NU Online News Service, May 11, 3:23 p.m. EDT,Washington--Public Citizen, a consumer group, issued areport yesterday stating that the current draft of asbestoslegislation would provide huge benefits for the insuranceindustry.

The report was issued a day before the Senate JudiciaryCommittee began to vote on amendments to the bill that would createan alternative claims handling mechanism for asbestos with a $140billion trust fund to pay injury claimants.

In a report in advance of today's action on the bill, the RANDCorp. pre-released a study indicating that asbestos claimants havereceived only 42 percent of every dollar insurers and companieshave paid to deal with asbestos litigation filed from the early1970s through the end of 2002.

The Public Citizen analysis said the legislation would by itscalculation reduce the potential liability of 10 large asbestosfirms by 78.5 percent.

The Public Citizen report said the total contributions by 10large manufacturers who used asbestos in their products would dropfrom an estimated $259.5 billion if they were to completebankruptcy trust fund arrangements under current law, to $5.6billion.

"On an individual basis, asbestos companies would effectivelysee their total payments over the life of the fund decline bymargins ranging from 40.5 percent to 100 percent," the PublicCitizen report said.

It contends that at least eight Fortune 500 companies are hugewinners under S. 852, because their annual asbestos payments to thetrust fund would be capped at $27.5 million per year for 30 years"no matter how large their revenues or how many asbestos cases theymight have pending against them."

In current dollars, the report said, "this means their maximumliability is $378.5 million."

By comparison, the report said, "Dow Chemical projects itsfuture liability at between $1.6 billion and $2.2 billion over thenext 15 years from 2004 to 2019. Similarly, Honeywell estimates itsfuture liability payments at $2.75 billion from 2004 through 2018.But the company would pay only 13.8 percent of that amount - $378.5million - over the next 30 years."

Under the legislation, a $140 billion trust fund would becreated to dole out funds to asbestos victims who met 10 levels ofmedical criteria. Money to populate the fund would be paid byinterested parties over 27.5 years. The fund would be administeredby the Department of Labor.

Approximately $5 billion would come from trust funds establishedby several companies under the aegis of bankruptcy courts. Thosemonies would be used to pay claims to those suffering frommesothelioma, a fatal form of cancer caused by asbestos.

The insurance industry would pay out $46 billion over thatperiod, but the amount would be front-loaded, that is, paid byinsurers mostly in the early years of the fund.

According to insurance industry representatives, a shortcomingof the fund arrangement is that the payments would not provide themcertainty; that claims would revert to the tort system if the fundcan't pay claims within nine months of the period they are finallyawarded. And, claims would revert back to the tort system after thelaw runs out in 27.5 years.

The industry is divided in its support of the legislation. Workon the bill began before Congress took a 10-day recess at thebeginning of May, and more than 60 amendments remain to be disposedof before a decision is made to report the bill to the fullSenate.

It is therefore impossible to predict whether work on the billwill be completed.

The RAND report, pre-released because of the current markup ofthe bill, said that more than 730,000 people in the United Statesfiled compensation claims for asbestos-related injuries from theearly 1970s through the end of 2002, costing businesses andinsurance companies more than $70 billion to pay awards andlitigation costs.

The RAND's Institute for Civil Justice in Santa Monica, Calif.,adds that claimants have received about 42 cents of every dollarspent on asbestos claims. Another 31 cents has gone to defensecosts, and 27 cents has gone to plaintiffs' attorneys and otherrelated costs. The research notes that there is no publishedresearch comparing the compensation received by asbestos plaintiffswith their economic losses.