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Asbestos litigation & the FAIR legislation

Many politicians who support the idea of a legislative solution for asbestos lawsuits do so because they believe that asbestos litigation is bankrupting hundreds of companies. They cite an “asbestos litigation crisis” that needs resolution because attorneys are running out of companies to sue and bankrupt companies can no longer pay out to victims. There are certainly facts that support those statements.

Since 1997, approximately 60 companies have declared bankruptcy attributed to pending and projected settlements in asbestos lawsuits. Those bankruptcies were filed under the Chapter 11 laws which allow a company to discharge its outstanding debts and reorganize its finances rather than liquidating their assets to pay off their debts.

For many of the major companies cited in asbestos-related litigation, bankruptcy is not a disaster that forces them to close their doors. Rather, it is a strategy to limit the amounts of the judgments for which they are liable. In addition, bankruptcy proceedings effectively halt all payments on judgments while the reorganization is ongoing. For plaintiffs in asbestos lawsuits, this can mean waiting 5-7 years to see any of the money that has been awarded them by the court system. For a patient with mesothelioma, whose typical life expectancy after diagnosis is 6-12 months, that wait is impossible.

The public perception of asbestos litigation as a drain on the economy that is forcing healthy companies into cutting jobs, closing their doors and harming the economy is quite different from the view that is put forth by many of those companies in their own literature. Here are some facts to help put the supposed disaster that is bankrupting these companies into perspective.

Fact: The majority of companies that have filed for Chapter 11 protection since 1994 have not gone out of business.

1994 was the year that Congress amended the bankruptcy laws to offer special protection to companies involved in asbestos litigation. The amendments, known as the “Manville Amendments,” allow a company to file for protection against future liability claims, if they can show that those future claims exceed the assets of the company. It also allows the company to settle all future asbestos claims by setting up a special trust to pay them. Chapter 11 bankruptcy allows the company to stop all lawsuits against them, and delay making any payments on judgments until they have completed reorganization.

A 2003 study of seven major companies that filed for Chapter 11 protection in 2000 and 2001 (Financial Analysis of Companies That Filed for Chapter 11 Bankruptcy in 2000 and 2001 as a Result of Asbestos Obligations, G. Bentson 2003) found that all seven continue to prosper and grow financially. They will all, the report declared, emerge from bankruptcy far stronger than they entered it.

Fact: The major winners in any of the versions of the FAIR bill are asbestos and insurance companies.

Under the most recent version of the FAIR bill, the fund to be established for payment of asbestos-related claims was $140 billion dollars. The funds were to be raised with contributions from the major defendants in asbestos lawsuits, with each company contributing a portion commensurate with their responsibility and possible liability. Under that plan, nearly every company involved would see their potential liability in asbestos-related cases shrink by nearly 70%.

Fact: Those most seriously injured by exposure to asbestos – those that reforms like the FAIR bill are intended to help – would lose if those reforms are passed.

In the 2005 version of the FAIR bill, compensation to those with malignant mesothelioma is capped at $1.1 million. Jury awards to those with malignant mesothelioma – the most serious outcome of asbestos exposure – are typically at least twice that amount. And the fact is that the medical expenses alone for a person with mesothelioma can easily top $500,000.

Fact: Despite all the evidence that asbestos is one of the most dangerous substances in current, widespread use, big business has consistently opposed and blocked all efforts to ban its use.

If there is any one fact that indicts the asbestos industry, it is this one. Despite all the lawsuits, despite the thousands of deaths annually attributed to asbestos, despite the research that shows there is no safe level of exposure to asbestos, big business continues to lobby against legislation that would ban the import and use of asbestos and products containing asbestos. The asbestos lobbies support measures that will limit their liability in current and all future asbestos claims, while opposing those that will prevent them from continuing to do business as usual.

If big business gets its way, those who have suffered from exposure to their products and those who will suffer from exposure to their products in the future will lose their right to seek compensation for their injuries under the law. If you believe that you have been exposed to asbestos and have concerns about your rights to recover compensation for injuries and damage that exposure has caused, you owe it to yourself to become informed about the proposed changes to the laws governing asbestos lawsuits.

