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Straight
Track #162
Asbestos
Accord Said To Be Near
The New York Times
April 24, 2003
The
New York Times, on April 24, 2003, published the following
article concerning the likely agreement that would end all asbestos
lawsuits. Because of the many questions about asbestos we receive from
railroaders at union meetings, we thought to share the article with our
Straight Track subscribers.
Asbestos Accord Said To Be Near
By Alex Berenson
Published in The New York Times April 24, 2003
Companies, insurers, unions and Democratic and
Republican senators are nearing an agreement in principle to end all
asbestos lawsuits and instead pay people with asbestos-related diseases
from a national privately financed trust, according to people from all
sides who have participated in the talks.
The trust, which would be subject to approval by
Congress and President Bush, would pay more than $100 billion to hundreds
of thousands of asbestos victims over the next 30 years. It would stop the
flood of asbestos lawsuits, 200,000 in the last two years alone, that have
strained businesses and the court system.
It would be the second-largest lawsuit settlement ever,
exceeded only by tobacco companies' agreement in 1998 to pay states $246
billion for their Medicaid spending on victims of cigarette smoking.
Many details of the trust remain to be worked out,
including the exact size of payments to victims and who will pay if the
trust unexpectedly runs short of money, and the negotiations could still
stall.
Unlike the fund Congress created to compensate victims
of the Sept. 11 attacks, an asbestos trust would not allow people to opt
out and sue instead. All new and existing claims would be settled through
the trust, which would largely or entirely be financed by businesses and
insurers, people involved in the talks said. Victims would receive
payments more quickly, while businesses would avoid the risk of huge
verdicts. And both sides would pay much less to lawyers, who now receive
more than half of all the money spent on asbestos litigation, studies say.
Efforts to reduce the rights of asbestos claimants to
sue have repeatedly failed in the past. In addition, the law creating a
trust would be complicated, and complexity is generally the enemy of
legislation. So some experts on asbestos said a trust had little chance of
becoming law.
But negotiators for all sides said they disagreed.
Democrats and Republicans in Congress seem to agree that the number of
asbestos lawsuits has become a crisis, and a trust is the only concept
with significant bipartisan support.
In addition, Frederick M. Baron, an influential trial
lawyer who has participated in the negotiations, said that the Association
of Trial Lawyers of America would not oppose a trust if it offers payments
similar to the net amounts, after lawyers' fees, that victims now receive
in lawsuits.
Some lawyers will fiercely oppose a trust. But if their
lobby stands aside, and unions, companies and insurers can reach a deal,
the legislation could pass, Mr. Baron said.
While it might seem surprising that the trial lawyers'
group is not fighting a trust, the group has been on the defensive since
Republicans gained control of the Senate, and asbestos lawsuits have
become particularly controversial.
"A national trust is the best solution," said
David Austern, president of an asbestos trust fund that resolves claims
against the Johns-Manville Corporation, once the leading maker of
asbestos.
Mr. Austern who has watched efforts to resolve asbestos
lawsuits since 1988, when he became counsel for the Manville trust, said
he thought the trust had a better-than-even chance of becoming law. (Mr.
Austern has consulted with Senate staff members, as well as a group of
large companies, about the proposed trust. He said he had not been paid
for the consulting.)
Creating a trust is a priority for many big businesses,
especially manufacturers. Companies worry that they will have to pay
hundreds of billions of dollars in claims unless Congress limits lawsuits
against them from people who were exposed to asbestos but are not sick.
Their concerns have grown in the last two years, after a spate of very
large verdicts against companies that did not make asbestos but used it in
their factories or products.
Already, lawsuits have forced into bankruptcy almost 70
companies, some of which were only peripherally connected to asbestos.
Most American companies stopped using asbestos decades ago, but the number
of lawsuits continues to rise. About 700,000 claims have been filed,
including 200,000 in the last two years.
