The election is over and the Democrats lost ground in the Senate, but the asbestos compensation crisis still stalks the nation.
While post-election euphoria drove up the stock prices of asbestos manufacturers (W.R. Grace up 28%, Armstrong Holding up 14% and Owens Corning up 548%!), it is already tempered by the hard obstacles that remain ahead.
Newly-appointed Senate Judiciary Committee Chairman Arlen Specter (R – PA) boldly announced, after a December 6 meeting with all the stakeholders, that he will present a revised bill on January 4, hold immediate hearings and get it to the Senate floor for a vote by the end of the month.
His optimism is unjustified. Despite intense lobbying and debate over the past three years, the key stakeholders have not reached a consensus. Until they do, the political process is stymied.
The bottom line is the sheer scale of the national catastrophe. Worker claims against the asbestos producers and manufacturers – who knowingly exposed their employees to the deadly mineral for decades – will top out above $140 billion. Yet, each claim has to be proven in court, and, in each case, the company is entitled to mount a legal defense. Each case can take years to resolve. With hundreds of thousands of cases, the American court system is overwhelmed.
Most of the caseload has been put on hold while some kind of practical alternative is investigated. Meanwhile, the victims and their survivors remain uncompensated, hampered in pursuing medical treatment or burial costs. At the same time, more than 70 companies, facing unprecedented claims, have filed for bankruptcy. In addition, until final liability is resolved, the manufacturers’ insurance companies face enormous but unspecified obligations.
With so much at stake and no way to resolve the crisis in the courts, everyone has turned to Congress for a bailout.
The obvious answer is an asbestos victims’ compensation fund. In exchange for prompt and adequate payment of claims, victims would relinquish their right to pursue legal action. In exchange for providing the funds necessary to supply basic compensation to all victims, the manufacturers and their insurers would gain relief from legal action against them.
The devil is in the details.
No one knows exactly how much money will be required because the disease develops over a 30-year period after exposure. Potentially, millions of exposed victims are not yet diagnosed. Estimates now run to $200 billion. What happens if the fund runs short?
Justice for victims requires that a shortfall be addressed through additional contributions or by allowing the re-opening of court cases. However, from the point of view of the companies and insurers, a fixed obligation with no possibility of reopened cases is necessary to re-establish financial accountability with their shareholders.
Initial insurance industry reaction to Specter’s timeline was muted. Typical was a remark by a senior financial analyst at Lehman Brothers, “That doesn’t sound like a realistic schedule, given that few of the industry’s concerns brought up over 18 months of negotiations have been resolved.”
The analyst cited two problems – no guarantee that future claims won’t be allowed to require additional contributions and the possibility that claims already filed will go back into the court system should the fund run out of money and be unable to pay.
Specter will face heavy lobbying from the insurance industry, and he already is under pressure from more conservative members of his party who initially balked at his appointment to chair the judiciary committee.
On the other hand, unions, trial lawyers and asbestos victims groups will pressure to ensure justice for victims. As LIUNA General President Terence M. O’Sullivan said in the fall issue of LIFELINES, “It is repulsive that the corporations responsible for the damage and their insurance companies refuse to step up and provide compensation to the hundreds of thousands of workers who have suffered from exposure to asbestos. I can only say this to the U.S. Congress: Let’s get the job done.”