Don’t let Big Asbestos Continue to Delay, Deny, and Lie
Almost two decades ago, OSHA observed that “it was aware of no instance in which exposure to a toxic substance has more clearly demonstrated detrimental health effects on humans than has asbestos exposure.” Yet asbestos use is still legal in the U.S. despite the fact that it continues to kill thousands of people each year.
Indisputable evidence shows that as early as the 1950’s, the asbestos industry knew asbestos exposure was killing its workers and their families and failed to issue warnings or proper protection. Despite their deliberate poisoning of its employees and their families, the asbestos industry has for decades continued to wage a campaign to minimize their asbestos liability with the ultimate goal of avoiding accountability until the victim dies, leaving grieving families and taxpayers with astronomical medical bills, and decreasing compensation to victims. In other words, Big Asbestos continues their campaign to delay and deny until the victim dies.
H.R. 982, the so-called “Furthering Asbestos Claim Transparency (FACT) Act of 2013,” is just the latest effort in this campaign to delay and deny asbestos victims fair compensation and must be opposed. The bill is unnecessary because information about the way trusts operate is already public; this bill would put new burdens on asbestos trusts—which exist solely for the purpose of compensating present and future victims of asbestos disease—by allowing companies to waste trust assets, delay recovery, and deny compensation to victims.
Even more telling is the fact that the only proponents of this bill are the big asbestos defendants who knowingly and deliberately exposed people to their deadly products. These are the same companies who for decades intentionally hid the dangers of asbestos from their workers and consumers and are now, in an effort to shift blame and avoid accountability, claiming they need more “transparency” within the system.
How Asbestos Product Liability Cases Work
The asbestos industry claims that changes are needed to stop asbestos victims from engaging in fraud or “double-dipping,” implying that victims are somehow recovering too much from too many defendants. These assertions rely on a complete misunderstanding of the nature of asbestos disease and how the tort and trust systems operate to compensate victims.
- Asbestos disease is the result of cumulative exposures over the course of a person’s working lifetime and can take decades to become apparent. Thus, when a person is diagnosed with an asbestos disease, it is usually decades after that person was exposed and it’s likely that a number of companies are at fault.
- It is scientifically impossible to determine which asbestos product caused a person’s disease; rather it’s usually the case that all of the products, in part, caused a person to become sick.
- A fundamental principle of American law is that a person can recover from every defendant who substantially contributed to their injury. Thus, when an asbestos victim recovers from each defendant whose product contributed to his disease, that victim is in no way “double-dipping;” rather he is recovering a portion of his damages from each of the corporations that harmed him. This is no different than if you were mugged by five people; all five people would be criminally and civilly responsible for your injuries.
- Whether and how much each defendant is held accountable is a matter determined by state law under rules dealing with joint and several liability.
- It is necessary and typical for an asbestos victim to file a claim against multiple defendants to recover for his injuries. Some of those defendants will be solvent defendants against which the victim will file a claim in the state tort system. Some of the other defendants will have gone through the asbestos bankruptcy process, and as explained below, rather than filing a claim in court, a victim will file a claim against the asbestos trust. There is nothing secret or “fraudulent” about this process.
How the Asbestos Bankruptcy Trust System Works
In 1994 Congress amended the Federal Bankruptcy Code to provide special treatment for asbestos companies seeking to reorganize their business. Section 524(g) provides that if an asbestos company establishes a trust to pay asbestos victims, it can shift to the trust all of its liability for present and future asbestos claims and emerge from bankruptcy without any asbestos liability. 524(g) trusts are unique to asbestos companies and are completely different than other bankruptcy procedures; these trusts exist ONLY for the benefit of asbestos victims, they must exist to compensate victims now and for many years into the future, they allow a company to carry on its business free and clear of all asbestos liability, and payments from the trusts essentially represent settlements from asbestos companies. Trusts make payments according to a plan that was negotiated by the asbestos company and approved by the court when the trust was established. These trust plans, the value of the claims, and the amounts the trusts are paying out is all publicly available information.
