Early Analysis of the Specter Draft Asbestos Bill - Courtesy of ATLA

Non-Exigent Claims:

The Bill stays for two years mesothelioma and cancer wrongful death cases where families and dependents have sustained serious financial losses and hardship. At that point, the claimants can return to the tort system if the Fund is not ready to pay them, but they have to restart a lawsuit that may have been close to conclusion at the time of enactment, but which will then be stale. Even if the Fund is paying after two years, the claimants could be required to wait 3-4 years for payment under the scheduled payout.

Exigent Claims:

The Bill stays these claims for nine months even though many of the claimants will die during the stay. Even if they survive nine months, there may not be enough time to reinstitute the case and bring it to conclusion prior to death. This is particularly true because the claimants will be unable to take any action within the nine months to preserve their claim, such as taking a video deposition of the injured party. The special provision for exigent claims that allows them to avoid the stay by tendering within 60 days a demand to the defendants for payment of the Trust Fund amount is simply not workable. In most cases there are multiple defendants and the proposal requires them to work jointly to agree on funding or to choose to fund the entire amount individually. Many or most defendants will not be prepared financially to step in the shoes of the trust and voluntarily pay the Trust Fund amount; even if they are given a future credit for such payment. Further, the 150% limit on recovery in the tort system when the defendants fail to make an offer equal to the Resolution Fund amount is an insufficient disincentive for allowing claims to return to the tort system.

Instead of actual funding, the Bill sets forth a process whereby the Administrator and the insurance commissioner place defendants in tiers and assesses insurer shares. Each defendant and insurer has the right to hearings and can appeal its tier placement and share assessment. Because the bill is opposed by many companies and insurers, contests and appeals over funding are virtually guaranteed; meaning it will take several years before funding issues are resolved and funding is in place. There will certainly be constitutional challenges by insurers who are assessed shares independent of any coverage liability and companies are placed in tiers regardless of actual future tort liabilities. At this point, no one knows how it will all add up, but in the interim (and maybe permanently) there will be funding shortfalls. Further, the borrowing provisions that were designed to help with initial funding shortfalls have been essentially neutered in the new draft because the federal government has no liability for any loans and no other liability under the Fund. Instead, the front end and later shortfalls are limited by borrow capacity that prevents the Fund from borrowing more than the available Fund assets and the amounts expected to be paid by participants over the subsequent 10 years. However, if initial funding is delayed by substantial company and insurer appeals, this limitation could preclude adequate borrowing.

The Bill appears to provide a sunset provision if the Administrator concludes that the fund will not be able to pay claims as they become due. However, the proposed provisions provide the Administrator with a number of victim unfriendly alternatives to sunsetting the Act. The Administrator can change the diagnostic or medical criteria, or change the enforcement or application of those criteria, or change the timing of payment, or change the amount of award values, etc. All of these would have the effect of watering down or even eliminating compensation for victims. These alternatives put Bill supporters in the position of agreeing in advance to a system of diluted compensation that they would never agree to at the enactment stage. It seems likely that the Administrator, whose job is to run the Trust, will be inclined to reduce values or impose more onerous diagnostic and medical criteria rather than sun-setting the Act. Victims are not protected when the Fund runs short of money and the alternatives include decreasing or extending payments or even eliminating payment by changing the criteria. Worse yet, the Administrator is not even in a position to select and implement these alternatives. Instead the matter is referred to a cabinet level commission, or their designees, who then make recommendations to Congress, which need not act within any specified time frame if at all.

The Specter Bill is a criteria bill excluding all mild asbestos disease victims from compensation.

Claimants with milder asbestos disease, the majority of all asbestos victims, get nothing but medical monitoring under the Specter Bill. Through 2002, claimants in Nonmalignant Level I (Sec. 121, p.76) accounted for 262,308 of 504,832 total claims paid by the Manville trust, 51.9 % of all claims. They received 568 million of the 2.88 billion paid out by the trust, or almost 20% of the total (See, memorandum and order by Judges Weinstein and Lifland, Dec. 27, 2002). These claimants, the majority of asbestos victims who now have access to the courts to seek compensation, will get nothing but a chest x ray under the Specter Bill.

Under the bill, asbestos victims with these cancers who do not also have non-malignant asbestos-related disease are excluded and get nothing, despite of a medical consensus that people with heavy asbestos exposure are at a substantially increased risk of these cancers, regardless of whether they also have asbestosis or pleural disease. Despite the well-documented explosive risk of combining these two carcinogens, smokers with cancer are penalized under the bill and get nothing unless they also have non-malignant asbestos disease.

Even the mildest asbestos disease claimants from Libby Montana receive at least 400,000 dollars, while the basic asbestosis victim from anywhere else only gets 25,000 dollars, if he or she qualifies at all (most do not) (See, Section 121, p.90 and section 131, p.91). This is unfair to other former asbestos mine and plant workers.

Non-Malignant Disease.

Lung Cancer.

Asbestos-related FELA claims, previously excluded from the bill, have now been included. The Bill requires a lengthy, ponderous arbitration to determine the values these claims will receive (See, section 131, p. 93-100).

After waiting what is likely to be months or years for the fund to start paying claims, and months or years more while the administrator wades through the thousands of pending claims, a claimant who is approved will have to wait years more to be compensated fully through the fund. The bill provides at least three and as much as four years for an approved claim to be paid, unless the claimant is alive and suffers from mesothelioma or is otherwise deemed "exigent

If an asbestos victim has received all or part of their scheduled award in the tort system before the fund becomes operational, the fund gets a credit for any previous settlements. If a victim has received at least the scheduled amount from some of the defendants in their lawsuit before the bill's passage, the remainder of the claim against other, solvent, responsible defendants is completely offset and wiped out by the Specter Bill. The remainder of the claim is worthless once the bill becomes law. This is an unlawful taking of property.

A number of victims have settled claims with defendants in the tort system and are counting on payment of those settlements to pay their medical bills and take care of their families. Although the Bill suggests that final settlements where the only remaining act is payment will be honored, the proposed language carves out most torts settlements by requiring that a written settlement agreement be signed directly by the defendant or the insurer.