Oppose Senate Bill 1125West Olive MI and Wauwatosa, WI
|
March 11, 2004
George Allen
Dear Senator Allen: With all due respect to you and your colleagues who have cosponsored SB 1125, this bill is anything but FAIR. On July 17, 2004, my father was diagnosed with pleural mesothelioma. Upon hearing the diagnosis, I spent many hours on the Internet researching his prognosis and possible treatments. Much to my dismay, I realized he had been handed a death sentence. What was perhaps equally disturbing to realize was that his exposure could have been reduced or avoided had asbestos companies acted in an ethical manner. "Over the years" is quite an understatement of how long the asbestos industry knew about the debilitating and fatal lung diseases caused by asbestos exposure. Asbestos manufacturers and suppliers realized as early at the 1920's that asbestos could seriously harm worker's health (perhaps even earlier). Not only did they not make that knowledge public or do anything to protect worker health and safety, they actively suppressed the information for decades. They placed profits above safety and shareholder interests above their own employees' welfare. I did not expect to find this nor did I go looking for this information. I was looking for information on how to treat the cancer. I believed, as my father did, that nobody knew about the dangers of asbestos until the 1970's and once known, health and safety precautions were rapidly put in place. Nothing could be further from the truth. My father was exposed from the late 50's until precautions were finally enacted in the late 70's, servicing, maintaining, and building 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. My father was a pro-business, anti-regulation Republican all his life. I believe that once he saw this information, he felt a deep sense of betrayal. He always told me 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 corporations placed profits and shareholder interests above all else, the stool could do nothing but tip over. That they are now reaping consequences of their morally bankrupt decisions is only just and FAIR. I believe that it what made him file suit against these corporations. While I agree that asbestos litigation is a mess, the answer to the problem is not to set up another huge federal bureaucracy to settle claims. Of the more than 600,000 people who have brought suits, it is estimated that 60-80% of those are unimpaired claims. 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 serious discussion, only to be replaced by FAIR. I 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. For example, Halliburton recently agreed to settle all pending asbestos claims for about $4 billion, but under SB 1125, Halliburton would pay only about $675 million over 27 years. 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 SB 1125, their payments are capped at $600 million. These are just two examples of how FAIR bails out corporate misconduct. Clearly FAIR is more than fair to industry, but it is fair to those who have really suffered from asbestos related illnesses? While you state 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 a five-member court deal with over 600,000 claims without a multitude of judges 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 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? And while it is true that about "43 cents of every dollar in compensation actually gets to the victim", you and all your other cosponsors know that the average award for seriously impaired victims is well over $2 million, sometimes in excess of tens of millions of dollars. Even if victims only get 43 cents to the dollar from that, it is still more than the highest award of $1 million proposed under FAIR. As for the negative impact of these lawsuits on the economy, 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. A 2002 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. 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 onthe 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. In fact, according recent SEC filings, W.R. Grace, United States Gypsum, Armstrong, GAF, Owens-Corning, Johns-Mannville, and Federal-Mogul were all still in business. All (with one exception) 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 "come back from the dead". What protection did my father (or the thousands of other asbestos victims) have, and why doesn't he get to reorganize and come back from the dead? How do I explain to my almost 3-year-old son, who for the last week has asked me every night before he goes to bed, "Why did grampy die?" Much to my enduring sorrow, I have no doubt his questions will fade as his memory of his grandpa fades. He will not remember how his grandpa loved to make him breakfast every morning, but hopefully he will forget those awful last weeks. I will not nor will my siblings. We deserve the right to be heard. We deserve the right to hold these companies responsible for their morally bankrupt decisions. Please understand, it 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. Doing so will cause (in the words of my father) the "corporate stool" to tip over and they will have to pay the price. FAIR as written sends corporations, exactly the opposite message. "America will not be a better place to live, learn, work, and raise a family" if corporations do not meet their equally important responsibilities to the community, to their employees, and to their shareholders. Sincerely,
*** POSTED ON MARCH 16, 2004 *** |