Firms seek asbestos claim safety net

Firms seek asbestos claim safety net

Monday, March 28, 2005

By Tracey L. Regan, Staff Writer

One side calls the tidal wave of asbestos claims by former industrial workers an epic tragedy caused by a ravaging disease, while the other side calls it a crisis of litigation.

Since the late 1970s, shortly after workers began suing asbestos-makers for causing them to become ill, companies defending against such suits and their insurers have urged lawmakers to create a federal apparatus to process the claims and remove them from the courts.

Labor unions, trial attorneys and workers have bitterly opposed those plans.

A recent attempt to create a "national solution" to administer asbestos claims by setting up a $140 billion trust to compensate victims and establish criteria for evaluating claims may be introduced in the U.S. Senate this month, people tracking the bill say.

That Republican-sponsored bill, currently in the Judiciary Committee, would set up rules identifying specific industries, occupations within those industries and time periods for what is called "substantial occupational exposure."

It would establish disease levels that would become the basis for compensation, such as five years of cumulative occupational exposure to asbestos for people claiming what it calls a Level 1 non-malignant disease.

Businesses and insurance companies say those criteria eliminate fraudulent claims. Labor groups and trial attorneys say they cut out many people who have been exposed.

In Hamilton, for example, the family members of former W.R. Grace & Co. employees who were exposed to the asbestos that their husbands and fathers brought home daily in their cars and on their clothes would only be eligible for compensation if they had the most deadly diseases.

Another hotly debated provision in the bill is how much compensation smokers would receive. Defending companies and their insurers want to limit those awards while public health advocates say asbestos exposure significantly magnifies the harmful effects of smoking.

Those are controversial provisions and there are Republicans who have expressed misgivings about the bill.

"I'm not confident the funding for the trust fund, as currently proposed, will be able to adequately compensate all injured persons and their survivors, and I am worried that non-occupationally exposed persons might not be eligible to even apply at all," said Rep. Chris Smith, R-Hamilton.

"Children who played in or near asbestos-producing or processing plants, wives who washed their husbands' clothes and nearby residents who breathed in emissions from mining or processing operations - these are all real asbestos exposures that could lead to disease and disability."

What the two sides do not dispute is that the number of people claiming illness and seeking compensation has escalated wildly since the early days when New Jersey-based asbestos maker Johns Manville came to embody the national conflict over the litigation.

A 2002 study by the Rand Corp. reported that 600,000 people had filed claims for compensation for asbestos-related illnesses, costing businesses more than $50 billion by the end of 2000. The study predicted the number of claims would escalate in the coming years.

"We haven't seen the worst of it yet," said Jim Young, spokesman for the New Jersey Work Environment Council. "Most experts project the highest levels of mortality in 2015 because of the intense exposures in the '60s and '70s."

"We feel very strongly that people should be compensated for their medical care and economic losses resulting from illness," said Jonathan Bennett, spokesman for the New York Committee for Occupational Safety and Health. "We don't feel compensation should be discounted."

New Jersey ranks sixth in the nation for the number of people with asbestos-related diseases, according to a review of government data by the Environmental Working Group.

The late New Jersey Rep. Millicent Fenwick was the first federal lawmaker to sponsor such a victim-compensation bill. Johns Manville, a company that has become virtually synonymous with asbestos contamination and declared bankruptcy over legal claims stemming from it in 1982, was in Fenwick's district.

The previous year, the California Supreme Court had ruled that Johns Manville workers could sue the company.

The current bill specifically addresses workers and residents of Libby, Mont., where W.R. Grace mined asbestos-tainted vermiculite for about 30 years. It grants them a waiver from some of the exposure requirements in the bill "because of the unique nature of the asbestos exposure."

W.R. Grace is under indictment for concealing information about the hazardous nature of the ore it mined in Libby, where 1,200 residents are now suffering from some kind of asbestos-related abnormality, according to the U.S. Environmental Protection Agency.

Smith said he is skeptical about the compensation fund bill, "believing that W.R. Grace and a handful of other connected companies who are under criminal investigation should first be required to meet their full liability."

But businesses insist that the government needs to step in to weed out spurious claims. The Asbestos Alliance, a consortium of business groups and companies defending against lawsuits, characterizes the situation as "an asbestos litigation crisis."

"While those who have become sick from an asbestos-containing product certainly must receive compensation, too many people who are not yet sick and may never become ill are filing claims," the group notes, on its Web site.

"If something is not done soon to resolve the asbestos litigation crisis, compensation for the truly sick will be jeopardized now and in the future."

The bill's backers say its chances of success increase as the lawsuits proliferate, naming businesses across industry lines.

"It's gone further than it ever has before - and there have been dozens of attempts - because so many types of businesses are now affected," said Jan Amundson, general counsel for the National Association of Manufactures and chairwoman of the Asbestos Alliance.

Business associations in New Jersey say they are not tracking the legislation. Small business trade groups say they also are paying little attention.

"We really haven't gotten involved," said Bradley Close, manager of legislative affairs for the National Federation of Independent Businesses. "It's a bill that tends to impact bigger businesses."

Close added, however, that the situation could "change down the road," as it did under the national Superfund law when some of the larger companies declared bankruptcy and the government sought to recoup cleanup funds from smaller businesses.

"They went down the food chain," he said.

But even those businesses and insurers advocating government intervention do not agree on some of the most basic provisions in the bill.

Insurance companies, for example, do not support the creation of a trust to which they would be required to contribute, people familiar with ongoing discussions of the bill say.