TheWeekInCongress.com

Week ending April 23, 2004

S-2290 Senate Fairness in Asbestos Injury Resolution Act (F.A.I.R.) of 2004

BRIEF

S 2290 aims to establish a fund from which plaintiffs suffering health problems due to exposure to asbestos can be paid damages. Claims of individuals would be considered and evaluated by the fund and awarded compensation as described in the bill. The fund would be financed by insurers and companies targeted by claims but the fund administrator can invest surplus funds and borrow from the Treasury or the private sector to meet payments if necessary. Should the fund run out of money more can be borrowed or the fund can be done away with.

Vote: The bill has been filibustered by Democrats and some like minded Republicans over the past few weeks. The filibuster has prohibited debate and vote on the bill. Normally the bill could pass with a majority vote but now requires 60 votes to end the filibuster and begin some 30 hours of debate. An attempt to invoke cloture to end the filibuster failed. (RV 69)

Cost to the Taxpayer: The CBO calculate that fund would face about $140 billion in claims over the next 50 years. Enacting the bill into law would spend $71 billion for claims payments over the 2005-2014 period but would receive less in donations than it would need to pay out. The administrator could borrow to continue the operation for several years after 2014 and could continue to borrow to make claims payments provided that the forecasted revenues are sufficient to repay the debts. Adjusting for fund revenues and administrative outlays it is calculated the fund would increase the budget deficit by $13 billion over the next ten years.

   CBO concludes that the funding would end before all claims are paid. Claimants then would have to take their matter to court for settlement.## All Rights Reserved. No reproduction in any form without written permission from TheWeekInCongress.com.

MORE INFORMATION

      Both parties recognize the importance of legislation that would at least manage if not resolve the over 600,000 lawsuits filed for asbestos poisoning and the potential for businesses to become bankrupt fighting and paying large settlements to victims and their families. Beyond that, support for the bill is clearly divided. Republican congressmen expressed fear that the thousands of court cases still ahead will be devastating to the economy and will eliminate over 400,000 jobs due to bankrupt businesses. Senator Orin Hatch (R-UT) said “…the number of claims continues to rise, with over 600,000 claims already filed. Typically, claimants filed against dozens of defendants; more than 8,500 companies have been named as defendants in asbestos litigation. With only a handful of the original asbestos manufacturing companies-the ones that are really liable-remaining today, new industries are being targeted for lawsuits. For instance, it has been reported that the big three automakers are defending approximately 15,000 cases based on claims alleging injury due to exposure to asbestos in brakes and clutches.”

   Sen. Hatch concluded that the court system is victimized by injury lawyers who see no bounds on collecting for their clients and the result is business destroying court awards and money going not to the very ill but to the better represented claimants and their attornies.    

   Those opposed to some elements of the bill, mostly Democrats and some Republicans have focused on their belief that the bill does not do enough for the victims. Senator Ted Kennedy (D-MA) said “The bill before us does not reflect what is necessary to compensate the enormous number of workers who suffer from asbestos-induced disease, it reflects only what the companies who made them sick are willing to pay.” He also said, “… as long as the compensation values are unreasonably low and the amount of money in the trust is grossly inadequate, improving the way in which that money is distributed to individual victims cannot make an otherwise bad bill acceptable.”

The Background of the Crisis.

   Sen. Kennedy put the current crisis in historical perspective. “Asbestos is the most lethal substance ever widely used in the workplace. Between 1940 and 1980, there were 27.5 million workers in this country who were exposed to asbestos on the job, and nearly 19 million of them had high levels of exposure over long periods of time,” he said. “That exposure changed many of their lives. Each year, more than 10,000 of them die from lung cancer and other diseases caused by asbestos. Each year, hundreds of thousands of them suffer from lung conditions which make breathing so difficult that they cannot engage in the routine activities of daily life. Even more have become unemployable due to their medical condition. And, because of the long latency period of these diseases, all of them live with fear of a premature death due to asbestos-induced disease.” The life expectancy of someone diagnosed with mesothelioma is 14 months. (Mesothelioma is a lung cancer specific to asbestos poisoning)

Who will Pay, How Much and is it Enough?  

   The insurers and defendants must finance the fund. Noting recent press coverage asserting that the government knew of the asbestos danger but ignored it and therefore should pay for it Mr. Hatch said, “This is not going to be part of our deficit burden we have in this country. Let some make their effective arguments the Government knew asbestos was harmful, yet imposed it by regulation in our ships and in so many other ways. Be that as it may, we are not imposing this (on the government to pay).”    

