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The Facts about the
Asbestos Bailout Bill
The asbestos bailout bill, S. 852, is unfair to victims,
under-funded, and unworkable. Every independent analysis of the
proposed trust fund it would create predicts it is destined to
fail, leaving victims and taxpayers worse off. The bill is opposed
by every major asbestos victims' organization, organized labor,
the insurance industry, and a large portion of the business
community; it is being pushed by a small group of large,
politically-connected corporations that stand to get a $20 billion
bailout.
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Not All Victims Will Be Covered by
the Bill
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While victims in Libby, Montana, where the asbestos was
mined, are covered under the bill, the people living near
asbestos "hot spots" - where the asbestos was
shipped all over the country - are left out of the program
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People exposed and sickened by asbestos in homes and schools
(asbestos insulation is in 35 million homes and thousands of
schools) are excluded from the fund.
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First responders, rescue workers, and residents of lower
Manhattan who were exposed to asbestos in the World Trade
Center collapse on Sept. 11, 2001 and in the months that
followed are excluded from the fund.
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Residents of New Orleans exposed to asbestos during the
cleanup after Hurricane Katrina are left out of the program.
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Asbestos victims with lung cancer who do not also have
non-malignant asbestos-related disease are excluded - despite
the medical consensus that people with heavy asbestos
exposure are at a substantially increased risk of cancer,
regardless of whether they also have asbestosis or pleural
disease.
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Those Victims Who are Covered by
Bill Will Face Long Delays
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CBO Analysis Concluded That Those Covered by Asbestos
Bill Would Experience Long Delays. For those asbestos
victims who are covered by the bill, there will be significant
delays in receiving compensation. The Congressional Budget
Office concluded that the trust fund "would not be fully
operational until at least a year following enactment of the
legislation." While the fund is being established, all
pending claims not already in court would be dismissed, and
victims would have to petition the trust. However, the American
Lung Association has reported that the survival rate for
Mesothelioma victims is about four to 12 months from the onset
of symptoms. [Congressional Budget Office cost estimate for S.
852, 8/25/05, p.6; Mesothelioma Fact Sheet, American Lung
Association, http://www.lungusa.org/site/pp.asp?c=dvLUK9O0E&b=35096]
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Under Current System, Victims Have Their Cases Heard in
Less Than a Year. The vast majority of Mesothelioma
victims, and those with other very serious asbestos-related
cancers, have their cases heard in a year or less. At least 22
states, or jurisdictions within those states, have established
clear procedures to handle these exigent cases as priority
matters. That means that these cases are being heard in
California and Colorado within 120 days; in New York,
Washington State and West Virginia within 6 months; and
generally within one year in Connecticut, Florida, Georgia,
Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts,
Michigan, Minnesota, Missouri, Ohio, Oregon, New Jersey,
Pennsylvania, and Rhode Island. There is also a growing trend
for the state courts and legislatures to establish systems to
preserve the rights of the less ill, while freeing up court
resources to handle the more serious cases.
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The Bill is a Bailout Package for
Asbestos Companies
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Asbestos Bill Would Bail Out the Companies Who
Knowingly Exposed their Employees; Bill Nets Corporations More
than $20 Billion. According to a recent Public Citizen
report, the asbestos bill would create a compensation system
that would have the effect of reducing the asbestos liabilities
of the very companies that knowingly exposed their employees to
asbestos. The report concluded the bill would reduce the
liability of the 10 large asbestos companies by more than $20
billion: "The total contributions on behalf of asbestos
victims paid [into the trust fund] by 10 large asbestos firms,
were they to complete their bankruptcy proceedings under
current law, would drop from an estimated $25.9 billion to $5.6
billion if S. 852 becomes law. This represents a savings of
$20.3 billion, or 78.5 percent, expressed in today's
dollars. On an individual basis, asbestos companies would
effectively see their total payments over the life of the fund
decline by margins ranging from 40.5 percent to 100
percent." ["Federal Asbestos Legislation: And the
Winners are…", Public Citizen, p.3, http://www.citizen.org/documents/master%20report.pdf]
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The Asbestos Trust Fund Created by
the bill is Critically Flawed
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Bates White Analysis Found that the Trust Fund Could
Cost as Much as $695 Billion. An independent analysis
by the Bates White consulting firm of the proposed $140 billion
trust fund in S.852 will fail in its first three years. The
study predicts that the proposed fund will be deluged by a
minimum of claims totaling $300 billion. After the fund fails
in the first three years, it will add $45 billion to the public
debt. This is using a conservative estimate of claims. If
higher levels of victims with lung and other cancers are
compensated, if all of the other categories described above are
not excluded, and more realistic claims estimates are used, the
fund would total as high as $695 billion. [Bates White analysis
of S. 852, 10/17/05,
http://www.bateswhite.com/news/pdf/2005_Bates_White_study_on_FAIR_Act.pdf
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Senators Gregg and Conrad Raised Concerns About the
Bill's "Potentially Serious Costs to Federal
Taxpayers." In a November 14, 2005 letter to
Senate Majority Leader Bill Frist and Democratic Leader Harry
Reid, Senators Judd Gregg and Kent Conrad raised concerns about
how S.852 would impact taxpayers: "There are potentially
serious costs to federal taxpayers from this legislation. S.
852 would create a national trust fund to compensate victims of
asbestos exposures in lieu of those victims pursuing
compensation through the tort system. The legislation was
reported by the Senate Judiciary Committee on May 26, 2005.
There remain, however, major unresolved questions about the
budgetary impact of the bill." [Gregg/Conrad letter,
11/14/05,
http://www.asbestostruth.org/news/2005-11-16_Gregg_Conrad.pdf]
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GAO Report Highlights Serious Problems With Existing
Federal Compensation Programs. A new Government
Accountability Office (GAO) report on existing federal
compensation programs finds major problems in funding
shortfalls and delays for victims that will likely befall the
proposed asbestos trust fund. The GAO report warned that,
"Policymakers must carefully consider the cost and
precedent-setting implications of establishing any new federal
compensation programs, particularly in light of the current
federal deficit." The GAO surveyed the claims and
financial history of four compensation programs through the end
of fiscal year 2004. The programs reviewed were the Black Lung
Program, the Vaccine Injury Compensation Program (VICP), the
Radiation Exposure Compensation Program (RECP), and the Energy
Employees Occupational Illness Compensation Program (EEOICP).
The GAO concluded that in all four programs:
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There have been far more claims than originally estimated
for each program. In fact the Black Lung program has cost
U.S. taxpayers at least $38 billion more than expected.
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Significant delays in completing claims for victims
occurred in all four programs.
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It took at least two years for all four programs to become
fully operational once enabling legislation was enacted.
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Programs have been expanded "to provide eligibility to
additional categories of claimants, cover more medical
conditions, or provide additional benefits."
["Federal Compensation Programs; Perspectives on Four
Programs," The Government Accountability Office,
November 2005]
*** POSTED FEBRUARY 8, 2006 ***
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