June 6 letter concerning Senate asbestos compensation legislation from AFL-CIO to Senate Judiciary Committee

Dear Chairman Specter and Ranking Minority Member Leahy:

On May 26, Senator Specter introduced a revised asbestos litigation reform bill, the "Fairness in Asbestos Injury Resolution Act of 2006" (S. 3274). When the Senate considered the last version of this legislation (S. 852) in February, we expressed the view that the trust fund created by the bill would fall short of its promise to fairly compensate the victims of this devastating disease. Unfortunately, the revised bill only addresses one of the objections we raised at the time. Most of the other changes in the revised bill address concerns that have been raised by businesses seeking to reduce their payments into the trust fund and limit their exposure to future tort claims should the fund become unworkable or insolvent.

The AFL-CIO remains deeply dismayed by the bill's start-up provisions, where the needs of victims are a secondary consideration. Like S.852, the new bill places the burdens and risks of the fund's start-up squarely on the shoulders of those who are sick. Under the revised bill, the rights of all claimants to proceed in court are immediately stayed upon enactment. Terminally ill (" exigent") claimants can accept an offer of judgment or payment through a claims facility during the start-up period, or exercise limited rights to continue to file claims with the existing asbestos bankruptcy trusts. However, all other victims, no matter how seriously ill they may be, would be barred from pursuing any remedy until the fund is operational. This could leave tens of thousands of victims with nowhere to go for compensation for as long as 24 months if the operation of the fund is delayed.

In our view, it is unfair to leave victims with serious illnesses without a remedy for up to two years. The uncertainty associated with the start-up of the fund should be borne by those responsible for the asbestos disease crisis -the defendant companies -not by asbestos disease victims. For nearly a year, we have been urging the bill's sponsors to correct this flaw by permitting the asbestos bankruptcy trusts to remain in place to pay claims by impaired claimants until the national trust fund is fully operational. Unfortunately, S. 3274 includes no such provision.

Furthermore, the new bill, like S. 852, unfairly restricts the legal rights of victims with silica disease. It establishes medical criteria for lawsuits by individuals who have both asbestos-related disease and silica-related disease, which would bar many of them from seeking compensation for their silica-related injury. The only recourse for victims of both diseases would be to seek compensation for their asbestos disease from the asbestos fund, which in most cases will be limited to $25,000 for Level II "mixed disease." All victims with silica-related disease, including those who also have asbestos disease, should have the right to seek redress in the courts for their silica injury, with any damages limited to the injury attributable to their silica exposure. In addition, the sunset provisions of the bill remain problematic and may leave the fund with a shortfall that it cannot make up. Further, nothing in the new bill addresses our concern about the overly broad definition of an asbestos claim. The bill is intended to provide an alternative remedy for personal injury claims related to asbestos, and preempts these claims from being pursued in the tort system. But rather than limit the bill's application to such claims, the bill defines asbestos claims very broadly to include virtually any civil actions that are directly or indirectly related to the health effects of exposure to asbestos, and then includes a list of the specific types of claims that are excluded. This overly broad definition of asbestos claims could have the unintended effect of preempting many civil actions "related to" asbestos that are not personal injury claims.

Last February, we urged the Senate to request that the Congressional Budget Office conduct a full review of new infonnation suggesting that future mesothelioma cases, as well as the number of pending claims, may be significantly higher than previously estimated. In the intervening four months, we are unaware of any further analysis that takes into account that new infonnation. As a result, we remain deeply concerned that the fund may be significantly underfunded, particularly in the crucial start-up years.

We acknowledge that some important improvements to the legislation have been made since S. 852 was introduced in April 2005, and the revised bill does correct language in the previous bill that would have nullified otherwise legally binding settlements between plaintiffs and defendants if they were not personally signed by the settling defendant before enactment of the bill. This change should make it more difficult for defendant companies to abrogate those agreements, and we appreciate the fact that our recommendation was adopted.

Throughout the legislative process, our goal has been to craft a bill that establishes a truly workable trust fund that provides fair and timely compensation to asbestos claimants. But this latest draft again fails to fulfill this promise to the victims of asbestos disease.

cc: All members of the Senate Committee on the Judiciary

*** POSTED JUNE 8, 2006 ***