The Case for Asbestos Litigation Reform

The true tragedy of most asbestos-related diseases is that they never had to happen. The harm caused by inhaling asbestos fibers has been well-known and well-documented since the early 1900s – at least in certain circles. There were published reports of lung diseases caused by working around asbestos as early as the 1890s. By the mid-1920s, the asbestos industry had already settled its first claim for asbestosis.

The safety measures that could prevent much of the damage from asbestos were also well-known. There were recommendations in Germany and in Great Britain that those working in asbestos mines and with asbestos wear breathing filters in the early 1900s. Those recommendations were largely disregarded by industries that depended on asbestos. Many of those companies not only did nothing to protect their workers from the hazards of asbestos, they actively concealed those dangers from their employees and from the general public. It was this callous disregard for the public welfare and for the health of their employees and families that opened the door for the massive settlements often remarked upon in literature about the need for asbestos litigation reform.

Asbestos litigation is unlike any other form of personal injury litigation for a number of reasons. The lawyers who handled the first lawsuits for damages due to asbestos exposure ran into a veritable maze of regulations and statutes and blank walls that made pursuing even legitimate and proven medical expenses difficult, let alone proving negligence and willful misconduct. The single circumstance that makes pursuing an asbestos lawsuit difficult is the unusually long latency period between exposure to asbestos and the development of symptoms. The fact that it can take as much as 40 years before any damages are apparent means that many of the considerations that hold true in most litigation are moot points when it comes to pursuing asbestos liability.

1. Statutes of limitations are essentially meaningless.

In some states, a suit must have been filed within a specified period of time after the injury occurred in order to be considered. That statute of limitations is meaningless in a case where the plaintiff isn’t even aware that there has been damage until forty years after the initial exposure.

Even in states where the clock on the statute doesn’t start ticking until the injury is discovered, it can present a hardship. A person originally diagnosed with pleural scarring characteristic of asbestos exposure may or may not develop asbestosis or mesothelioma.

To complicate things still further, in some states, plaintiffs must bring suit for all their injuries at once. Because of the nature of asbestos, those pleural scars may not begin to cause physical symptoms or develop into a physically limiting or potentially fatal disease for another decade or more after they are first discovered.

That left many people who knew they’d been exposed to asbestos a difficult choice – once they learned of their exposure to the deadly substance and found the least sign of symptoms of damage from it, the clock started ticking on their statute of limitations. If they didn’t file suit with a prescribed number of years, they lost the right to any compensation at all. If they filed suit claiming damages for their current level of disability, they might not recover enough in damages to cover their treatment if the asbestos scarring developed into more serious asbestosis or mesothelioma.

2. The length of time since exposure makes it difficult to determine when and where exposure occurred.

Lawyers who took on the first asbestos-related injury cases found themselves becoming detectives. Even today, the largest part of an asbestos lawsuit is tracking down the origin of exposure to asbestos. Because many companies actively concealed the presence of asbestos in their products, many workers didn’t even know that they were handling it. In other cases, a person may have worked briefly for a company that used asbestos-containing products, or have lived near to a factory or construction site where asbestos was used. Someone diagnosed with asbestosis may have been exposed to asbestos fibers when her father came home from work at the mill with his clothing and hair covered with asbestos dust. A child may have been exposed to asbestos playing on an old construction site. Any of those people might eventually have developed asbestosis, pleural scarring or mesothelioma as a result of that exposure.

3. The pervasive use of products containing asbestos sometimes makes it impossible to assign liability to one particular manufacturer – or even a group of them.

A worker on a construction project may have been exposed to asbestos products from a dozen different companies, either on one job, or over the course of his career. Many companies will argue that it was not their product – or not their product alone – that caused the later symptoms.

4. The length of time between exposure and development of symptoms means that many of the companies for which a plaintiff worked have gone out of business, or been absorbed by other companies.

5. The problem of jurisdiction presents another complication in asbestos lawsuits.

A retired plumber living in Florida may have been exposed to asbestos in the shipyards in Quincy, Massachusetts thirty years earlier. The products to which he was exposed might have been manufactured in Oregon or Montana or Chicago by a company with headquarters in New York. The various laws in each of those jurisdictions may prevent a claim from being filed – or make it more favorable to file in one state over another.

