Oppose Senate Bill 1125 West Olive MI and Wauwatosa, WI
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April 20, 2004 To the Senators and people of the United States of America: On April 7, 2004, Senators Frist and Hatch introduced to the Senate floor S.2290, the Fairness in Asbestos Injury Resolution Act, with the cruelly ironic acronym of FAIR. No major news network covered this event and few news outlets have notified our country of, in Mr. Hatch's own words, "one of the most important bills in our country at this time." (Congressional Record, S3922). We are aware of it only because we have followed this legislation closely for the last year, since our father was diagnosed with malignant mesothelioma on July 17, 2003. Upon hearing the diagnosis, we spent many hours on the Internet researching his prognosis and possible treatments. Much to our dismay, we realized there were few effective treatments and little hope - he had been handed a death sentence. What was equally disturbing was to discover that his exposure could have been reduced or avoided had the companies that mined, manufactured and installed asbestos products acted in an ethical manner. The asbestos industry knew about the debilitating and fatal lung diseases caused by asbestos exposure for decades before the knowledge was made public in the early 1970s. Asbestos manufacturers and suppliers realized as early as the 1920s that asbestos could seriously harm worker's health (perhaps even as early as the late 1800s). Not only did they not make that knowledge public or do anything to protect worker or public health and safety, they actively suppressed the information for decades. They placed profits above safety and shareholder interests above their employees' welfare. We did not expect to find nor did we go looking for this information. We were looking for information on how to treat the mesothelioma (a rare cancer caused almost exclusively by internal exposure to asbestos). We believed, as our father did, that nobody knew about the dangers of asbestos until the 1970s and once known, health and safety precautions were rapidly put in place. Nothing could be further from the truth (visit www.egilman.com for thousands of documents verifying this claim). Our dad was exposed from the late 50s until some precautions were finally enacted in the late 70s. His exposure came from building, servicing, and maintaining, power plants around this country. Had the asbestos industry "come clean" when they first knew about the potential dangers of their product, he would still be alive today. Our father was a pro-business, anti-regulation Republican all his life. We believe that once he saw the information about what the asbestos industry knew and when they knew it, he felt a deep sense of betrayal. He always told us that a corporation was like a three-legged stool, supported by the employees, the shareholders, and the community in which it does business. When the asbestos industry placed profits and shareholder interests above all else, the stool could do nothing but tip over. That these corporations are now on trial and reaping the consequences of their morally bankrupt decisions is only just and FAIR. While we agree that asbestos litigation is a mess, the answer to the problem is not to set up another huge federal bureaucracy (funded by inadequate contributions from industry and their insurers over the next 24 years) to settle claims, as FAIR proposes to do. Of the more than 600,000 people who have brought suits, it is estimated that 60-80% of those are unimpaired claims (i.e. documented exposure with no documented impairment). A 2002 RAND report indicates that most litigation expenses are due to pursuing these unimpaired claims in court. Clearly, the simplest solution would be to set up an unimpaired asbestos claimant registry as proposed by Senator Nickles of Oklahoma last year. Individuals exposed to asbestos, but with no functional impairment, could register and preserve their right to file suit if they should develop serious illness in the future. Deciding who is impaired may be a difficult process, but FAIR is not immune to the problem either as medical criteria will have to set up to define the various classes of injury and the settlement they should receive. Mysteriously, this reasonable proposal vanished quietly without any serious discussion, only to be replaced by FAIR. We can only wonder if it vanished because corporations would still be liable for future damages, while under FAIR they will only have to pay a fraction of potential damages into the trust fund. Is it "FAIR" that Honeywell would be able to renege on a $2 billion pending settlement and pay only $25 million a year for 24 years thereby reaping a reward of $1.4 billion. Halliburton (a corporation recently in the news for over billing the government for services not provided in Iraq) is another beneficiary of passage of this legislation. Halliburton would walk away from a $4.2 billion pending settlement and would pay only $25 million a year for 24 years. That is A PROFIT OF $3.6 BILLION. Essentially, Halliburton could bank the $4 billion and pay into the fund on interest. Armstrong has agreed to pay $1.9 billion of it net present value to its bankruptcy