Asbestos litigation is a continuing crisis. Thousands of truly impaired asbestos victims are deprived of just compensation through the courts because their legitimate claims must compete with those of the unimpaired.
At the same time, hundreds of firms face the imminent threat of bankruptcy at the hands of a predatory trial bar with all the economic calamities that inevitably result — lost jobs, a depleted source of settlements and destruction of the retirement pensions of ten of thousands of employees.
The current system is irrational and unfair. The problem is compounded by an elite class of trial lawyers who have turned asbestos litigation into an entrepreneurial pursuit. Worse still, the hundreds of millions of dollars siphoned by the trial bar are unavailable to compensate suffering asbestos victims.
For the past several years, Congress has tried to address this crisis with legislation to replace the current litigation system with an asbestos trust fund. Funded by defendant companies and insurers, the trust fund model would set up medical criteria for determining eligibility as well as compensation based on impairment. In exchange, asbestos claims would be theoretically removed from the tort system and ineligible for compensation from other sources of funding (such as the U.S. treasury). But things haven’t worked out that way.
Instead, the trust fund model is proving to be a political and policy mess. The fund’s size has skyrocketed, now up to a $140 billion, with provisions in the bill ensuring that will go higher.
The medical criteria provisions (standards that determine eligibility for compensation) permit unimpaired individuals — even those with conditions unrelated to asbestos exposure — to stake a claim on trust fund dollars.
Other problems are the compensation amounts and the potential future taxpayer liability if the new $140 billion asbestos tax doesn’t provide enough revenue for the trust fund. The fund will get bigger and the medical criteria less stringent. And, again, truly impaired victims of asbestos exposure and their families will be left empty-handed.
The Senate’s trust-fund champion, Sen. Arlen Specter, Pennsylvania Republican, confirms the difficulties of creating a workable trust fund. Many of Mr. Specter’s recent public comments on asbestos reform, such as his March 1 op-ed article in these pages, focus on the legislative battle and his closed-door efforts to divide the asbestos pie between businesses, victims and attorneys. Unfortunately, this approach does not address the asbestos crisis in the context of our limited government principles and belief in the rule of law.
Indeed, Mr. Specter seems to sense a lessening of Republican support for creating a trust fund and its necessary taxes and is now turning to Democrats in order to get the bill passed.
On Feb. 25, Mr. Specter told the Wall Street Journal: “I’m very close to getting sponsorship by Democrats. Part of the chess game is that if you get Democrats on certain key issues, you may lose Republicans, so it is a balancing act.”
That’s hardly a prescription for good public policy, but it shouldn’t come as a complete surprise. Mr. Specter clearly does not agree with the Senate majority on broader tort reform. Indeed, just last month he was the only Republican to vote for an amendment that would have gutted the Class Action Fairness Act — a key Republican priority to limit junk lawsuits. And in the 108th Congress, Senate Democrat Leader Tom Daschle. co-authored Mr. Specter’s Asbestos Trust Fund bill.
Fortunately, there is another way. Reasonable and effective asbestos litigation reforms have been proposed or enacted in several states. The most notable example was the enactment last year of a medical criteria law in Ohio — to ensure a day in court for those who most deserve to have their claims heard and to be awarded compensation.
Additional provisions in medical criteria reforms can further help curb litigation abuses, limit costs and rationalize the court system. And what has worked in Ohio and elsewhere can be translated into legislation Congress may find more palatable politically and less likely to break the bank.
The Senate should shelve the Specter-Daschle Trust Fund asbestos reform and move a medical criteria bill that delivers just compensation to asbestos victims and their families.
Dick Armey, former U.S. House majority leader, is co-chairman of FreedomWorks, a nonpartisan, nonprofit group advocating lower taxes and less government.