Members of the Senate Judiciary Committee are hoping to agree on key elements of an asbestos reform bill for a vote today (June 26). The legislation would create a fund to pay for medical care and compensation for persons suffering from asbestos-related illnesses.
James Taylor’s in-depth report on the asbestos debate, originally published in the March 2003 issue of Environment & Climate News, offers valuable background for the controversy.
In a January 29 hearing on the state of the U.S. economy, the Senate Budget Committee heard testimony about the $200 billion burden posed by asbestos litigation.
“Out of control asbestos litigation is an anchor weighing down the business community, particularly the manufacturing sector, and slowing down our overall economic recovery,” testified Michael Baroody, executive vice president of the National Association of Manufacturers and chairman of the Asbestos Alliance Steering Committee.
Budget Committee Chairman Don Nickles (R-Oklahoma) agreed. “We absolutely must grow the economy to have any hope of eliminating the deficit and preparing for future budget challenges,” Nickles said. “There are many things outside the tax code that have real economic consequences, and the escalating problem of asbestos litigation is one of them.”
Earlier in the month, Senate Judiciary Committee Chairman Orrin Hatch (R-Utah) had raised hopes of relieving the asbestos burden on the nation’s economy. On January 7, Hatch emphasized his desire to pass meaningful asbestos tort reform that would end a litigation crisis that has driven scores of companies into bankruptcy. He is expected to introduce a bill in March.
While Democratic control of the Senate precluded serious efforts to pass reform legislation in the 107th Congress, Republicans’ control of the 108th–along with the support of key Democrats–has raised hopes for bipartisan cooperation on the issue.
Senator Christopher Dodd (D-Connecticut) cosponsored asbestos legislation in the 105th and 106th Congresses, and he has indicated he would be willing to raise the issue once again. Democrats Joe Lieberman (D-Connecticut) and Charles Schumer (D-New York) have also cosponsored asbestos tort reform bills in the past and would be open to compromise legislation.
“It’s possible we could get together,” said Dodd, who stressed the issue is a political hot potato and would have to be handled delicately. “If the bill is questionable, nothing will happen. They [Republicans] know … if it’s an anti-trial-bar bill, it will fail.”
Bankrupting an Industry
“Without federal legislation,” warn Michael Angelina and Jennifer Biggs of the consulting firm Tillinghast-Towers Perrin, “asbestos liabilities will haunt corporations, insurers, and reinsurers for years.”
According to Roger Parloff of Fortune magazine, more than 200,000 asbestos tort claims are pending nationwide against more than 1,000 corporations. Most of the plaintiffs in those suits show no signs of physical harm from asbestos exposure, and many of the defendant companies never made asbestos products. Nevertheless, plaintiffs are being awarded unprecedented judgements based on highly speculative future harm, suspect science, and juries’ preconceived notions regarding asbestos.
Joseph Stiglitz of Sebago Associates, an economic and public policy consulting firm, estimated in a December 2002 report that 61 companies have filed for Chapter 11 bankruptcy protection as a result of asbestos liabilities. Forty-seven states have at least one asbestos-related bankruptcy. The firms, representing a wide range of industries and employing more than 200,000 people the year before they filed for bankruptcy, include insulation maker Owens Corning; floor manufacturer Armstrong World Industries; chemical giant W.R. Grace; construction materials manufacturer USG Corp.; and auto-parts conglomerate Federal-Mogul Corp.
With so few asbestos manufacturers remaining to be sued, the litigation has extended to companies only tangentially related to asbestos manufacturing. The burden is increasingly being borne by firms two and three steps removed from culpability.
“Total corporate asbestos liability to U.S. plaintiffs is now expected to reach $200 billion,” notes Fortune magazine’s Parloff. That’s more than the economic damage attributed to the Enron scandal.
As recently as 15 years ago, observers predicted a total of 100,000 people might eventually file asbestos-related claims. The most recent forecasts predict between 1.3 million and 3.1 million claims, of which only about 570,000 already have been filed.
“The latest wave of litigants are people who have medical proof of exposure to asbestos but do not suffer from disease as a result of that exposure,” explained Heartland President Joseph Bast in September testimony to the Senate Judiciary Committee, then chaired by Vermont Democrat Patrick Leahy. “Due to the low level of their exposure, most probably never will. Some 90 percent of new asbestos cases are brought by individuals with no physical impairment.”
In his January 2003 testimony before the Senate Budget Committee, Michael Baroody offered one example of the success marginal plaintiffs are achieving:
“In October 2001,” Baroody reported, “a Mississippi jury awarded $150 million to six plaintiffs in an asbestos case. Each was awarded $25 million. Not one of these six men displayed any symptoms at all. In fact, the lawyer who brought the case boasted to reporters, ‘Most of these guys have not missed a day of work in their lives.’ One plaintiff even boasted in his deposition that he was a jogger.”
