February 20, 2006
http://www.latimes.com/business/la-fi-golden20feb20,0,834679.column?coll=la-home-business

by: Michael Hiltzik

Asbestos Claims for Cash, Justice

"It was beautiful," Terry McCann told me. "It would come down like silver, a silvery snow."

The retired Orange County business executive and 1960 Olympic gold-medal wrestler was describing the dust that filled the air of the Oklahoma refinery site where he worked in 1957 and 1958. It would settle on his face, his hair, his clothes, sting his eyes, fill his lungs.

This floating, glittering nuisance was asbestos. In April 2005, nearly 50 years later, McCann visited a doctor to determine why he was experiencing knife-like pains in his lungs after a lifetime hewing to a fanatical fitness regime. That was when he learned that the cascades of silvery flecks had bestowed upon him an incurable disease called mesothelioma.

A few months later, McCann, 71, became an asbestos plaintiff in Los Angeles Superior Court, where he sued 21 manufacturers and marketers of asbestos or their corporate successors. Eight were later dropped from the case, and 12 reached confidential settlements. Opening statements in the trial of the sole remaining defendant, Burns International Services Corp., are scheduled for Wednesday.

It's too easy, albeit instructive, to cast McCann as a data point in a woeful statistic: Since the 1960s, more than 750,000 people have filed legal claims resulting from asbestos exposure, according to a study by the Rand Corp., and the growth rate has been picking up steam. Cases of mesothelioma, an aggressive lung malignancy of which asbestos is the only known cause, have been increasing by more than 2,500 a year.

The Rand study estimated that defendant companies and their insurers had spent more than $70 billion through 2002, including $21 billion on their own legal expenses and $49 billion in settlements and court awards, of which the plaintiffs received $30 billion. Meanwhile, more than 70 defendant companies have filed for bankruptcy protection (not all because of their asbestos liability).

Asbestos plainly presents an unprecedented challenge to the U.S. court system. Although insurers and manufacturers knew of its health dangers by the 1930s, asbestos products were used extensively in industrial, commercial and residential construction through the 1970s, exposing people in all walks of life. Because its effects can appear 40 years after exposure, the size of the claimant pool is incalculable.

Litigation in state courts, where most asbestos cases are filed, can have wildly varying outcomes: The average California jury award for mesothelioma is $5 million, says McCann's attorney, Roger Worthington, who specializes in such cases. But one of his clients was recently awarded $34 million. The process also imposes an intolerable burden on plaintiffs who may be terminally ill; one of McCann's depositions was a six-hour ordeal in the presence of 16 squabbling attorneys.

Every attempt to find a solution has fallen short. Consider the 1982 bankruptcy of Johns-Manville Corp., an innovative attempt by a major manufacturer to get a handle on the crisis. The bankruptcy resulted in the creation of a settlement trust whose billions of dollars in assets seemed to be comfortably adequate to pay the 100,000 claims anticipated over its lifetime.

But the trust was quickly overwhelmed. The number of claimants breached the 100,000 threshold in about a year. Soon after, the trust was forced to conserve its resources by slashing payments to 10 cents on the dollar. In 2001, when actuaries warned that it might face as many as 2.5 million more claims, payments were cut further, to 5 cents on the dollar.

Most recently, Congress has gotten into the act, but its efforts to quell the litigation boom also have stumbled. Just last week, a Senate plan to create a $140-billion trust fund with money from manufacturers and insurance companies was killed in a procedural vote. The plan had bipartisan support — and bipartisan opposition. Plaintiffs and their lawyers were concerned that its built-in payment cap of $1.1 million per claimant would leave many victims impoverished by medical costs.

"That would evaporate like water in the desert," Worthington says. Moreover, once the fund was drained, payments to victims would become the responsibility of taxpayers.

Worthington and other attorneys prefer an approach being pushed in the House, which leaves the courtroom doors open to those with the most severe disease and defers lawsuits by those who can't show significant injury, even if they can prove exposure. But that bill could itself render many worthy claims too costly to interest lawyers, leaving victims out in the cold.

Both congressional approaches beg the question of whether it's just to bar the courthouse door to people whose lives have been scarred by a hazardous product that was indiscriminately marketed for decades.

Seated on the couch in his Dana Point home next to Lucille, his wife of 52 years, McCann can still seem the picture of vigor. When he stands upright, his 5-foot-4 frame projects the compact power that won him his gold medal as a 125-pound wrestler at the Rome Games in 1960. It's only when one sees him shamble painfully from one room to the next that the effects 12 courses of chemotherapy have had on his body become outwardly detectable.

McCann recounts his life story in pithy whole sentences, as befits the former CEO of Mission Viejo-based Toastmasters International, a service organization that promotes public speaking as a tool of community leadership.

He grew up in a tough Chicago neighborhood, went to college as a wrestler and supported his wife and two children with the refinery job while training for Rome. (He and Lucille would raise seven kids.)

Over the years, the wrestling teams he coached in his spare time produced 52 national champions. He never smoked, never drank liquor, never drank coffee. He doesn't conceal his bitterness toward the industry that poisoned him.

"I was taught that you run your business in an ethical manner," he says. "If I hadn't seen the documentation that these companies knew what they were doing, I wouldn't have pursued this. But I'm angry."