Importantly, these are privately funded trusts; no government funds are used or involved in the trusts. Trust assets are capped at the time the trust is formed. Because trusts must preserve those assets to pay not only present asbestos victims, but also future asbestos victims, they are limited in the amount they can pay out to present victims. Thus, asbestos victims are not even recovering the full amount of their claims. The RAND study – funded by asbestos defendants — found that “[m]ost trusts do not have sufficient funds to pay every claim in full and, thus, set a payment percentage that is used to determine the actual payment a claimant will be offered.” The median payment percentage is 25 percent, but some trusts pay as low as 1.1 percent of the value of a claim.#[i]
What Does the FACT Act Really Do?
Extensive information about trust operations, claims, and payments is all publically available. The FACT Act would do three things not currently required: 1) it would require the trusts to publically disclose extensive, individual and personal claim information; 2) it would allow asbestos defendants to demand any additional information from the trusts at any time and for virtually any reason; and 3) it would apply retroactively to the initial creation of the trust, forcing the trusts to look back to every claim ever filed and paid.
- Under the bill, many victims will die before their case resolves. There is an international consensus that asbestos causes mesothelioma (a cancer of the lining of the lung), lung cancer, and asbestosis. Victims of mesothelioma typically only live for 4 to 18 months after their diagnosis. The bill’s new burdens meant that trusts will have to spend time and resources complying with these requirements, causing trust recoveries to decrease and be delayed. In addition, some state laws force victims to go through the trust process before their cases can proceed in state court; so this bill is designed to slow down the overall compensation system such that victims will die before trial. In addition, many states give expedited trial dates those that are dying; if an asbestos victim dies before that trial date, that case is no longer given priority.
- The bill seeks to override state law regarding joint and several liability. Asbestos defendants want a victim’s trust claim information to argue that it should pay the victim less. But, state law already governs how a victim should be compensated and indeed, state judges routinely require that plaintiffs disclose information about a trust payment or other settlement and provide a defendant with a set off for amounts received. But how this occurs is a matter of state law.
- The bill seeks to override state law regarding discovery/disclosure of information. State discovery rules currently govern disclosure of a trust claimant’s work and exposure history. If such information is relevant to a state law claim, a defendant can seek and get that information according to the rules of a state court. What a defendant cannot do, and what this bill would allow, is for a defendant to engage in fishing expeditions for irrelevant information which has no use other than to delay a claim for as long as possible.
- The bill maintains the right of asbestos defendants to demand confidentiality. A typical asbestos defendant who settles a case in the tort system demands confidentiality as a condition of settlement in order to ensure that other victims do not learn how much they paid. Trust payments represent settlements of former asbestos defendants. These same defendants now want the trusts to disclose specific settlement amounts that they do not themselves provide nor would have provided before the trusts were created. If transparency were the true goal of this bill, then why doesn’t the bill require settling defendants to reveal individual settlement amounts?
- Trust information is already public. Trusts already disclose far more information than solvent defendants do about their settlement practices and amounts – the settlement criteria used by a trust and the offer the trust will make if the criteria are met are publicly available in the Trust Distribution Procedures for that trust. Trusts also file annual reports with the Bankruptcy courts and publish lists of the products for which they have assumed responsibility.
- There is no abuse of the trust process. Defendants have no evidence to support their assertions of fraud by plaintiffs. What defendants largely claim to be fraud are largely data entry issues; a problem that exists in any electronic system subject to human error. Of the millions who have asserted claims to asbestos trusts, defendants have only been able to find an error rate of .35%, an amount far lower than similar large trust systems. Further, to the extent any actual fraud has been found, such as in the Kananian case, such examples of fraud are isolated incidents, which are appropriately remedied by the state court.
Let’s Put an End to Big Asbestos’ Campaign to Delay, Deny, and Lie;
Oppose the FACT ACT