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GOP-backed legislation touted as necessary to keep lawyers from raiding funds set up for people suffering from asbestos poisoning is coming under fire from public health advocates who say the proposal will only create hurdles for victims of diseases like Mesothelioma.
The dispute centers on roughly 60 trusts with nearly $40 billion in assets set up to compensate people sickened by the mineral fiber linked to cancer.
Though both sides agree victims should be compensated, Rep. Blake Farenthold (R-Texas) said the system’s limited funding needs to be protected by legislation that’s now moving through the House.
“When trusts are out of money, future folks who were exposed aren’t going to have a remedy,” he said. “There won’t be any money to help them with their medical bills.”
The funds were created in the mid-1990s, when the bankruptcy code was amended to allow asbestos manufacturers filing for bankruptcy to create trusts to compensate people poisoned by asbestos.
But Farenthold said unscrupulous attorneys, on behalf of victims, are filing claims with multiple trusts and double-dipping in the limited coffers.
He has reintroduced the Furthering Asbestos Claim Transparency, or FACT Act, which appears to for the first time have a chance at passing Congress with Republicans in control. The House Judiciary Committee approved the bill last week by a 19-9 vote and Sen. Jeff Flake (R-Ariz.) has introduced a companion in the Senate.
But Alex Formuzis, a spokesman for the Environmental Working Group’s Action Fund, said the bill was written by business groups — Koch Industries Inc. and the U.S. Chamber of Commerce, in particular — in an effort to delay compensation claims and run out the clock on those who are currently ill and seeking redress.
“A lot of companies that still exist and still use asbestos products are behind this effort,” Formuzis said. “If this bill were to become law companies in litigation could request information from any trust, which would force the trust to process these information requests and burn through resources to do so instead of spending time administering claims.”
The bill would also require asbestos trusts to report the claims they receive quarterly in a publicly accessible database. But because victims filing claims with asbestos trusts often seek compensation from additional companies through litigation, attorneys say the bill will make it easier for companies to defend themselves and place the blame on those companies that have already gone belly up.
“The typical asbestos victim has been exposed to multiple products and environments, so there are multiple entities responsible,” said EWG’s Action Fund Attorney Reade Wilson. “It’s very common, like other tort action, to file claims with multiple trusts and there is nothing illegal or double-dipping about it. The trusts only pay the portion of the claim attributed to their responsibility.”
The Chamber of Commerce, a major supporter of the bill, however, pointed to the case against gasket maker Garlock Sealing Technologies as evidence of systemic fraud in asbestos litigation.
In the case, asbestos victims wanted Garlock to create a $1 billion trust for current and future victims. But the company claims anyone exposed to their long-ago products were also exposed to products manufactured by other companies. They argued that the plaintiffs’ lawyers had manipulated the company into overpaying settlements by withholding evidence showing the claimants had in fact been exposed to other manufacturers’ products, according to a Reuters report.
“Exploitation of the system drains the funds available to deserving claimants and forces solvent companies, as well as their shareholders, to pay more than their fair share when plaintiffs’ lawyers file ‘double dip’ claims in court and in the trust systems,” Lisa Rickard, president of the chamber’s Institute for Legal Reform, said in a statement. “The FACT Act would diminish the damaging economic ripple effect of these abuses, while preserving assets for future asbestos claimants.”
Representatives from Koch Industries Inc. could not immediately be reached for comment to address claims they are behind the legislation.
Advocates argue that industries' claims of fraud are unfounded.
They point to a 2011 Government Accountability Office (GAO) examination of asbestos trusts. The study found that of the 98 percent of 52 trusts reviewed required audits. Of 11 trust officials interviewed, GAO said none indicated their audits had identified any cases of fraud.
The report also found that most trusts are unable to pay the full value of claims and instead pay victims a fraction of what they’re owed. The report said trusts had paid about 3.3 million claims valued at about $17.5 billion through 2010.
In the U.S. alone, asbestos related disease account for 12,000 to 15,000 deaths a year.
“I don’t ever hear people talk about the plight of the asbestos victims,” said Linda Reinstein, whose husband Alan died of Mesothelioma nine years ago. “What does bankruptcy look like for us? What do the medical bills look like for us?”
Reinstein, who is fighting for legislation to ban asbestos, said victims don’t support the FACT Act.
“Why would we want Congress to pass a bill to defend, negate and reduce liability for those that caused this man-made this disaster?” she said.
Reinstein, however, said she believes the legislation could pass, now that Republicans control both chambers of Congress.
“We are seeing bills move at the speed of sound,” she said. “I’ve never seen bills marked up and voted out of committee at this speed. It’s threatening on a lot of levels, but I believe in truth and justice. Lawmakers will have to listen to constituents and understand that the special interest groups' bill must fail.”
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