Senate asbestos-victim fund characterized as inadequate

An economic consultant yesterday said a Senate proposal for a $140 billion trust fund to compensate asbestos victims is inadequate.

The fund might need $300 billion to $695 billion over 50 years to cover the claims of workers suffering lung cancer or other illnesses caused by asbestos, according to a private study done by Bates White LLC, an economic consulting group.

“I did not expect to find this result when I started this,” Charles E. Bates, the consulting group’s president, told the Senate Judiciary Committee yesterday. His firm was hired by a nonprofit public-policy group.

The proposed fund, which the Senate Judiciary Committee approved May 26, would end litigation that has forced 77 companies, such as Columbia, Md., chemical maker W.R. Grace & Co. and USG Corp., the world’s largest wallboard maker, into bankruptcy. It would create a trust fund to pay victims of diseases such as cancer up to $1.1 million if they can prove asbestos caused the illness.

The money would be contributed by corporations that are liable for asbestos exposure. The federal government would administer the fund.

Sen. Arlen Specter, Pennsylvania Republican, said the Bates White study was “grossly in variance” with other studies that show the cost in the $140 billion range.

Economists also questioned the accuracy of the study.

“Their analysis overestimates the at-risk population,” said Denise Martin, vice president of National Economic Research Associates Inc.

Potential asbestos claimants under the Bates White study include taxi drivers, beauticians and barbers, she said.

The other studies assume that valid claimants, such as pipe fitters and shipbuilders, were routinely exposed to asbestos.

Congressional approval requires an accurate estimate of the amount of money needed for the trust fund, Senate Judiciary Committee members said.

The $140 billion figure used in the proposed Fairness in Asbestos Injury Resolution Act was developed by Senate staff members.

A Congressional Budget Office study estimated the fund’s needs at $120 billion to $150 billion.

Other private studies, except for the Bates White study, reached estimates similar to the government’s.

Majority Leader Bill Frist said the trust fund would be the Senate’s top priority next year.

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