Asbestos Firms, Insurers Agree to Fund

Asbestos Firms, Insurers Agree to Fund

Susan Cornwell, Planet Ark/Reuters

16 October 2003

Washington - Asbestos companies and insurers have agreed to divide the cost of a $114 billion fund to compensate people sickened by asbestos, in a deal aimed at jump-starting legislation on Capitol Hill, Senate Republican Leader Bill Frist's office announced yesterday.

The plan, bartered by Frist and his staff between members of a squabbling business community, would end asbestos victims' right to go to court to sue for compensation. Asbestos litigation has already cost more than $54 billion.

Instead of facing litigation, asbestos companies and insurers would finance the fund for victims. Insurers said they would pay $46 billion under the plan, with most of the rest of the money supplied by asbestos companies, although a small amount would come from existing asbestos bankruptcy trusts.

The proposal will go to organized labor officials for input before legislation is taken to the Senate, said aides to Frist, a Tennessee Republican. Labor's support is key to getting the backing of Democrats for the bill in the closely divided Senate.

However, labor's initial reaction was deeply skeptical amid concerns that the funding may be too low, and questions about how other issues such as medical monitoring of people exposed to asbestos would be addressed.

"We haven't been involved in any of these discussions. We'll keep an open mind, but it's extremely unlikely at this point that anything will be worked out," said Jonathan Hiatt, general counsel to the AFL-CIO labor federation.

Asbestos was widely used for fireproofing and insulation until the 1970s, when scientists concluded that inhaled fibers could be linked to cancer and other diseases. Thousands of lawsuits by victims have driven 67 U.S. companies into bankruptcy.

Frist said he was very encouraged by the agreement. "While many details still remain to be worked out, clearly this is a significant and meaningful step forward between two major parties to the larger asbestos negotiations," he said, adding that he would seek bipartisan support.

Frist got involved in trying to barter a deal between feuding parties to asbestos litigation after support for a bill by Utah Republican Sen. Orrin Hatch appeared to be eroding.

Hatch's proposal would have established an asbestos victims fund of $108 billion to $139 billion. Insurers had complained it would ask them to pay too much - at least $52 billion.

American Insurance Association spokeswoman Julie Rochman said insurers agreed to contribute $46 billion under the Frist proposal on condition that the trust would be the exclusive remedy for all asbestos claims - and that lawmakers ditch an amendment to Hatch's bill that would allow victims to return to courts if the fund runs out of money.

Mike Baroody, chairman of the steering committee of the Asbestos Alliance representing asbestos companies, welcomed the agreement as a "positive step."

Organized labor had withheld its support from the Hatch bill, saying the planned awards, as low as $25,000 for an asbestos victim with lung cancer who smoked, were not enough. The question for Frist would be what awards his new proposal would provide for, said Peg Seminario, AFL-CIO's occupational health official.