Asbestos Victims Get Relief in Senate Judiciary Vote

Published June 27, 2003

Greg Gordon

Star Tribune Washington Bureau Correspondent

WASHINGTON, D.C. -- The Senate Judiciary Committee on Thursday moved another major roadblock to a legislative settlement of all pending and future asbestos injury claims, voting to require industry to pay as much as $135 billion over 27 years.

But the panel stumbled when confronted with the last impediment to a bipartisan deal: how much cash an asbestos trust fund would award victims of several categories of lung diseases.

The payment formula, which will determine the true price, represented the biggest test of whether months of negotiations between organized labor, corporate defendants and insurance companies would yield results.

Utah Sen. Orrin Hatch, the committee's Republican chairman, implored his colleagues to reach consensus on a "no-fault" system, pointing to 67 companies already in bankruptcy protection because of a flood of asbestos injury claims.

"If we don't get this done, we could see thousands and thousands of people never get a dime -- and if they do, it could be pennies on the dollar," he said. A settlement deal would compensate victims swiftly and fairly, he said.

But committee Democrats complained that Hatch's proposed payment formula offered too little cash to current and retired workers facing disabling or terminal illnesses from breathing the microscopic fibers 10 to 40 years earlier.

Sen. Richard Durbin, D-Ill., said the legislation amounted to "a windfall" for corporate defendants such as the Halliburton Corp., citing an analysis that concluded its asbestos liabilities would shrink from more than $4 billion to $420 million. He said a number of defendant companies' share prices have moved sharply higher as the committee has progressed toward a deal.

Sen. Dianne Feinstein, D-Calif., warned that Hatch would fail to get a filibuster-proof, 60-vote Senate majority unless he increased the compensation.

Hatch said, however, that many companies are on the brink of bankruptcy and that no one should "try to gouge."

The two sides negotiated into the night on payments for diseases ranging from mesothelioma, a rare, fast-moving cancer of the lining of the lungs for which no cure has been found, to lung cancer and disabling asbestosis.

Hatch originally proposed creating a $108 billion, industry-financed trust fund, financed largely by two pools of $45 billion -- one from defendant companies, the other from insurers.

But AFL-CIO officials had denounced the measure, warning that if the funds were exhausted after 27 years, thousands of victims could be left without money or recourse.

Much of the difficulty revolves around uncertainty over how many asbestos claims will be filed in the future. To date, an estimated 700,000 people have sued in state and federal courts, including 100,000 in each of the last two years. But nearly every projection of future claims has been low.

The AFL-CIO estimates that as many as 27.5 million American workers have been exposed to the invisible fibers, which can produce deadly diseases decades after they become embedded in the lungs.

An analysis by the investment banking firm of Goldman Sachs, which has provided computer modeling during the negotiations, projects that another 1.2 million workers will file claims.

Feinstein and Herb Kohl, D-Wis., scored a breakthrough in the negotiations, winning approval of an amendment under which progressive reductions in corporate contributions would be delayed if the trust fund lacked enough money to pay claims.

Differences over the compensation formula were wide except for people with the most severe disease, mesothelioma, which is almost always attributable to asbestos exposures. Mesothelioma took the life of Rep. Bruce Vento, D-Minn., in 2000, apparently because of exposure when he worked in Twin Cities factories 30 years earlier.

Hatch and Sens. Lindsey Graham, R-S.C., and Mike DeWine, R-Ohio, proposed paying $1 million to an estimated 2,000 to 3,000 mesothelioma victims each year. An alternative proposal offered by the panel's ranking Democrats -- Vermont Sen. Patrick Leahy and Massachusetts Sen. Edward Kennedy -- would pay those victims $1.1 million.

Hatch and his colleagues' formula would pay as much as $600,000 for lung cancer victims who have serious "asbestosis" that greatly restricts their breathing and $100,000 to $400,000 to lung cancer victims with less severe asbestosis.

The committee adjourned Thursday night.

Hatch and Leahy said they were "very close" to agreement on a compromise compensation formula, though Hatch also said there had been "very heated arguments" in closed-door negotiations.

Hatch said the parties would negotiate during the July 4 recess and reconvene July 10.

Greg Gordon is at ggordon@mcclatchydc.com.

** POSTED JUNE 30, 2003 **