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Published: June, 2004; Vol 1, Num 1

 

Asbestos Compensation Bill Shelved, Again

For the second year in a row, the U. S. Congress failed this spring to reach a compromise to enact legislation to address the nation's mushrooming asbestos litigation crisis. The failure leaves victims, insurers and asbestos manufacturers in limbo as the backlog of liability lawsuits jams the court system, prolongs bankruptcy proceedings and delays payouts to victims, many of whom are severely debilitated and near death.

"Many LIUNA members, retirees and their families are suffering from asbestos-related disease," says LIUNA General President Terence M. O'Sullivan. "We'd certainly like to accelerate their compensation, and a trust fund may be the best way to do that. If so, however, the trust must have the right criteria and enough resources so that all victims get appropriate care. The plans proposed this spring had the backing of insurers and the asbestos manufacturers, but they didn't ensure adequate compensation for the victims."

In 2003, an estimated 10,000 people died of asbestos-related diseases. That number is expected to rise steadily over the next decade as the latency period ends for hundreds of thousands of workers and their families that were exposed to asbestos fibers 20 to 30 years ago, before the government established effective exposure limits.

Through the late 1980s and 1990s, a rising tide of successful lawsuits established the culpability of mining and manufacturing companies in the exposure of workers and their family members. Evidence showed that the companies knew of the danger of asbestos, yet took no action to address it.

As the long latency period of asbestosis passed and more workers were stricken, hundreds of thousands of law suits swamped the court system, delaying decisions and compensation for victims and tying up resources for the companies and their insurers. Already, asbestos litigation has cost the industry more than $54 billion, and nearly 70 companies have sought bankruptcy protection.

The idea of the proposed legislation was to establish a trust fund to compensate victims without further recourse to legal action. The compromise would have set payout limits for victims - thus, saving money for insurers and companies that manufactured or utilized asbestos products - but would have accelerated compensation for dying victims whose court actions, otherwise, face years of delay.

The compromise broke down over two issues: (1) the medical criteria, evidentiary burdens and compensation levels for claimants and (2) who should pay if the initial claim estimates turn out to be too low (the so-called "evergreen" issue).

Though the bill's chief sponsor, Senator Orin Hatch (R - UT) asserted that his bill relies on the same standards and rules as the Manville Trust (a trust set up to settle asbestos claims against the Johns-Manville Company and its affiliates), the AFL-CIO detailed a number of the bill's criteria that were substantially more restrictive than Manville. These would have prevented many workers from filing claims or reduced the awards of many who did (see Former LIUNA Dispatcher Leads Asbestos Fight in Libby).

The question of who should cover any shortfall also was important because utilization projections in other compensation trusts have been far too low. According to the AFL-CIO, "Every projection made by Manville and other trusts has been exceeded, with insufficient funds available to pay victims. Manville now only pays five cents on the dollar of scheduled values due to the number of claims filed."

How much money will be required to honor all claims is a matter of dispute. Under the proposed legislation, insurers and manufacturers would have put in about $109 billion, and a special tax exemption would have allowed the fund to keep all earnings on its investment, making a maximum of about $124 billion available to victims. Some actuarial sources placed the estimate much higher, some as high as $200 billion (Engineering News-Record, May 5, 2003).

One proposed solution, should there be a shortfall, was that the U.S. government would assume responsibility, but, given the tight federal budget, that option gained no support in the Congress.

Since the "evergreen" provision was not resolved and no changes were made to the bill's medical eligibility criteria, the AFL-CIO - despite its support, "in principle, [of] federal legislation that would provide asbestos victims fair and timely compensation through a no-fault system" - urged supporters to write their senators to oppose the legislation. LIUNA joined the AFL-CIO in its stance.

Without passage, victims and defendants remain mired in the court system. The outcome of next fall's election will probably determine the shape of any legislation that may be introduced next year.

[Steve Clark]