Senate Battle Begins on Asbestos Fund

Published August 1, 2003

On July 14, the U.S. Senate began debate on the Fairness in Asbestos Injury Resolution Act of 2003, a measure aimed at addressing the nation’s asbestos litigation crisis.

Introduced in May by Senate Judiciary Committee Chairman Orrin Hatch (R-Utah), the measure was approved by that Committee on July 10, after a flurry of hearings and markup sessions were held to work out the details of a proposed $108 billion national compensation fund, the centerpiece of the measure.

Asbestos injury compensation claims have been backing up in the court system for years; the fund has been proposed as a way to resolve claims more quickly.

Asbestos was widely used for fireproofing and insulation until the 1970s, when scientists concluded inhaled fibers could be linked to such illnesses as cancer and pulmonary disease.

The proposed compensation fund, to be financed by industry and insurers, would resolve hundreds of thousands of asbestos claims. Some 67 companies already have been driven into bankruptcy by claims both legitimate and spurious.

More than 200,000 asbestos tort claims are pending nationwide against more than 8,000 corporations. Many of the defendant companies never made asbestos products. The Senate measure would end those lawsuits and protect firms against any future suits asbestos victims might bring.

Medical Criteria Set

In June, Judiciary Committee members reached agreement on language describing the medical criteria that would be used to evaluate asbestos injury claims submitted to the proposed compensation fund.

The medical criteria approved by the committee include five levels of nonmalignant disease and five levels of cancer, including lung cancer and mesothelioma. Colorectal cancers and cancers of the throat and stomach could also qualify for compensation if the victim can show 15 years of occupational exposure to asbestos and medical documentation that the exposure contributed to the disease.

“Emergency room physicians are trained to ‘triage’ their patients according to the severity of their injuries and illnesses,” noted Tom Miller, director of health policy studies for the Cato Institute. “We’ve reached that point long ago in the litigation lottery for asbestos claims that are real, minor, and imaginary. Future compensation must be based on the severity of medical distress.”

Compensation Levels Set

Shortly after the medical criteria for compensation were established, the Judiciary Committee also reached agreement on the amounts the trust fund would pay to claimants in each of the 10 categories. Compensation would range from $20,000 for persons claiming “mixed diseases with impairments” to $1 million for those suffering mesothelioma, a rare form of cancer linked to occupational exposure to asbestos.

Injury claims would be heard by 20 special “asbestos masters,” who would be appointed to work through the existing U.S. Court of Claims, instead of in a separate asbestos court as Hatch originally proposed. Claimants would not be required to hire a lawyer to qualify for compensation.

Of the compensation fund’s $108 billion price tag, $104 billion would come from insurers and manufacturers. That’s up from the $90 billion Hatch proposed in his original bill, and insurers strenuously objected to the increase.

The bill was “supposed to provide fairness and finality,” said Julie Rochman, speaking for the American Insurance Association. “It doesn’t do either.”

How Much Is Enough?

Democrats and labor union representatives also objected to the bill. Senator Dick Durbin (D-Illinois) said “more money should be on the table,” and the AFL-CIO’s Peg Seminario agreed, saying the measure would “leave the vast majority of asbestos victims without compensation.”

Proponents of the measure countered the fund is needed to make sure victims with documented health impairments are compensated, quickly and without the expense of hiring a trial lawyer.

Most of the plaintiffs in currently pending asbestos litigation show no evidence of illness or other physical harm from asbestos exposure. Nevertheless, some are being awarded large judgments based on what critics say is highly speculative future harm, suspect science, and juries’ preconceived notions about asbestos.

Without a national compensation fund, proponents warn, asbestos claims both legitimate and spurious will bankrupt companies long before most victims can be compensated.

Conrad F. Meier is managing editor of Health Care News. His email address is [email protected].