   The first version of the bill (S-1125) sponsored by Mr. Hatch set the funding level at $159 billion but the bill was rejected on many levels. S-2207, the replacement bill sponsored also by Senate Majority Leader Bill Frist (R-Tenn), lowered the amount to around $109 billion

Defendants would pay to the fund an amount determined by their prior asbestos expenditures.

Tier I includes all debtors that, together with all of their direct or indirect majority-owned subsidiaries, have prior asbestos expenditures greater than $1,000,000.

Tier II: $75,000,000 or greater.

Tier III: $50,000,000 or greater, but less than $75,000,000.

Tier IV: $10,000,000 or greater, but less than $50,000,000.

Tier V: $5,000,000 or greater, but less than $10,000,000.

Tier VI: $1,000,000 or greater, but less than $5,000,000.

Opposition questioned the rating of defendants. Mr. Kennedy said, “Furthermore, there is no guarantee that this bill will raise even the $109 billion which the sponsors say is necessary. The bill establishes contribution tiers for defendant corporations of various sizes and asbestos histories. However, the Senate has no hard information about the number of companies which will fall in each tier. Thus, the aggregate amount which will be raised to fund the asbestos trust is highly speculative. Under the proposed funding plan, some corporations--such as Halliburton and WR Grace--can escape accountability for their wrong-doing by paying only a small percentage of the amounts they are currently responsible to pay. As long as companies such as Halliburton and Grace are permitted to pay billions of dollars less than their fair share, it will be extremely difficult, if not impossible, to fund the trust at a level sufficient to fairly compensate those who have been poisoned by asbestos.” {Editor’s Note: Haliburton, when it acquired its’ subsidiary, Dresser Corp., inherited 232,000 asbestos lawsuits filed against Dresser. (Newsday, May 2002.) Haliburton acquired Dresser in 1997 through the efforts of Richard Cheney now the U.S. Vice President, then the Haliburton CEO. }

Who Gets Money, How Much and Why?

  The legislation as published in the Congressional Record made reference to a payment schedule but the amounts were not printed. Senator Kennedy’s comments indicated that payment schedules were low, in his opinion. “If a worker had substantial asbestos exposure and was a non-smoker, his primary lung cancer was almost certainly caused by asbestos. Yet the bill would pay these victims as little as $225,000. In many instances, that will not even cover their medical expenses. They are currently receiving much higher judgments in the courts, and fairness requires far more compensation for their life threatening diseases than this bill offers. If the worker smoked--and unfortunately most of these workers did--the combination of tobacco and asbestos exposure dramatically increases the likelihood of contracting lung cancer. Workers who smoke and have been exposed to asbestos are over four times more likely to get lung cancer than smokers with no asbestos exposure. Asbestos is clearly a major contributor to their lung cancers. Yet, this bill would give them next to nothing. Under the terms of this bill, they would receive between $25,000 to $75,000. That is outrageous. These victims, who must have at least 15 weighted years of asbestos exposure, deserve much more--they deserve a level of compensation that reflects the reality of their conditions and their families' needs. Even when the worker's lungs show specific evidence of asbestos disease, raising the probability that the asbestos exposure significantly contributed to the lung cancer to a virtual certainty, the legislation would pay them as little as $150,000. That is incredibly low.”

   The bill allows for payouts to a claimant to be reduced when aid is paid from elsewhere. The bill did not specify where the ‘collateral’ aid would come from but workmen’s compensation and health insurance payments would be among them. Sen. Kennedy saw some deception in that arrangement. “To make matters even worse, the legislation would actually allow workers' compensation and health insurance companies to seek reimbursement out of the meager amounts these seriously ill workers receive from the asbestos trust. Thus, the worker and his family may literally end up with nothing despite his undeniable injuries. At the very least, the bill should protect the compensation paid to a worker by the trust from subrogation claims,” Sen. Kennedy said.

   Some claimants would be protected from losing health insurance if they become involved in medical monitoring of their condition or suspected condition. The bill would prohibit insurers from ending their coverage; ‘No health insurer offering a health plan may deny or terminate coverage, or in any way alter the terms of coverage, of any claimant or the beneficiary of a claimant, on account of the participation of the claimant or beneficiary in a medical monitoring program under this Act, or as a result of any information discovered as a result of such medical monitoring.’

How the Government Would Manage the Fund.

S-2207 would create within the Department of Labor an office that would manage Asbestos poisoning claims and payouts to victims. The fund would be divided into several accounts; A Mesothelioma Account, a Lung Cancer Account, a Severe Asbestosis Account and a Moderate Asbestosis Account.

   A medical advisory committee would also be created and contract X-Ray readers would be hired.

