Washington–Senators opposing legislation that would create a trust fund to remove the settlement of asbestos claims from the court system lost a key vote yesterday.

The 70-27 vote added to growing concern within insurance industry trade groups and insurers lobbying against the measure that the bill, S. 852, has momentum and will likely pass the Senate, probably sometime late next week.

Another key vote for the bill, on a budget point of order, is scheduled for Monday. That vote will require the bill to get 60 votes to keep going. However, given Thursday's strong vote, most industry lobbyists believe it will hurdle that barrier as well.

The amendment, proposed by Sen. John Cornyn, R-Tex., would have substituted strong medical criteria for a $140 billion trust fund administered by the Department of Labor as a means of resolving claims by those injured by exposure to asbestos in the workplace. Employers and insurers would contribute to the fund.

The bill is S. 852, the Fairness in Asbestos Injury Resolution (FAIR) Act. Under the FAIR Act, insurers would have to contribute $45 billion over 27.5 years to the fund.

Not only is that an industry concern, but the bill would front-load the insurer contribution, mandating they would pay $20.5 billion of their contribution in the first five years.

Moreover, the bill provides no certainty. If claims weren't paid within nine months, victims would have the ability to force the claims settlement process back into the courts. And, the bill says that after the 27.5-year life of the fund, claims would automatically revert to the court system.

The vote was so critical that those insurers who wanted to defeat the bill even joined with plaintiff's lawyers in lobbying efforts.

Insurance lobbyists now say their best hope for killing the trust fund approach lies in the House, where a bill similar to the amendment proposed by Sen. Cornyn, H.R. 1957, the Asbestos Claims bill, already has 60 co-sponsors.

The vote in the Senate was a critical victory for Sen. Arlen Specter, R-Pa., chairman of the Senate Judiciary Committee, its key drafter and primary supporter.

The bill also has the support of Sen. Patrick Leahy, D-Vt., ranking minority member of the committee.

The amendment by Sen. Cornyn–similar to the House approach–would have established specific medical criteria to distinguish between the claims of people “who are physically impaired due to exposure to asbestos or silica and the claims of people who are not experiencing any physical problems associated with exposure to asbestos or silica.”

The insurance industry and some large defendants had been supporting establishment of medical criteria as an alternative to the creation of a trust fund for several years.

But that concept has won little support from Sen. Specter, the driving force behind removing asbestos claims from the court system as a means of reducing the cost of handling claims.

The medical criteria measure called for no venue reform–that is, removal of asbestos claims litigation from state courts to federal courts.

In comments calling for defeat of Sen. Cornyn's amendment, Sen. Specter said the cost of settling asbestos claims had been forcing a number of large firms into bankruptcy court.

He also said under the current system, only 42 cents of every asbestos claims dollar is going to victims, with 27 cents of every claims dollar going to plaintiff's lawyers.

Sen. Specter pointed out another issue raising the ire of insurers. He said the amendment proposed by Sen. Cornyn would have given no relief to workers from firms which have gone bankrupt, and for those workers exposed to asbestos while laboring in such government installations as shipyards.

As a number of insurers have noted, those workers were not even covered by policies issued by insurers, however poorly priced those policies were.

Supporters of Sen. Cornyn's amendment contended that by allowing claimants who are actually impaired to pursue their claims in the judicial system, while deferring the claims of those who are not impaired, “the asbestos litigation log jam would cleared.”

One paper circulated by an advocacy group to members of the Senate said, “It is estimated that 90 percent of asbestos claims fall into the category of those showing no physical impairment.”

Sen. Specter said the current environment for settling asbestos claims is “scandalous.”

He added that Sen. Cornyn's amendment would defeat the trust fund proposal, adding that it is “window dressing,” as well as a “red herring.”

Heaping additional scorn on the amendment, Sen. Specter said “it is not even a palliative.”

Special Reports /

Asbestos Fund Wins Round In Senate

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