Hopes for crafting compromise legislation to reform the asbestos litigation process have been revived as a result of the November elections. The Republican gain of four seats in the U.S. Senate, coupled with the defeat of Senate Minority Leader Tom Daschle (D-SD), sent asbestos-related stocks sharply higher on the morning after the election and had interested parties speaking optimistically of finally resolving an issue Congress has sought for years to address.
Bipartisan Agreement Reached
For four years Congress has been negotiating the creation of a trust fund embodied in the Fairness in Asbestos Injury Resolution Act. While the trust fund concept has received strong support from virtually all parties with an interest in asbestos litigation, establishment of the fund has been thwarted repeatedly by disagreement in the U.S. Senate, largely along party lines, regarding a few key components.
One significant obstacle was overcome in September 2004 when Daschle and Senate Majority Leader Bill Frist (R-TN) agreed on the amount of money to be included in the fund. The September 17 edition of Environment & Energy Daily reported the two Senate leaders had agreed asbestos manufacturers and their insurers should create a $140 billion fund, with $42 billion to be provided within the first three years to expedite payment to persons who currently require medical care or who are near death from asbestos-related illnesses or related reasons. Prior to the agreement on the amount of the fund, reported the April 23 Seattle Post-Intelligencer, Daschle had demanded a $160 billion fund, while Frist had insisted on a $124 billion fund.
Finality of Agreement Still at Issue
Other contentious issues remain. Frist has insisted that establishment of the trust fund must preclude any current or future litigation against companies linked to the manufacture of asbestos. Daschle has steadfastly demanded that current litigation must be allowed to proceed and that plaintiffs may still sue companies in the future if the trust fund becomes depleted.
Companies that manufactured asbestos or can be traced back to the manufacture of asbestos through corporate mergers or other means have insisted that the $140 billion must be a liability ceiling as well as a floor. They argue it would be foolish for them to agree to pay such money and get no finality out of the legislation.
“The business and insurance communities simply are not willing to fund a $140 billion trust and, simultaneously, leave open the tort system as your proposal envisions,” Frist told Daschle in a July 30, 2004, letter.
“A well-designed trust fund is the best solution,” said Julie Rochman, a spokeswoman for the American Insurance Association, according to the Reuters news service. “A poorly designed trust fund is the worst solution, because if you are paying into the trust fund and still end up paying [in] court, it’s untenable.”
Similarly, companies would not agree to set up the compensation fund if persons who have already initiated litigation would be allowed to continue with their court cases, explained Frist in his July 30 letter to Daschle.
As an illustration of Frist’s point, the law firm of Goldenberg, Miller, Heller, and Antognoli filed 295 asbestos cases in Madison County, Illinois just before December 1, 2003, when, under a new state law, asbestos claims would begin being prioritized according to the degree of current illness. Persons with a terminal health condition would receive first priority, persons with a severe diagnosed illness or impairment would receive the next priority, and so on, down to those who merely had been exposed to asbestos but have yet to be diagnosed with any resultant medical impairment.
According to the September 21, 2004 St. Louis Post-Dispatch, the claims filed by Goldenberg, Miller used identical boiler-plate language and made up roughly 30 percent of the claims filed in the county for the entire year. News of an impending national trust fund deal that would allow existing litigation to proceed in court would encourage similar actions by trial lawyers, this time on a national scale, in the days leading up to a final vote on such a bill.
Plaintiffs, Defendants Seek Reform
Despite disagreement over the degree to which a trust fund would provide finality for prospective defendants, virtually all interested parties have recognized that reform litigation would benefit plaintiffs and defendants alike.
In testimony before the Senate Judiciary Committee, Jenni Biggs of the Tillinghast-Towers Perrin consulting firm noted an agreement that avoids future litigation would ensure that plaintiffs, rather than their lawyers, are the primary beneficiaries of asbestos damage awards. Under the current system, testified Biggs, plaintiffs’ lawyers are likely to usurp $70 billion in damages that would otherwise go to victims.
According to the September 21 Post-Dispatch, a RAND Corporation study has found that under the current system, only 44 percent of asbestos damages awards ever reach the actual plaintiff.
Reform litigation also would benefit companies by bringing finality and economic certainty to their outstanding liability. The Reuters news service reported on August 6, 2004, “in recent years hundreds of thousands of injury claims have been filed, forcing companies to pay out $70 billion in compensation to date.” According to the September 23, 2004 Greenwire, more than 60 companies already have filed for bankruptcy as a result of such awards, coupled with the prospect of thousands of future cases that have yet to be filed.
The foreboding prospect of thousands of future court cases strikes many observers as curious, given the history of the asbestos issue.
Dr. Peter Tuteur, associate professor of medicine at the Washington University School of Medicine, notes that heavy exposure to asbestos ceased around 1965, when the government began heavily regulating the manufacture and use of asbestos. While asbestosis can take 20 to 25 years to develop, Tuteur told the Post-Dispatch that the number of patients he has seen with asbestosis has dwindled since the 1980s.
Despite the many years of stringent federal regulation and the dwindling number of confirmed medical impairments, asbestos litigation is a booming industry. The Post-Dispatch reports that in Madison County alone, the number of new asbestos lawsuits filed increased from 411 in 2000, to 884 in 2001, to 953 in 2003. That’s an increase of well more than 1,000 percent since 1995, when 65 new asbestos lawsuits were filed in Madison County, notes a fact sheet issued by the Illinois Chamber of Commerce.
“Critics of the current system say that lawyers coach clients to incriminate companies that still have assets, that lawyers are making unreasonably large fees for routine, boilerplate legal work, and that lung screenings for asbestosis are often fraudulent,” explained the Post-Dispatch.
Daschle-Frist Framework Still in Play
The defeat of Daschle, whom Republicans viewed as an obstruction to sensible asbestos litigation reform, in his 2004 Senate race against Republican challenger John Thune, may signal new prospects for finalizing an asbestos deal in the coming year. Reuters reports that since the November election, companies linked to the manufacture of asbestos have been engaged in internal discussions regarding how the results may strengthen their hand in Senate negotiations.
The Daschle-Frist framework probably would form the foundation of any future reform bill. “I think the major focus is still whether a deal can be made along the guidelines that were set up by the Frist and Daschle dialogue of a couple months ago,” Stanton Anderson, chief legal officer at the U.S. Chamber of Commerce’s Institute for Legal Reform, told Reuters.
James M. Taylor ([email protected]) is managing editor of Environment & Climate News.
For more information …
The 234-page full text of the Fairness in Asbestos Injury Resolution Act is available on the Library of Congress’s THOMAS Web site at http://thomas.loc.gov/.
Nearly three dozen documents addressing asbestos litigation reform are available through PolicyBot™, The Heartland Institute’s free online research database. Point your Web browser to http://www.heartland.org, click on the PolicyBot™ button, and select the Environment/Asbestos topic/subtopic combination.
The Web site of the U.S. Chamber of Commerce’s Institute for Legal Reform, http://www.instituteforlegalreform.org/, includes information on asbestos litigation and other tort reform issues.