The growing number of asbestos defendant companies and asbestos plaintiffs may reach peaceful coexistence shortly if an agreement can be finalized that would result in national legislation setting up a trust fund to compensate those sickened with an asbestos-related illness.

As reported in The News (see “Asbestos Lawsuits Surge,” January 27, 2003), asbestos liability has returned as a major problem and it is encompassing a wide range of businesses, including HVACR contractors, distributors, and manufacturers. According to the Insurance Information Institute, the cumulative liability could reach as high as $200 billion.

Momentum Building

Over the last few months, momentum has been building for legislation to address the asbestos litigation problem — fairly compensating victims without bankrupting the defendant companies. In February at its 2003 Midyear Meeting, the American Bar Association (ABA) came out in favor of legislative action. The ABA supported establishing medical criteria for claims for non-malignant asbestos-related disease. It also supported exempting potential claimants from statutory deadlines for filing such claims, which would remove the incentive to file claims prematurely, before one even shows signs of illness, in order to meet the statute of limitations.

A few days later, Sen. Don Nickles (R-Okla.) introduced “The Asbestos Claims Criteria and Compensation Act of 2003,” which, he said, “establishes medical criteria that a claimant must meet prior to filing a suit. It will also toll the statute of limitations, so that those who develop an asbestos-related disease years down the road will still retain their right of legal action.”

Early in March, the Senate Judiciary Committee held a hearing to discuss asbestos litigation reform. Testifying at the hearing, Dennis Archer, president-elect of the ABA and former mayor of Detroit, stated, “More than 200,000 claims are presently clogging the court system and tens of thousands of new claims are filed each year. Truly sick individuals are facing lengthy delays due to clogged court dockets. Funds that are needed to compensate persons who are sick now or who will become seriously ill from asbestos later are in danger of being dissipated.”

Objective Medical Criteria

Archer outlined the ABA’s ideas for “establishing objective medical criteria for presently compensable claims.” Steven Kazan, a plaintiffs’ trial lawyer who represents asbestos victims, testified that “asbestos litigation has become a nightmare because the courts have been inundated by the claims of people who may have been exposed to asbestos but who are not sick.” He urged, “Congress needs to act now, to establish medical criteria to ensure that those who are sick today, and the many more who will become sick in the years to come, are protected.”

The following week, in its decision on Norfolk & Western Railway Co. v. Ayers et al., which concerned six asbestosis claimants, the U.S. Supreme Court, as it did earlier, called for federal legislation to resolve “the elephantine mass of asbestos cases.” In his dissenting opinion, Justice Anthony Kennedy wrote that, for a person who may develop cancer in the future, “the majority’s decision endangers this employee’s chances of recovering any damages for the simple reason that, by the time the worker is entitled to sue for the cancer, the funds available for compensation in all likelihood will have disappeared, depleted by verdicts awarding damages for unrealized fear.”

On April 4, Rep. Chris Cannon (R-Utah) introduced the “Asbestos Compensation Fairness Act of 2003,” similar to the bill he presented in 2002. A few days later, Rep. Cal Dooley (D-Calif.) unveiled the “Asbestos Victims’ Compensation Act of 2003,” which likewise “develops fair medical standards,” said Dooley.

Sen. Orrin Hatch. (Courtesy of Sen. Hatch's office.)

A National Trust

With bipartisan support for a legislative solution, the wheels were in motion for a push to resolve the issue. The Asbestos Study Group, made up of asbestos defendant companies similar to the Asbestos Alliance (see “Asbestos Lawsuits Surge,” January 27, 2003), proposed the idea of a national trust, privately funded by the defendant companies and their insurance firms but run by the federal government.

The Asbestos Study Group reportedly hired Kevin McGuiness, a former staff member of Sen. Orrin Hatch (R-Utah), who is Senate Judiciary Committee Chairman. Hatch and Sen. Patrick Leahy (D-Vt.), the ranking Democrat on the committee, are now said to be working on legislation to establish a national trust fund, with support from a number of businesses, insurers, and union officials.

The size of the trust fund is expected to be in the range of $100 billion. “The business community is somewhere near 90 billion, the labor community is somewhere near 120,” Hatch recently told reporters. The exact size needs to be ironed out.

Companies and insurers are backing the proposal because they would avoid potentially huge lawsuits and would be able to determine what their asbestos liability is. Labor unions are said to be in favor because the increased corporate bankruptcies related to asbestos litigation have eliminated a substantial number of jobs. Halting the flood of lawsuits would help prevent further job losses.

Under this plan, there would be a tribunal made up of several judges that oversees the trust. The amount of payment to an asbestos victim would depend on how ill that person is. The goal would be to get payment to the most severely ill as quickly as possible.

Hatch is believed to be considering introduction of a bill in late May. It is not clear if Congress would act on and pass legislation this year, or whether the Bush administration would support a national trust fund.

Publication date: 05/19/2003