Because of these considerations, and because of the sheer enormity of the exposure to asbestos, the court dockets literally exploded with mesothelioma cases. By 1993, it was estimated that there were nearly 300,000 asbestos-related lawsuits filed across the country, with another 200,000 being filed each year. Changes in the laws surrounding bankruptcy allowed many companies to declare bankruptcy as a way to protect themselves against judgments in mesothelioma and asbestos-related lawsuits. Those who filed suit to recover damages due to asbestos exposure sometimes found themselves with a court date months and even years in the future. In many cases, plaintiffs with malignant mesothelioma, lung cancer or asbestosis died before their cases were ever heard, or before ever seeing a penny of their award if they won the case.

It became increasingly obvious that the current litigation system is not designed to handle a crisis of the magnitude of asbestos litigation. By the mid-1990s, both sides of the asbestos wars were calling for some sort of reform to ease the backlog of lawsuits awaiting trial and provide fair and equitable compensation to those who were suffering – and would suffer – because of their exposure to a danger that should never have happened.

Lawyers and judges and jurors charged with making determinations in the whole tangled mess found themselves fighting in a labyrinthine system where most of the laws favor industry. Plaintiffs dying of a disease with only one known cause – asbestos exposure – have to prove that they were exposed, prove that they are ill, prove that the reason they are ill is their exposure to asbestos, and prove that the companies from whom they are seeking compensation are liable. The maze of laws and regulations, and the stonewalling of the asbestos and insurance industries often mean that those who bring suit do not survive to see any benefits that may be awarded in their cases.

Lawyers involved in asbestos litigation soon found that the best chance to recover damages for the majority of their clients was to bundle cases together. By presenting a group of defendants at once, they could often push through a settlement for clients with weaker cases on the strength of clients who had strong cases. By 1993, there were nearly 300,000 asbestos-related cases filed across the nation, and an estimated 200,000 more filed annually. The court system was hopelessly mired in lawsuits to the point where many jurisdictions created special courts specifically to handle only asbestos-related cases. Industry was demanding reforms in legislation to stem the growing tide of lawsuits that they claimed were forcing them into bankruptcy. In fact, it’s believed that nearly 100 companies have filed for bankruptcy due to asbestos litigation and projected liability in asbestos-related cases.

There is widespread agreement that some type of reform is desperately needed, but the form it should take is hotly contested. Since the mid-1990s, nearly every session of Congress has considered some iteration of the FAIR (Fairness in Asbestos Injury Resolution) bill. Most call for the creation of a fund from which to pay damages to those who were exposed to asbestos, and the establishment of a committee to hear all asbestos-related claims. There are several sticking points that have killed every version of the FAIR bill to date.

  • The amount of the fund. The most recent version of the FAIR bill (which died in the early months of 2005) called for $140 billion, an amount that will almost certainly not be enough to meet all the claims pending against the asbestos industry, let alone any future injury claims.
  • The specific requirements to qualify for any compensation under the FAIR bill. The most current version of the FAIR bill set out specific amounts to be paid for specific injuries, and was open to those who could prove exposure through their occupation, or because they lived in Libby, Montana, where the W.R. Grace Company operated through the 1990s.
  • Whether plaintiffs retain – or regain – the right to pursue litigation if their expenses are not met, or if they develop another condition after being compensated for one
  • Whether there is any recourse for those denied compensation by the fund and the committee.

The asbestos and insurance industries would obviously like to see the establishment of a fund created with a one-time only payment from the major defendants in most asbestos lawsuits. In addition, the legislation that they’ve favored completely insulates them from any litigation that is based on asbestos exposure. The committee would require documented proof of an existing medical condition with payments from the fund established according to that condition.

Those who lobby for the rights of workers to obtain fair compensation for their injuries are not opposed to the establishment of a fund to pay that compensation. In order for such a fund to truly be the FAIR legislation that it claims to be, however, the following criteria must be met:

  • An ‘evergreen’ fund, which will be renewed by the companies if it is exhausted before all claims against it are paid.
  • A right of appeal, possibly through litigation, by those who are denied compensation for their injuries
  • Looser restrictions on those who may make a claim under the fund. Specifically, the most recent version of the FAIR bill made no provision for those who may have been exposed to asbestos in the environment unless they or a family member was employed in an occupation where they were exposed to asbestos
  • A guarantee that every person who suffered damages as a result of exposure to asbestos will be fairly compensated for those damages.

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