Scrap Asbestos Trust Fund, Insurer Says Liberty Mutual leads drive to scuttle key provision in Senate reform bill

By ARTHUR D. POSTAL

WASHINGTON

Liberty Mutual Insurance Company is asking other insurers to sign onto a letter to the U.S. Senate saying that the trust fund concept for asbestos litigation reform is inappropriate and should be dumped.

The move comes at the same time the Senate Republican leadership and the Bush Administration are signaling a renewed push to get legislation embracing the trust fund through Congress.

Liberty Mutual Washington lobbyist Doug Bennett confirmed that the Boston-based company is leading the effort to send a letter to Senate Majority Leader William Frist, R-Tenn., and Sen. Arlen Specter, R-Pa., chairman of the Judiciary Committee.

The letter asks for the scrapping of the trust fund concept at the core of efforts to create an alternative claims resolution process for workers injured from exposure to asbestos while on the job. The letter suggests that congressional initiatives in the asbestos area should be focused instead on establishing medical criteria for claims.

The letter, obtained by National Underwriter, is being circulated to members of the Property Casualty Insurers Association of America to gauge their support. It says: “Liberty believes that an unequivocal message should be sent to Chairman Specter and the Senate Leadership that the Trust Fund process has gone on long enough, given their view that no bill acceptable to the insurance industry is likely to come out of the process, and that the chances of a bad bill are real.”

Given this, the letter adds that “now is the time to turn to alternatives such as litigation-based reform, including medical criteria and venue.” The cover note to PCI members passing on Liberty Mutuals letter was signed by Gregory W. Heidrich, PCI senior vice president for commercial lines.

PCI asked those members who support Libertys initiative to directly call Paul Mattera, senior vice president and chief public affairs officer at Liberty Mutual, at paul.mattera@libertymutual.com.

“Paul has indicated to us that insurers who have agreed to sign the letter include Liberty Mutual, Chubb, Safeco, AIG, Zurich, GenRE, AmRE, SwissRE, Nationwide and Equitas (the runoff company established by Lloyds of London),” Mr. Heidrich said in PCIs cover note. “He also indicates that companies considering signing include One Beacon and Hartford.”

A PCI staff official in Washington denied that the letter implied that PCI supports efforts to kill asbestos legislation that has creation of a trust fund as its core.

“The letter was an e-mail sent to a group of member companies on behalf of another member company,” said the PCI representative, Scott Duncan. “PCI gives its members every opportunity to develop consensus on issues that affect the insurance industry. In this case, PCI performed an administrative role in circulating a letter from one of its members
attempting to do just that. However, PCI has not signed the letter.”

In general, while insurers have joined with defendant companies in asking that the trust fund approach be abandoned in favor of a bill establishing medical criteria, the industry has not publicly sought to dissuade the Senate from working on a bill incorporating a trust fund for fear of antagonizing key members on both sides of the aisle.

A trust fund is key to Democratic support in the Senate, and the concern is that publicly abandoning it will reduce Democratic support for other industry priorities. The letter comes at a time when Senate Republicans are under renewed pressure from the White House to pass an asbestos litigation reform bill.

On March 17, Sen. Specter said at a Judiciary Committee meeting that he was close to getting agreement from Republican members of the committee for a bill that would include a trust fund, and asked members of the committee to give his staff a list of concerns so they could deal with them during the two-week Easter recess that began March 18.

There are reports that Sen. Specter will reduce the size of the trust fund from the agreed-upon $140 billion to $90 billion to win the support of Republicans on the committee, but Mr. Bennett of Liberty Mutual denied that. “I dont know the status of that,” he said.

Mr. Bennett added that concessions Sen. Specter is making to Republicans include:

Language holding attorneys fees to 5 percent.

Tightening of medical criteria to give less compensation to smokers.

Revision of language in the current bill that makes all claims revert to the tort system any time awarded claims are not paid within nine months.

The latter provision is a key reason the insurance industry and defendants are reluctant to support the bill. Another concern is that under the current bill all claims revert to the tort system when the legislation sunsets in 27.5 years.

Sen. Specter also said Republicans on his committee were concerned about whether the Labor Department was best suited to administer the fund, and whether the federal government might be compelled to pay into the fund if it runs out of money. “It's ironclad the federal government is not going to have to pay,” he told reporters after the committee meeting.

Reproduced from National Underwriter Edition, March 25, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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Scrap Asbestos Trust Fund, Insurer Says

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