$140 billion federal asbestos fund advances

Supporters of federal legislation to create a $140 billion trust fund for victims of asbestos exposure won a critical victory earlier this month when the bill was approved to go the full Senate for debate later this session.

Had that vote gone the other way, the asbestos bill would have most likely been killed for the year. The Senate voted overwhelmingly 98 to 1 to consider of S. 852, The Fairness in Asbestos Injury Resolution Act. Opponents of the measure went along with the majority because they lacked sufficient votes to defeat it.

Sen. Arlen Specter (R-Pa.), chairman of the Judiciary Committee, and Sen. Patrick Leahy (D- Vt.), the panel’s ranking Democrat, are co-sponsors of the bipartisan measure. Specter has tried for years to forge a compromise among insurers, asbestos manufacturers, labor and the trial bar. He has asserted that the trust fund is necessary to “solve the worst litigation crisis in the history of the American judicial system.”

According to a May 2005, report by the RAND Institute for Civil Justice, the number of asbestos claims continues to rise, with over 730,000 claims filed and some 200,000 pending.

The bill is designed to remove asbestos cases from the civil courts and speed payments to victims on a no-fault basis. Under the act, the Department of Labor would administer the fund’s payments to victims of asbestos exposure.

Senate Democratic Leader Harry Reid (D-Nev.) led the opposition to proceeding on the bill, although he later voted with the majority. “The problem seems to be that the so-called FAIR Act places the needs of a few large companies with asbestos liability above the needs of those suffering from asbestos-related illness. This is the fundamental flaw of the legislation itself,” Reid said.

Republicans split
Although the bill is a priority for President Bush and Repub-lican leaders in Congress, even Republicans are split over the measure, as are the insurance and business communities.

Some opponents argue that the plan favors large manufacturers while others, including conservatives, worry it will eventually require a taxpayer bailout or more money from businesses. They cite a Congressional Budget Office report that suggested the fund would fall $10 billion short.

Insurers are worried that the fund is not as exclusive as it should be, that the insurance industry’s $46 billion contribution would not be the end of its liability, and that the medical criteria used for deciding who gets awards are insufficient.

“The last thing that a national trust fund should do is to allow asbestos litigation to continue after the bill is signed into law, or be constructed in a way that ever allows a return to the same litigation system that has created the problem in the first place,” testified Craig Berrington, the American Insurance Association’s general counsel.

According to Ernie Csiszar, chief executive officer, the Property Casualty Insurers Association of America, the potential costs lie not just in the $46 billion insurers will be responsible for providing to the trust fund, but in the “countless billions in legal costs” that insurers will spend on cases that the trust fund does not cover.

David A. Winston, senior vice president for federal affairs, the National Association of Mutual Insurance Companies, agrees. “Beyond leakage, we are concerned that additional costs will be imposed on our member companies because of the orphan share, exigent claims start-up, and weak medical criteria provisions of the bill,” he said.

The debate has attracted considerable political money. Accord-ing to Political Money Line (www.politicalmoneyline.com), a nonpartisan organization that reports on Congressional financial disclosure, for the first six months of 2005 alone, 25 lobbying firms reported receiving more than $8 million for lobbying on the asbestos issue.