or another payer did not cover. This category includes copays, deductibles, uncovered treatments, transportation to medical appointments, and similar costs.
How Replacement Income Loss Is Calculated
The VCF calculates your income replacement loss by establishing two figures. First, what you would have earned if your 9/11 illness had not occurred. Second, what you actually earned, or are projected to earn. The difference is the loss.
To establish the “would have earned” baseline, the VCF typically looks at your pre-illness earnings history. Usually this covers the three to five years before your condition began affecting your ability to work. W-2s, tax returns, and Social Security earnings records are the primary sources. In some cases, the calculation also considers projected future earnings. For example, a construction worker who would have worked until age 65 but retired on disability at 55 will have significant projected future earnings factored in.
For union tradespeople, the VCF often uses prevailing wage rates for the relevant trade and period, along with union benefit documentation. Self-employed claimants and business owners typically rely on Schedule C income and other tax records.
The Offset Calculation
Once the VCF establishes gross economic loss, the Fund reduces it by collateral source offsets. In other words, these are benefits you received from other sources for the same underlying loss. The key offsets are:
Workers’ compensation and disability retirement benefits. These reduce the award by the lifetime value of workers’ comp or disability pension payments attributable to the 9/11 condition.
Life insurance. In wrongful death cases, life insurance proceeds may offset the award.
Social Security Disability. As of the 2019 Never Forget the Heroes Act, this is no longer an offset.
Other collateral sources. Depending on their nature and source, certain other disability benefits may reduce the award.
The offset calculation is often the most disputed part of an economic loss claim. Specifically, the way the VCF characterizes a disability retirement — whether as workers’ comp-equivalent or as ordinary pension income — can dramatically affect the net award. For this reason, a VCF attorney who handles these calculations regularly is essential.
The Statutory Cap on Economic Loss
The VCF imposes a cap on the income it uses to calculate economic loss. The cap changes periodically and reflects the 98th percentile of all U.S. wage earners for the relevant year. For claimants whose pre-illness income exceeded the cap, the calculation uses the cap amount rather than actual income. However, for the vast majority of claimants, actual income falls below the cap, and the VCF uses the full income history.
Medical Cost Claims
For unreimbursed medical expenses, you will need documentation of the costs you paid out of pocket. This includes explanation of benefits statements from your insurer, medical bills, and pharmacy receipts. You can also claim future medical costs with physician support. For conditions that require ongoing treatment, monitoring, or medication indefinitely, the present value of projected future costs can be a significant figure.
Getting the Calculation Right
VCF economic loss calculations involve projections, actuarial assumptions, offset valuations, and document-intensive income verification. Even unintentional errors in any of these components can reduce your award significantly. For this reason, a VCF attorney reviews the calculation for accuracy. We also challenge offset characterizations that disadvantage the claimant. Finally, we present supporting documentation in the format the VCF requires.
If you received a VCF award that included economic loss and you believe the calculation was wrong, consider having an attorney review it before the appeal deadline passes.
Contact The Dearie Law Firm for a Free Consultation
If you have a significant income loss or medical cost history related to a 9/11 condition, call The Dearie Law Firm, P.C. for a free case review. We handle VCF economic loss claims on contingency. No fee unless we recover for you.