- The Washington Times - Tuesday, October 17, 2000

For years, there has been widespread recognition that the tort system is failing asbestos victims as well as the growing number of companies targeted in asbestos suits. This past March, the House Judiciary Committee approved "The Asbestos Compensation Act of 2000" legislation that would finally reform out-of-control asbestos litigation.

The bill would provide victims with fair and timely settlements while ensuring that company resources are not drained by illegitimate claims. The legislative clock has all but run out on moving the reform bill through Congress this year, which is bad news for victims, the defendant companies, and their employees whose jobs hang in the balance due to the financial uncertainty of companies targeted by asbestos lawyers. But the bad news has recently gotten worse as real reform is threatened by a very different approach that is currently gaining ground in the Congress.

The current effort is being pushed by those who stand to cash in on asbestos claims while exacerbating the crisis of asbestos litigation. The bill, H.R. 4543/S. 2955, is not a reform measure at all, though proponents have sold it that way on Capitol Hill. It does nothing to address the ills of the current system. Instead, it throws taxpayer money at the problem by giving specialized tax favors to a few narrowly defined asbestos defendants.

There is speculation that this bill could quietly be tacked on to an omnibus bill escaping any real debate. If the measure is passed, many in Congress will incorrectly think that they can close the book on asbestos litigation, thereby derailing real reform in the next session. A cursory look at the state of asbestos litigation demonstrates that simply allowing taxpayers to pick up the tab for this problem will not make it go away.

Today, approximately 200,000 asbestos-related cases are pending in state and federal courts. The logjam has forced victims to wait years for settlements, only to receive bread crumbs left on the table after everyone else gets his cut. On average, 60 percent of the award is lost to transaction costs and attorneys' fees. Many victims die before receiving any compensation.

Adding to the problem is the fact that at least half of all asbestos cases are filed on behalf of claimants who are not sick. Asbestos lawyers not only consume the bulk of many victims' awards, but they further diminish potential awards (and, again delay the process for true victims) by flooding the system with tens of thousands of unimpaired claimants.
The U.S. Supreme Court has twice called upon Congress to find a legislative solution to this litigation nightmare. Most recently, in the June 1999 Fibreboard case, the Supreme Court said "the elephantine mass of asbestos cases … defies customary judicial administration and calls for national legislation." In the 1997 Amchem ruling Justice Ruth Bader Ginsburg stated, "The argument is sensibly made that a nationwide administrative claims processing regime would provide the most secure, fair, and efficient means of compensating victims of asbestos exposure."
The original bipartisan legislation passed by the Judiciary Committee is a direct response to the Supreme Court's directive. The bill would establish an administrative system to speed resolution of claims for the true victims of asbestos disease without going to court. Victims would receive full compensation in a matter of months, rather than the years it takes under the current system and a victim would always retain the right to revert to the tort system if not satisfied with the settlement offer.
Conversely, the proposed taxpayer bailout approach would only perpetuate the problem by infusing billions into a broken asbestos litigation system. The bill narrowly defines what type of companies qualify for tax "relief" for their liability woes, leaving most of the approximately 2,600 defendant companies many small businesses included in their status quo predicament.
In fact, the bill gives asbestos lawyers even more control over the system and greater incentives to search out potential victims. Asbestos lawyers will aggressively seek to tap into the generous flow of tax dollars by increasing filings and settlement demands on all defendants regardless of whether a company meets the criteria for the tax "break" or not. With 40,000-50,000 new asbestos cases added each year, the list of companies filing for Chapter 11 protection will surely continue to grow.
To date, more than 20 companies have gone bankrupt, leaving trial lawyers to seek out new defendants that have very tenuous connections to asbestos. It is not only the big-name, publicly traded companies whose solvency is threatened by the crushing weight of asbestos litigation mom-and-pop hardware stores and local service stations have been snagged in the dysfunctional litigation web as well.
To add insult to injury, there is no guarantee that the $1 billion per year of federal tax dollars will reach asbestos victims. Exorbitant attorney fees and costs will still be a problem and claimants will continue to get their minuscule cut. Thus, asbestos lawyers get an undeserved windfall while deserving victims get more of the same treatment under an admittedly failed system. And the taxpayers get to pay for it all.
Congress must commit to enacting real reform. Throwing taxpayer dollars at this litigation nightmare is not a solution. Asbestos victims, affected businesses and U.S. taxpayers deserve much better.

Karen Kerrigan is chairman of the Small Business Survival Committee in Washington.

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