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Although the bill is a priority for President Bush and Republican leaders in Congress, Republicans are split over the measure. $140 billion federal asbestos fund advances in Washington

Sen. Patrick Leahy (D-Vt.)

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 Senate voted to bring the bill to 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 proceed to consideration of S. 852, The Fairness in Asbestos Injury Resolution Act, as opponents 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 measure. Specter has asserted that the trust fund is necessary to “solve the worst litigation crisis in the history of the American judicial system.”

The bill is designed to remove asbestos cases from the civil courts and speed payments to victims on a no-fault basis. According to a May report by the RAND Institute, more than 730,000 claims have been filed and another 200,000 are expected.

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 Republican leaders in Congress, Republicans are split over the measure.

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

Insurers are worried that the fund is not as exclusive as it should be, that the industry’s $46 billion contribution would not be the end of its liability, and that the medical criteria 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, American Insurance Association 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 put into the fund, but in the “countless billions in legal costs” they will spend on cases that the trust fund does not cover.

David A. Winston, senior vice president, 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. Political Money Line (www.politicalmoneyline.com), a nonpartisan organization, found that for the first six months of 2005 alone, 25 firms received more than $8 million for lobbying on the issue.