The piling on by plaintiffs with only minimal exposure to asbestos, and no evidence of having been harmed by that exposure, is leaving precious little money for the compensation of persons directly exposed to asbestos experiencing measurable harm.
“The system is bad for almost everyone involved,” asserts Houston attorney Richard Faulk, “particularly the sick claimants. Absent some changes in the way asbestos claims are resolved, claimants who become truly sick in the future may not receive adequate compensation. Changing the current asbestos compensation system would be pro-claimant.”
The plaintiff’s bar appears to benefit most from the current system. “For plaintiff lawyers, this development was like the discovery of gold at Sutter Creek,” said professor Lester Brickman of the Benjamin N. Cardozo School of Law in New York.
“Asbestos litigation today has come to consist, mainly, of unimpaired people reaping compensation at the expense of the genuinely injured,” he added, “on the basis of prepared scripts with perjurious contents, backed by bogus medical evidence.”
Research confirms that employees of asbestos manufacturers and installation firms are at greater risk than the general public of developing asbestos-related medical conditions, especially respiratory conditions, particularly if they do not use protective breathing equipment. But research also confirms that asbestos poses virtually no health risk to persons who do not work directly with asbestos products. Environmental exposure is not a health threat; occupational exposure is.
Even persons who spend significant amounts of time in buildings with asbestos insulation are at little risk of harm, as asbestos products pose no risk unless they are carried on airborne dust particles and breathed into the lungs. And most airborne asbestos fibers are not dangerous; 90 percent take on a curly chrysotile form that is easily intercepted by the body’s defense mechanisms before penetrating the lungs.
Efforts to remove asbestos from public school buildings–launched after the risk of occupational exposure was documented but before research could be conducted to determine the risk of environmental exposure–have proven costly and unnecessary. According to Rhodes College professors Ben Bolch and Harold Lyons, authors of Apocalypse Not, airborne asbestos is 1,000 times less dangerous to schoolchildren than a whooping cough vaccination.
Even among asbestos installers, the heightened risk of harm is directly correlated with the unrelated act of smoking. A 1990 study in Science magazine surveyed 17,800 installation workers with mixed fiber exposure. Of these, 471 were found to have developed lung tumors. Of these 471, only four were nonsmokers. Given that many smokers and some nonsmokers develop lung tumors regardless of their asbestos exposure, the study presents a remarkable picture of how the dangers of asbestos exposure have been exaggerated, even among those few persons most at risk.
“Asbestos lawsuits … will one day undoubtedly take a place in the pantheon of great American swindles, next to the Yazoo land frauds, Credit Mobilier and Teapot Dome,” predicted law professor Brickman.
The Business Roundtable, an association of CEOs of leading corporations in the U.S., considers asbestos tort reform among its top 2003 agenda priorities. In a January statement to the press, the group indicated it would “work to develop a unified industry agreement on an asbestos-related liabilities proposal that can be enacted into law in 2003.”
Similarly, the U.S. Chamber of Commerce puts asbestos tort reform high on its agenda. The 2003 Policy Priorities identified on its Web site note the group plans to “work to enact a comprehensive and rational solution to the burgeoning asbestos-related liability crisis.”
Faulk and others have recommended creating a separate docket for asbestos-exposed claimants who have yet to experience health impairments attributable to that exposure. Rather than exhausting the system by awarding million-dollar judgments to plaintiffs who will likely never be harmed by their minimal exposure, plaintiffs who can show current health impairments should be given priority.
Faulk also recommends that companies only marginally connected with the manufacture and installation of asbestos should not be held liable for alleged asbestos harm. He points out that in Texas, a defendant generally cannot be held jointly liable for tort damages unless the defendant is more than 50 percent at fault. But the state carves out an exception for environmental and toxic tort cases, in which defendants can be held liable for full damages even if they are only 15 percent to blame.
Finally, Faulk recommends ending the practice of awarding punitive damages against already-bankrupt manufacturers of asbestos. “Punitive damages serve to punish a defendant for wrongdoing and to deter others that might engage in similar conduct,” explains Faulk. It makes no sense, Faulk notes, to punish a defendant already bankrupt, and there remain no asbestos manufacturers to be deterred by a punitive damages award.
James M. Taylor is managing editor, and Diane Carol Bast is editor, of Environment & Climate News.
For more information …
visit the Web site of the Asbestos Alliance at http://www.asbestossolution.org for information on the history and scope of the asbestos tort crisis and how it affects U.S. consumers and workers.
The Heartland Institute’s online PolicyBot research database offers more than two dozen documents addressing the asbestos issue, including Michael Baroody’s January 2003 testimony to the Senate Budget Committee (9 pages); the executive summary (16 pages) and full text (45 pages) of the December 2002 Sebago Associates report, The Impact of Asbestos Liabilities on Workers in Bankrupt Firms; and “Sizing Up Asbestos Exposure,” a report by Tillinghast-Towers Perrin (4 pages). Point your Web browser to http://www.heartland.org, click on the PolicyBot button, and select the Environment – Asbestos topic.