   The fund Administrator must provide $1,000,000 from the Fund for each of the fiscal years 2004 through 2008 for each of up to 10 mesothelioma disease research and treatment centers. The centers are to be geographically located around the U.S. with consideration given to areas with a high incidence of mesothelioma and VA hospitals. The centers would also offer public education about, screening and treatment for the disease as well as detection and prevention of the disease and pain management.

What Happens if the Money Runs Out?

   Mr. Kennedy also concerned himself with the prospect that the fund may not have enough money to go around; “If the asbestos trust does become insolvent, workers will have to wait years before they can return to the tort system,” he said.

   An amendment offered in committee by Sen. Joe Biden (D-De) allowed claimants the right to immediately go to court for damages if the trust was unable to fully pay claims in a timely manner, but that amendment was removed from the Hatch / Frist version, S-2207. “Victims will have to wait as long as 7 years after the trust becomes insolvent before they can take their claim to court. Many of them will be dead by then. And, if they do return to court, the workers will not have the same rights that they do today; Under the Frist bill, seriously ill workers can find themselves in an intolerable legal limbo through no fault of their own,” he said.

   S-2207 requires that specified provisions of the Act are ended if the Fund has insufficient resources.

Who Could File a Claim?

Those exposed to asbestos and how much their settlement might be is defined by the extent they were exposed to asbestos;

Substantial Occupational Exposure to asbestos includes those employed in an industry and an occupation where for a substantial portion of a normal work year for that occupation, they handled raw asbestos fibers; fabricated asbestos-containing products so that the claimant in the fabrication process was exposed to raw asbestos fibers; altered, repaired, or otherwise worked with an asbestos-containing products such that the claimant was exposed on a regular basis to asbestos fibers; or worked in close proximity to other workers engaged in those activities.

Weighted Occupational Exposure to asbestos means for a period of years as follows:.

Moderate exposure- A substantial portion of a normal work year involved working in areas immediate to where asbestos-containing products were being installed, repaired, or removed under circumstances that involved regular airborne emissions of asbestos fibers, equals1 year of substantial occupational exposure.

Heavy exposure- A substantial portion of a normal work year involved the direct installation, repair, or removal of asbestos-containing products such that the person was exposed on a regular basis to asbestos fibers equals 2 years of substantial occupational exposure.

Very heavy exposure- A substantial portion of a normal work year for that occupation, was in primary asbestos manufacturing, a World War II shipyard, or the asbestos insulation trades, such that the person was exposed on a regular basis to asbestos fibers equals 4 years of substantial occupational exposure.

Dates of exposure- Each year of exposure calculated as above that occurred before 1976 shall be counted at its full value. Each year from 1976 to 1986 shall be counted as 1/2 its value. Each year after 1986 shall be counted as 1/10 its value.

Asbestos Would be Prohibited

The Administrator of the fund, in one year from enactment of S 2207, shall propose regulations that prohibit manufacturing, processing or distribution commercially asbestos containing products. Two years from enactment the Administrator shall promulgate final regulations that prohibit the same.

Some Exceptions

   Any person may petition the Administrator for an exemption and may be granted one if the Administrator determines that the exemption would not result in an unreasonable risk of injury to public health or the environment and that the petitioner has made a good faith effort but has not succeeded in developing or identifying a substitute substance that does not present an unreasonable risk to public health or the environment.. An exemption would be in affect for up to five years.

   The Administrator of the EPA can provide exemption to the Secretary of Defense or the Administrator of NASA. if  there is no reasonable alternative material, no unreasonable risk to health or the environment and the use is critical to the functioning of the Dept of Defense or NASA.

Already Exempt

  Specific exemptions are asbestos diaphragms for use in the manufacture of chlor-alkali and the products and derivative therefrom and roofing cements, coatings and mastics utilizing asbestos that is totally encapsulated with asphalt. Those exemptions are subject to a determination 18 months after the bill is passed that they would not result in unreasonable risk of injury to public health or the environment.

   Asbestos containing products mean any product to which asbestos is knowingly added or used because the properties of asbestos are necessary for product use of function, but would not include products that contain minimal levels of naturally occurring asbestos as defined by the Administrator within a year of enactment of S-2207.

   Asbestos, the term. means chrysotile, amosite, crocidolite, tremolite asbestos, winchite asbestos, richterite asbestos, anthophyllite asbestos, actinolite asbestos and any of the minerals that has been chemically treated or altered, and any asbestiform variety, type or component. ## All Rights Reserved. No reproduction in any form without written permission from TheWeekInCongress.com.