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The Frist/Hatch proposal provides even LESS funding for
victims than S. 1125, and that bill was rejected by all but one
of the Democrats on the Judiciary Committee. Asbestos
defendants and their insurers have reportedly informed Senator
Frist they will only provide $114 billion in funds for an
asbestos trust fund - of which $10 billion would be contingent
funds. That represents $29 billion less in funding than S.
1125. Even the contingency funding mechanism is weaker than S.
1125, because in the Frist/Hatch proposal, contingency funds
would not be available to victims for at least 24 years. S.
1125 contingency funding would begin as early as year 6 of the
fund. Independent analysts from the Congressional Budget Office
(CBO) to the Johns-Manville Trust say that S. 1125 was itself
inadequately funded. Why would Senator Frist propose a trust
fund that offers even less?
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The Frist/Hatch proposal would delay for years
compensating asbestos victims with terminal cancer,
mesothelioma, and other asbestos diseases. Currently
pending claims, and claims expected to be filed once the
Frist/Hatch fund is operational, have an estimated liability of
between $54 billion and $58 billion. Yet, the Frist/Hatch
proposal asks asbestos companies and their insurers to pay only
$5 billion into the fund annually. That means victims with
claims today - even those with claims already settled by
the companies or approved by a court or bankruptcy trust -
could wait as long as 11 years for compensation.
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The Frist/Hatch proposal bails out Halliburton and
others with pending bankruptcies and existing settlements,
while shortchanging victims. Many asbestos defendants,
including Halliburton, have current or pending settlement
agreements with asbestos victims. Yet under the Frist/Hatch
proposal, all payments due to victims under those agreements
would be suspended and the settlements voided. Halliburton, for
example, would pay only a small fraction of the billions it has
already agreed to compensate asbestos victims. No wonder
Halliburton and industry coalitions are so anxious for this
bill to pass.
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Even the sickest asbestos victims receive less under
the Frist/Hatch proposal than under the current tort
system. Supporters of the Frist/Hatch proposal like to
argue their fund will actually provide asbestos victims with
more money to compensate them for asbestos poisoning than the
existing system. Sadly, this is just not true. Even the sickest
asbestos victims - those diagnosed with mesothelioma, or other
fatal cancer, such as lung or stomach cancer - receive only a
fraction of the compensation they could expect from the tort
system. Worse, tens of thousands of asbestos victims with
pleural disease or permanent, regressive lung damage, would be
denied real compensation altogether.
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The Frist/Hatch proposed Trust Fund will not have the
funding to pay the projected claims. CBO predicts
there will be 1.7 million asbestos claims over the life of a
27-year trust fund, at a cost of $136 billion. Even this CBO
estimate has been criticized by some experts for
underestimating the cost of future claims. David Austern, the
General Counsel for the Johns Manville Trust, believes that
"substantially greater funds will be needed to compensate
eligible claimants than the amounts noted in the [CBO]
report." History shows that projections of future asbestos
claims are always low. Yet, the Frist/Hatch proposal does
not even meet the CBO projections, virtually guaranteeing
that future claimants will be left out in the cold.
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There is no guarantee that the funding in the
Frist/Hatch proposal will be collected and paid to asbestos
victims. To date, the list of companies that will
contribute to this trust fund is a secret. Even CBO could only
identify approximately 1,000 of the roughly 8,000 companies
that industry coalitions claim to be a part of the plan. There
is no minimum contribution level required, there is no joint
and several liability, there is no transparency at all in the
funding system. Even worse, the insurers' liability is
fixed, so if one insurer fails to make its payments, nobody is
required to make up the shortfall to the victims. No money, in
fact, is guaranteed. Even the CBO report warns - "The
revenue stream that would be generated by the legislation is
highly uncertain…"
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The "unimpaired" victim is a myth -
perpetuated by the asbestos and insurance industries.
Proponents of the Frist/Hatch proposal claim the majority of
funds paid in asbestos cases go to individuals who are not sick
- the so-called "unimpaired" - yet, nothing could be
further from the truth. According to experts, that even the
asbestos defendants and their insurers themselves rely on in
court, minimal exposure to asbestos fibers can lead to long
term health problems. The life insurance industry has denied
life insurance benefits to victims of asbestosis for
decades - yet today, insurers want to claim these victims
are "unimpaired."
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The Frist/Hatch proposal places the entire risk of fund
insolvency on the victims. In a bipartisan agreement,
Senator Biden amended S. 1125 to ensure that any risk of the
Fund running out of money not fall on the backs of innocent
victims and their families. The Biden agreement would sunset
the Fund, allowing victims to pursue their rights in the civil
justice system, if the Fund is insolvent. The Frist/Hatch
proposal butchers the Biden amendment, by taking away
victims' state tort rights, and forcing them to return to
Federal court, in a new court system with defenses for
companies, hurdles for victims and restrictive medical
criteria.
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The Frist/Hatch proposal leaves victims with a stacked
deck under an unfair legal process, after the underfunded
"fund" runs out of money. If the Frist/Hatch
Fund runs out of money, asbestos victims would be barred from
using the state court system to seek compensation. Instead,
they would be forced into federal court, where they would face
far more restrictive rules than they face in the court system
today. First, victims would have to qualify under new and
untested medical criteria and then if they met the criteria,
their compensation would be capped.
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The Frist/Hatch proposal is NOT a "no-fault"
system. Under a true no-fault system, all workers with
the same disease get the same compensation without having to
prove fault. Under the Frist/Hatch proposal, smokers with lung
cancer and other deadly asbestos-related disease are penalized
and receive less compensation.
-- provided by the American Trial Lawyers Association, March 25,
2004
*** POSTED MARCH 26, 2003 ***
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