Asbestos reform now

Jack Kemp
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Posted: Nov 21, 2005 12:05 AM

I applaud Senator Bill Frist who recently announced that, "Asbestos reform will be the first major piece of legislation that we consider in late January when we return." That is great news for Americans like Mike Carter, owner of Monroe Rubber and Gasket Co. in Monroe, Louisiana, who told the Senate Judiciary Committee in 2003 of 75 asbestos lawsuits pending against his small company, which never manufactured the product. For many years, we have been operating in a system in which people who aren’t sick are demanding compensation from a pool of defendants that have had increasingly less to do with asbestos exposure. This has also marginalized real asbestos victims, whose cases have been compromised by the onslaught of lawyer driven claims that make up in volume what they lack in merit.

We can begin with the uncontroversial premise that great harm came to many people exposed to asbestos, particularly U.S. veterans, shipyard workers and other laborers. Working to fairly resolve asbestos issues requires doing something other than the status quo. In fact, Justice David Souter has written, “The elephantine mass of asbestos cases…defies customary judicial administration and calls for national legislation.” Opponents of the Fairness in Asbestos Injury Resolution (FAIR) Act of 2005 are strong, well-financed and formidable, but following the lead of Senators Frist and Arlen Specter, Congress needs to see beyond this financial self interest and do what is right for truly sick victims and other bystanders who have been swept into the tidal wave of litigation, losing jobs and retirement savings in the process.

When one company declares bankruptcy, another one is found to fill its place in a pool of over one hundred defendants. For this reason, virtually every sector of our economy is represented in the extensive defendant list in asbestos lawsuits. Nontraditional defendants are now responsible for the majority of asbestos liability. Close to 80 companies have declared bankruptcy, creating a windfall in legal fees in the process and limiting the opportunities for Americans to pursue their entrepreneurial dreams.

The Trust fund proposed in the FAIR Act addresses these problems, but opponents are challenging the wisdom of the federal government addressing the issue. Here are some answers:

Will the Trust fund go broke? No, the trust fund will be privately financed at $140 billion. Concerns of the claims overrunning the fund capacity are based on lung cancer claimants overwhelming the fund, but the medical, diagnostic, latency and exposure criteria included in FAIR will weed out the non-asbestos related lung cancer claims. In the Manville Trust, the largest asbestos trust today, 8.2% of its claimants suffer from lung cancer related to asbestos and not the 75% predicted by one study (Bates White). The RAND Institute has estimated that approximately $70 billion had been spent on asbestos litigation through 2002 and approximately $40 billion of that cost went to pay (plaintiff and defendant) attorney fees. The trust fund will cap attorney fees at 5%. It is easy to see why there are such vociferous opponents to this bill.

What about the claims that we need strict medical criteria? Medical criteria are central to the FAIR Act and weeding out false claims will leave the resources for the truly sick.

Is the government going to be funding this at all? It is true that the Fund can borrow from the government; however, that ability is severely restricted in several provisions of the bill to make sure the Fund remains fiscally sound. Moreover, the US Government is explicitly protected from any and all liability for the Fund. Even if the Fund were to run out of money, it would sunset and claimants would be able to return to the courts.

Why can’t this be left to the states? It has been and can’t be any longer. This is a private sector solution administered by the federal government. State-based solutions lead to verdicts for victims that are wildly variable, leaving some victims with many millions of dollars and others with much, much less. States also cannot address particular hardships faced by our veterans. Laws restrict veterans' rights to recover from the federal government, and the companies that supplied asbestos to the government are now bankrupt, leaving veterans with nowhere to turn.

It is clear that we need a national solution preventing abuse of our legal system, compensating real victims and providing businesses with resolution regarding their liabilities. There has been much discussion and it is time to act. Senators Frist and Specter are demonstrating their courage and compassion for the physical and financial pain of many Americans.

Kemp Partners has done work on behalf of corporate defendants in asbestos litigation reform.