AFL-CIO, Shut Out from Talks, Rebukes New Funding"Agreement" as "Grossly Inadequate"

October 16, 2003

Dear Senator:

I am writing to convey to you the AFL-CIO's deep concerns about the reported "agreement" on funding for asbestos compensation legislation that has been reached between asbestos defendant companies and their insurers. The $115 billion funding agreement provides far less funding than S. 1125 as reported out of the Judiciary Committee. In our view, this level of funding is grossly inadequate to provide fair compensation for victims or any certainty that claims will be paid. We want to make clear that the AFL-CIO has not been involved in any of the discussions on this funding proposal and will strongly oppose any legislation that fails to provide fair, timely and certain compensation for asbestos victims and to remedy the other major deficiencies in the reported bill.

The funding agreement reached by the defendant companies and insurers is a major step backwards. The asbestos legislation as reported by the committee provided $104 billion in base contributions and $45 billion in contingent funding to be split equally between insurers and defendants, with a total funding of $153 billion. The new agreement of $115 billion total funding provides similar base funding, with a greater share borne by defendants, but limits contingent funding to $10 billion to be paid only by defendants. The terms of this agreement are inadequate to cover the costs of expected disease claims, which the Congressional Budget Office has recently estimated to be $136 billion for S.1125 as reported, let alone to cover the costs if the number of claims exceed projected estimates. Moreover, the CBO estimate is for the inadequate, unfair claims values in S. 1125 as reported. It is unclear how the level of funding in the new agreement can fund claim values that are fair for victims.

The AFL-CIO has made clear that in addition to fair and timely compensation for asbestos disease victims, there are other key issues that must be addressed in any federal asbestos compensation legislation. These include: (1) the inadequacy of mandatory "front-end" funding by businesses and insurers; (2) the back‑end solvency of the Fund; (3) the need for a truly non‑adversarial, no‑fault administrative system to process claims, with an impartially selected and impartially functioning Medical Advisory Committee; (4) the separate treatment of pending claims and settlements; (5) the need for medical screening of high risk workers; and (6) exclusion of FELA‑covered employees from the scope of this law. These issues have not been addressed in this current agreement, and it appears that there may be attempts to seek an abrogation of agreements reached by the committee including those on collateral source offsets and a return to the current tort system if funding proves inadequate to pay claims (the Biden amendment).

The AFL-CIO has indicated from the outset that we support efforts to adopt asbestos compensation legislation that will improve the system of compensation for victims of asbestos disease. We have attempted to play a constructive and responsible role in this process, and will continue to do so. But we will strongly oppose any efforts to pass S. 1125 as reported, a bill that incorporates this latest inadequate funding agreement or any legislation that does not provide fair, timely and certain compensation to asbestos victims.

Sincerely,

William Samuel, Director
DEPARTMENT OF LEGISLATION

*** POSTED ON OCTOBER 16, 2003 ***