trust; under S2290, their payments are capped at $600 million. These are just a few examples of how FAIR bails out corporate misconduct. Clearly, FAIR is more than fair to industry. But is it fair to those who have really suffered from asbestos related illnesses, to the people who struggled to breathe as they were being crushed to death from the inside out? While Mr. Hatch has stated that under FAIR "victims will get compensation much quicker than under the current backlogged and broken system", that is hard to believe. Considering that the federal government is known for long delays in just about any process, the estimated range of time before anyone would receive compensation from the fund is from two to eight years. And how exactly would the proposed five-member court deal with over 600,000 claims without a multitude of clerks and medical claim examiners. Talk about an "elephantine mass"! Even with this help, it would take the Asbestos Court years to wade through all the current claims. Each judge would have to decide over 450 cases per week to clear the current docket in 5 years (unlikely at best!). How is this better than the current system? We were given a trial date in less than a year in a state known for its backlog of asbestos cases And while it is true that about "43 cents of every dollar in compensation actually gets to the victim", the remainder is not going only to plaintiff lawyers, as Mr. Hatch would like you to believe. It is almost evenly split between plaintiff and defendant lawyers and costs would likely be significantly lowered if unimpaired claims were removed from the court system. Furthermore, the bill does not provide a clear "net monetary gain for legitimate victims". The highest award proposed under FAIR, for the most devastating of diseases, mesothelioma, is $1 million. According to the 1992 Rand Institute study that Mr. Hatch is so fond of citing, the average award for mesothelioma in 1999 was $6 million and for asbestosis, a less serious but often fatal illness, $5 million. How is that a "net monetary gain"? Even if victims only get 43 cents to the dollar, it is still more than the highest award of $1 million proposed under FAIR. Mr. Hatch makes a great deal about the "enormous" negative impact of these lawsuits on the economy, but the overall effect is highly debated. Money received by victims (or more likely their heirs) does not disappear from the economy (nor will it likely be shifted to foreign subsidiaries to avoid paying taxes as many corporations do!). The recipients will save, spend, and invest their settlements, perhaps in more socially responsible corporations or even in their own businesses. The RAND study conceded that while asbestos litigation certainly costs jobs and investment in certain industries, it was difficult to determine the overall impact of asbestos litigation on the economy. Mr. Hatch cites a figure of an eventual 432,000 jobs lost due to asbestos litigation. However, these are not actually jobs lost, according to the RAND study, but jobs not created. In fact, to date, it is estimated that the total job losses from bankruptcies related to asbestos litigation range from 60-70,000. Compare that to the total number of jobs lost due to the passage of NAFTA in 1994, which according to the Department of Labor is in excess of 500,000. Outsourcing is by far a bigger threat to the manufacturing base of this country than asbestos litigation ever could be. According to a report in the Wall Street Journal, by 2015, 1.7 million jobs in the office sector alone (real jobs, not jobs that have never been created) will be lost in the United States due to outsourcing. But that is simply the way to do business now, and business apparently rules America. Certainly, many businesses have gone bankrupt with negative effects for employees and shareholders. But how, in 1998, did Johns-Manville buy 3.6 million shares from the Manville Personal Injury Trust, because according to CEO Jerry Henry "given our strong cash position, we believe repurchasing shares represents an opportunity to increase shareholder value ... Johns-Manville receives a tax deduction when the Trust distributes proceeds from its ownership of company stock to a settlement fund. These deductions will lower our effective tax rate, resulting in increased earnings of approximately 8 cents per share." At the same time, the Manville Personal Injury Trust was awarding only 5 cents on the dollar for asbestos claims. How did Owens-Corning pay former CEO Glen Hiner over $3.45 million in compensation (not including stock options) in 1998, just a few years before filing for bankruptcy? How did W.R. Grace CEO Paul J. Norris earn in excess of $5.5 million dollars (again not including stock options) in 2001-2002. And how is it that W.R. Grace was able to hide an estimated $2 billion of assets in new companies it set up before filing for bankruptcy, including Sealed Air Corporation. Sealed Air Corp. did end up settling with the bankruptcy court, returning $1 billion in cash and stocks, but only because the court was filing suit against it for concealing assets (Schneider and McCumber, 2004). In fact, most of these corporations (W. R. Grace, Halliburton, Dow Corning, Union