Despite mounting opposition among insurers, Democratic leaders, conservative members of Congress and representatives for victim groups, the U.S. Senate is scheduled to take up asbestos claims handling reform legislation this week.

The odds are rising against passage of the bill, despite strong support from the Bush administration, Senate Majority Leader William Frist, R-Tenn., and many defendant firms that feel it will substantially reduce their asbestos liability.

Insurers object to the fact that the bill does not provide the exclusive remedy the industry sought, with some claims potentially “leaking” outside the proposed trust fund system.

“We remain strongly opposed to S. 852 until certain provisions are adequately addressed,” said Dennis Kelly, an American Insurance Association representative. “The bill, as written, still leaves insurers substantially exposed in the tort system, while simultaneously mandating that we pay tens of billions of dollars into the trust fund.”

In a recent letter to Sen. Frist, the National Association of Mutual Insurance Companies said it also cannot support the bill because it provides “neither certainty nor finality” to the asbestos risks faced by its member companies.

“NAMIC entered into the asbestos legislative discussion with the good-faith understanding that the bill would provide the exclusive administrative remedy for the resolution of all asbestos-related claims,” said NAMIC's senior vice president for federal affairs, David Winston.

“While initial proposals seemed faithful to this principle, as the process has unfolded, the trust fund legislation has become a hodgepodge of accommodations that have eroded finality and exclusivity,” he added.

The legislation would create a $140 billion trust fund to compensate victims of workplace exposure to asbestos. Contributions would come primarily from defendants and their insurers, with carriers mandated to pay some $45 billion.

Another of the industry's objections is that its contributions will come in the early part of the fund's scheduled life of 27.5 years. That was done because there is great concern by groups such as organized labor that a flood of claims will deplete the money in the fund in the early years of its existence. Similar concerns were voiced by two professors at the Stanford School of Business in a letter last year to Sens. Frist and Minority Leader Harry Reid, D-Nev.

“We do not believe the currently available information permits one to reliably forecast the fund's economic viability with any reasonable degree of certainty,” said the letter, signed by Jeremy Bulow, a professor in the Stanford University Graduate School of Business, and Jonathan Levin, an associate professor in the Department of Economics.

Some monies would come from trust funds created by defendants who entered bankruptcy from the weight of their asbestos liability. The constitutionality of moving the money in these individual funds to an overall trust fund is just one of the myriad of legal issues expected to delay launching the system–even if it passes.

Sens. Arlen Specter, R-Pa., chairman of the Judiciary Committee, and Ranking Minority Member Patrick Leahy, D-Vt., failed to win enough backing to hold a last-minute hearing on the bill last Thursday to drum up public support, as well as assuage opponents by revealing a manager's amendment designed to deal with supposed problems. The effort failed because Democratic opponents refused to consent.

Sen. Reid stepped up his opposition to the legislation last week by sending a letter to Sen. Frist warning he would use his clout to stop the Senate from considering the bill. At least 36 Democrats oppose it and are planning to filibuster, if necessary. Some conservative Republicans also oppose the bill because they fear the government will ultimately wind up on the hook to pay off asbestos exposure victims.

“The bill is simply not ready for consideration by the full Senate,” Sen. Reid said. “Notwithstanding the hard work of Sens. Specter and Leahy, and lengthy deliberations by the Judiciary Committee, the bill is plagued by massive uncertainties that cannot be resolved through Senate floor debate, no matter how lengthy.”

Another group of opponents–individuals suffering from asbestos exposure–held a news conference last Thursday at which they raised a number of concerns, including the fact that the bill would:

o Strip many asbestos victims of their rights to bring claims to court.

o Force victims (many of whom may not have long to live) to face long delays in receiving compensation.

o Leave countless victims (including those from 9/11 and Hurricane Katrina) out in the cold.

Public Citizen also came out in opposition to the bill on Jan. 30, with its president, Joan Claybrook, calling it a “wolf in sheep's clothing.”

She cited the disclosure that day by USG Corp.–which in 2001 filed for bankruptcy protection in the face of claims from victims of asbestos exposure–that it has reached an agreement with claimants and others to resolve all asbestos-related personal injury claims against the company.

“In vivid terms, the agreement shows how the creation of a federal asbestos compensation fund is really a backdoor attempt to erase billions of dollars in corporate liability for asbestos exposure,” Ms. Claybrook said.

Under terms of the plan, the Chicago-based building materials company will pay $900 million into a victim compensation fund, followed by another $3.05 billion by next year if a federal fund is not approved.

However, if Congress passes the current asbestos legislation this session, the company said, its liability would be limited to the initial $900 million–about 23 cents on the dollar compared to full liability under its own fund.

“The USG plan makes plain that the federal trust fund is a corporate bailout in sheep's clothing,” Ms. Claybrook said. “Under the guise of compensating victims for terrible diseases, like asbestosis and mesothelioma, Corporate America's real aim is to run away from billions in liability for knowingly exposing workers to a lethal toxin.”

Special Reports /

Asbestos Reform Proposal Faces Increasing Opposition

Related Stories

Recommended For You