By Emily Heil

Although prospects for a Senate vote on a trust fund for asbestos victim appear to be dimming, Senate Majority Leader Frist and Minority Leader Daschle are continuing to negotiate and neither leader is publicly willing to throw in the towel.

"Senator Frist and I -- have exchanged a good deal of paper and thoughts on how we can narrow the gap," Daschle told reporters yesterday. "That effort continues, and I'm still hopeful that before the end of this year we could complete our work." Frist was slightly less optimistic, telling reporters that the leaders still have not settled differences on a host of issues related to the proposed trust fund.

The measure under consideration would replace the court system with a trust fund intended to ease congestion in the courts, speed resolution of cases and provide certainty to companies with large asbestos-related liabilities. But the bill has stalled over disagreements over the size and structure of the proposed trust fund. The two leaders have traded proposals in recent weeks, with Frist suggesting a fund as large as $140 billion and Daschle proposing $145 billion.

Frist said the size of the proposed trust fund was not the biggest difference confronting the leaders. Frist is concerned that under Daschle's proposal, some asbestos cases still would move through the regular court system. That would be unacceptable to the businesses whose payments would make up the trust fund, Frist says.

Daschle would not say whether he had responded to Frist's concerns, saying the two leaders would negotiate privately.

The continued negotiations likely are an indication of the high stakes resting on the outcome of the legislative process. A number of companies with large asbestos liabilities are closely watching Capitol Hill. "We saw a significant number of asbestos-related bankruptcies in 2000 through 2002," said Steve Carroll, a researcher for the RAND Corp. "It is speculated that the reason for the drop-off in filings is that some companies are hanging on, hoping that the legislation would ease their problems." RAND estimates that more than 8,400 companies have been named as defendants in asbestos lawsuits.

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Size of Asbestos Trust Fund Appears Resolved as Frist, Daschle Continue Talks

Senate leaders negotiating a proposed multi-billion dollar private trust fund for workers exposed to asbestos said Sept. 8 that the overall size of the fund is all but resolved, and they are now focusing on how to handle asbestos lawsuits that still would be pending during the trust fund's implementation.

"The money is not the issue at this juncture," Senate Majority Leader Bill Frist (R-Tenn.) said at a briefing. But, he added, a proposal most recently offered by Senate Minority Leader Thomas Daschle (D-S.D.) does not halt pending lawsuits from moving forward in court as the trust fund is being set up.

Frist said he has yet to receive a response from Daschle to a July 30 letter, in which he stated, "The business and insurance communities simply are not willing to fund a $140 billion trust and, simultaneously, leave open the tort system as your proposal envisions." Daschle's proposal would allow pending lawsuits to continue in court until the trust fund is fully operational.

Under the proposed trust fund, workers who were exposed to asbestos no longer would be able to sue their former employers and would receive no-fault cash awards based on the seriousness of their medical conditions. Businesses that could be liable for the exposure and the insurers that cover them would pay into the fund for at least 25 years.

Daschle Hopeful

At a separate briefing, Daschle concurred with Frist's assessment that negotiations no longer are focusing on the money paid into the trust fund by businesses and insurers. "Our staffs have exchanged a good deal of paper," he said. "I think there is a way to resolve the remaining issues and that's my hope."

Daschle and Frist are approximately $5 billion apart on the overall size of the proposed trust fund. In June, Daschle had sent Frist a proposal for a trust fund valued at $145 billion. Frist then sent Daschle a counterproposal to create a 30-year trust fund valued at $140 billion.

Both Daschle's offer and the counterproposal from Frist include $4 billion in assets from existing trust funds that would be absorbed into the new trust fund. Under both schemes, the insurance industry would be responsible for $46 billion and businesses would be responsible for $90 billion in payments into the fund.

In his comments, Frist referred to the proposed trust fund as a $140 billion proposal, but Daschle did not confirm that the two leaders had settled on that as a final figure for the overall size of the trust fund.

In July, Daschle acknowledged that some Senate Democrats have questioned whether his proposed $145 billion trust fund would be enough to adequately compensate all the potential claimants to the trust fund. The AFL-CIO has said it only would support legislation to create a trust fund if the fund was at least $149 billion.

But a $140 billion trust fund has the support of at least one Democrat. A compromise asbestos bill floated in August by Sen. Dianne Feinstein (D-Calif.) would create a $140 billion fund. Under that proposal, companies that could be liable for asbestos exposure lawsuits would be responsible for up to $93.75 billion in payments into the fund for 29 years. Insurers that cover those companies would be responsible for $46.25 billion.

*** POSTED SEPTEMBER 9, 2004 ***