At the same time, the trust would ensure that tens of
thousands of people who will die over the next 30 years from exposure to
asbestos, as well as many others sickened by exposure, will be
compensated.
Under the current system of lawsuits, some people who
are sick or dying from asbestos exposure receive little money if their
exposure happens to have come from companies that are already in
bankruptcy. Others, including some who are not sick, get millions of
dollars from sympathetic juries.
Most of the money in the trust would go to the sickest
people, with the largest payments exceeding $1 million. People who have
been exposed to asbestos but are not sick might get up to $1,000, although
business groups would prefer much less. The level of payments to people
who are not sick is crucial, because if it is set too high, millions of
people may apply for payments, draining the trust of money it needs to
compensate sick people, said Stephen Carroll, a senior economist at the
Rand Institute for Civil Justice who has studied asbestos suits.
While more than half the money paid in the current
system goes to plaintiff and defense lawyers, the trust under discussion
would pay nearly all its money to victims if they are new claimants. But
lawyers who represent people who have already filed claims would receive
their standard fees of up to 40 percent of any settlement, meaning those
claimants would cost the fund more.
People involved in the discussions say companies that
made asbestos or used it in their products, as well as insurance
companies, have together offered to pay $90 billion over the next 25 years
to pay claims. Insurers and companies would each pay for half its cost.
The government might also contribute a nominal amount, or help pay for
medical monitoring of people who have been exposed to asbestos but are not
sick.
Since the trust's principal would accumulate interest
over time, the fund would pay out more than $100 billion in all. That
figure is less than half as much as analysts forecast that companies and
insurers would eventually spend to resolve asbestos claims under the
current system. But because much of the money goes to lawyers under the
current system, the companies say, victims would do as well. Trial lawyers
say companies and insurers will have to contribute more than $100 billion
so that victims do not lose out.
The efforts to build a trust have gained momentum since
a meeting on April 1 that included senators and top representatives from
the major interest groups. Staff members for Senator Orrin G. Hatch,
Republican of Utah and chairman of the Senate Judiciary Committee, and
Senator Patrick J. Leahy of Vermont, the committee's ranking Democrat, are
meeting regularly to hammer out details. Mr. Hatch has said that he would
like to introduce legislation next month, people involved in the talks
say.
Proponents of a trust have focused on the Senate because
it has killed asbestos bills in the past andthey assume that if a bill
passes the Senate with the endorsement of business, it will clear the
House and be signed by the president. A White House spokeswoman said any
legislation would be reviewed.
"Right now everyone's at the table," said Ed
Pagano, an aide to Senator Leahy.
Barry B. Direnfeld, a lawyer who represents the Asbestos
Study Group, an association of about a dozen large companies, including
General Electric and General Motors, that strongly favors a trust, said:
"We are close to an agreement. Now we're wrestling with the tough
decisions to make it a reality."
Still, efforts to end asbestos litigation have foundered
in the past, and this plan faces many hurdles. Although they have reached
broad agreement on financing, businesses and insurers have not yet decided
exactly how much each company would pay or how such assessments would be
determined.
Nor has business agreed with labor on how much money the
trust would pay to different types of victims, a factor that will
determine the overall size of the trust.
The A.F.L.-C.I.O. believes that the $90 billion that
companies and insurers have offered is inadequate, said Damon Silvers, the
union's associate general counsel.
Another potential complication is that one of the
biggest beneficiaries of any such settlement could be Halliburton, the oil
services company, which faces asbestos suits that have depressed its stock
price. Because Vice President Dick Cheney was chairman of the company, any
settlement that benefits Halliburton may be criticized by Democrats.
"The trust creates a number of problems, "
said Lester Brickman, a professor at Yeshiva University and an expert on
asbestos who is not involved in the talks. "The complexity of it, the
decisions about who contributes and how much."
But Mr. Silvers said the disagreement over the size of
payments can be resolved. "We can see far clearer than we could a few
weeks ago that there's a meeting point on the financial numbers," he
said. "We think there's a win-win number."
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