US Asbestos Developments Add Controversy over Bill
Date: 23-Jan-06
Country: USA
Author: Susan Cornwell
While US lawmakers have haggled for years over creating an asbestos fund, laws were passed in Texas, Ohio, Florida and Georgia that impose medical criteria on asbestos lawsuits and make it harder for unimpaired claimants to sue.
Other states have cracked down on out-of-state residents "forum shopping" for favorable venues and Manville Trust, the largest of the corporate trusts set up in bankruptcy to compensate victims, tightened its medical criteria in 2003 and its claims have since plunged.
"With all this going on now, why would you take the tremendous leap to enacting the bill?" said Tom O'Brien, spokesman for the Coalition for Asbestos Reform, a group of companies and their insurers that oppose the Senate bill.
But supporters of a national fund that may come to the Senate floor next month are adamant that the measure remains essential to stop lawsuits from clogging the courts and forcing companies to seek bankruptcy protection.
"I don't think any recent experience makes people less concerned about the potential for further negative impact on individual companies, on the economy as a whole, on the job market, and on the legal system," said Mike Baroody, executive vice president of the National Association of Manufacturers.
Some senators also say a national response is still needed - but changes must be made to the bill, in part to reflect lessons learned from recent developments.
"I do think federal action is necessary and desirable, if it is the right bill," Texas Republican Sen. John Cornyn told Reuters.
Asbestos, a fibrous mineral, was widely used in insulation and construction until the mid-1970s.
Inhalation is linked to cancer and other lung-scarring diseases, and hundreds of thousands of injury claims have helped push over 70 US companies, like W.R. Grace & Co. and USG Corp, into bankruptcy proceedings.
Under the Senate proposal, victims would lose their right to sue and claims would be paid instead from the $140 billion fund to be financed by defendant companies and their insurers.
The proposal has split the business community, with small to medium-sized companies complaining they would have to pay too much to the fund while bigger companies would get a break from mammoth asbestos liabilities.
Some victims' groups, meanwhile, say they would rather continue to take their chances in court.
The controversy makes the bill's outlook hard to predict but Pennsylvania Republican Sen. Arlen Specter, the Judiciary Committee Chairman, doggedly pushes it. "Never underestimate Chairman Specter," said Oklahoma Republican Sen. Tom Coburn.
Cornell Law School Professor James Henderson says the states may be reversing "asbestos litigation madness".
Their reforms "would seem to make it especially difficult to justify sweeping federal proposals to replace tort law in whole or in part with a compensation-based no-fault system," he said in an article this month in Mealey's Litigation Report.
Sen. Coburn said the state reforms were not enough. "Just because a few states have done it, you'll still have billions paid out on claims that are not appropriate," he said.
Coburn, a doctor, says the medical criteria for claims in the Senate bill must be tightened or he will not vote for it, because the fund would go "belly up" from too many claims.
Cornyn agrees the bill's medical criteria must be stricter, noting US District Judge Janis Jack last year denounced as "manufactured" claims from another mineral, silica.
"My greatest fear is that we perpetuate that sort of thing (manufactured claims) in this bill," Cornyn said.