- The Washington Times - Tuesday, April 3, 2001

Another asbestos giant has fallen victim to a surge of medical litigation over the once-common building material now linked to lung cancer and other deadly ailments.

Chemical maker W.R. Grace and Co., of Columbia, Md., filed for Chapter 11 bankruptcy protection yesterday with 61 of its subsidiaries to save itself from a skyrocketing number of asbestos claims.

"This is a voluntary decision that, although very difficult, was absolutely necessary for us," Paul Norris, Grace's chairman, president and chief executive officer, said in a statement.

Grace is the ninth major company since February 2000 to file for Chapter 11 because of the cost of asbestos litigation, including Owens Corning and G-I Holdings Inc. Asbestos was used until the mid-1970s as a flame retardant in building materials. It is believed to cause cancer and other health problems in people exposed to it over time. Last year, nearly 49,000 asbestos claims targeted Grace, representing an increase of 81 percent, and those numbers grew in the first three months of 2001, the company said.

The company has spent $1.9 billion so far on asbestos litigation and lost $107.6 million in the fourth quarter because of the lawsuits. More than 124,000 claims have been filed against Grace.

"In general terms, everyone's been saying 'who's next?' " said Ken Bradley, editor of the Asbestos Litigation Reporter. "I can't say it's a surprise to people who cover this. These companies are getting hit by lots of lawsuits, and some big verdicts are coming down across the country."

Grace's liabilities stem from asbestos that was added to some of its fire-protection products, including insulation. The chemical and specialty materials company has not added asbestos to its any of its products since 1973.

The plaintiffs in many of the multimillion-dollar lawsuits claim to suffer from serious illnesses, including cancer and asbestosis, a serious lung disease. Asbestos-related litigation has proven to be big business for law firms. Baltimore lawyer Peter Angelos, for example, earned millions of dollars representing asbestos victims in the 1980s and '90s, enough for him to buy the Baltimore Orioles baseball team in 1993.

Defendants argue that many plaintiffs who claim exposure to asbestos file lawsuits without displaying any symptoms of asbestos-related diseases. The problem in determining whether a person has been exposed to harmful levels of asbestos stems from its 20-to-30-year latency period, according to those who follow asbestos litigation closely.

"I think the thing there is the defendants are saying that plaintiffs are coming forward who aren't that sick," Mr. Bradley said. "There are claims where the plaintiffs aren't sick now but will get sick."

Mr. Norris referred to most of the asbestos claims as "unmeritous" and said federal legislation is needed to help companies handle massive asbestos claims by separating the truly sick from those without symptoms.

Other business advocates agreed.

"The worst abuse today is these lawyers who inflate the fees are putting very sick people with those who've only been exposed and have no symptoms at all," said Jim Wootton, president of the U.S. Chamber of Commerce's Institute for Legal Reform. "These trial lawyers are parasites that try to keep their hosts alive so that they can feed off the body of the asbestos company."

A bill introduced last year to Congress and championed by Sen. Orrin G. Hatch, Utah Republican, and others was designed to provide "quick and fair compensation to those who became ill as a result of asbestos exposure."

The bill was drafted at the request of the U.S. Supreme Court, which said "an elephantine mass of asbestos cases" was clogging the court systems. The Supreme Court became involved at the request of lower courts.

The bill was abandoned after asbestos lawyers mounted a massive advertising campaign against it and its supporters.

Reasons for the dramatic rise in asbestos claims are not clear. Mr. Bradley said the harmful effects of asbestos are now appearing in many people who were exposed to it in the 1970s, when it was last used.

He also said there is often a domino effect, as those asbestos victims suing more than one company ask for more compensation from one defendant company if another files for bankruptcy protection. Mr. Norris referred to the phenomenon when he pointed to the Chapter 11 filings of Babcock and Wilcox Co., Pittsburgh-Corning, Owens Corning and Armstrong World Industries Inc.

Others pointed to a 1997 U.S. Supreme Court ruling that knocked down a $1.7 billion lawsuit, thus paving the way for smaller, more numerous suits.

Grace said it plans to keep operating and will work with asbestos claimants and other creditors on a reorganization plan that will satisfy all parties. Its stock price closed down 78 cents to $1.52 on the New York Stock Exchange.

Its shares have fallen 87 percent in the past year.

In addition to asbestos lawsuits, Grace was sued in the 1980s by residents of Woburn, Mass., who claimed the company was poisoning the water supply with cancer-causing toxins. The suits spawned a book and the 1999 movie, "A Civil Action," with John Travolta playing the role of plaintiffs' attorney Jan Schlichtmann.

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