Carbide, Honeywell, Armstrong, etc, etc, etc…) still exist in one form or another today. They are still making a nice, healthy profit (and sheltering their profits offshore out of the reach of the taxation system - the same taxation system that will be called upon to fund this bailout once the meager contributions of the industry and their insurers are exhausted by the current and future claims). While most people believe bankruptcy means "out of business", a Chapter 11 bankruptcy does not mean the doors close and the company ceases to exist. According recent SEC filings, W.R. Grace, United States Gypsum, Armstrong, GAF, Owens-Corning, Johns-Manville, and Federal-Mogul all (except one) have increased sales, and have the same or greater number of employees than before they filed for Chapter 11 protection. Asbestos companies that file for protection under Chapter 11, get to sell product and earn profit while they reorganize and rise from the "dead" - a chance our dad and the hundreds of thousands of other victims do not get. And if any of these corporations do happen to end up in Chapter 7, real bankruptcy, if there is a demand for the products and services provided, another company will step in to fill the void- that is the beauty of capitalism. And maybe, just maybe, these new corporations will be better corporate citizens - ones who realize that corporations do have moral and ethical obligations to their workers and to the communities in which they operate. Do you ever wonder why there are so many corporate scandals these days? The majority of corporate CEOs seem to feel they have no moral or ethical obligations to their employees or the community (or country) at large. These current corporate leaders are the direct heirs to the corporate leaders of the 20's- 60's, who made the decisions to put profits ahead of the welfare of their workers and the public at large by suppressing the information that asbestos is an extremely dangerous substance and that it kills. If this legislation is approved, we are sending a message, loud and clear, to the leaders of corporate America that they can do whatever they want. They can harm the citizens of this country and the world and they will not be held responsible - the government will step in and bail them out (at taxpayer expense). If you think the corporate scandals of the past couple years were appalling, pass this legislation and see the corporate malfeasance you will reap. It will validate the cynical belief of many Americans, that this country is no longer run by and for the "people", but by and for "corporations". While Senator Hatch repeats over and over again that this bill is a "fair and efficient" solution to the asbestos litigation mess, it is neither. And nowhere is there any mention of justice. Every day and night, we relive the nightmare of watching our father literally be crushed to death from the inside out by a giant tumor growing only because he had the misfortune of working in an industry that exposed him to asbestos. He deserved to know the risks he was taking and to make an informed choice about the work he would do and the protection he would need to do it safely. That choice was taken from him and countless others by corporations that willfully and knowingly suppressed information about the adverse health effects of asbestos exposure for decades all in the name of "what's good for business." We deserve the right to hold these companies responsible for their morally bankrupt decisions. We deserve our day in court as guaranteed by the 7th amendment to the Constitution of the United States of America. The passing of this bill will abrogate our rights and will set precedent for all future cases of corporate negligence. Please understand, this is not about the money. No amount of money can compensate us for our loss. But we want a message sent to corporations, stating clearly and unequivocally, that they cannot place profits and shareholder interests above the health and safety of employees; that doing so will cause (in the words of my father) the "corporate stool" to tip over and they will have to pay the price. Passage of FAIR will send corporations exactly the opposite message. Defeat of FAIR will perhaps open the eyes of the leaders of corporate America and perhaps we can avert the next "asbestos crisis" This legislation is not good for the victims and their families, it is not good for the economy, it is not good tort reform. Its only purpose is to provide a government bail out of an industry that criminally put profits ahead of everything This legislation is not right - this legislation is not "FAIR" and this legislation does not represent the America that we thought we lived in. We urge all of you to seriously consider the ramifications of this legislation for the country and all we stand for. Are we a country run "by the people, for the people" or are we a country run by and for corporations? Are we nation whose bottom line is profit? This vote will play an important role in the future shape of American life and politics. Choose wisely! Sincerely, Elizabeth A. Platz, Cynthia Platz Thompson, and Victoria M. Platz, daughters of Huberto R. Platz, deceased from malignant mesothelioma August 29, 2003
*** POSTED ON APRIL 20, 2004 *** |