Last week's failure of the Senate Republican leadership to surmount a parliamentary hurdle on asbestos trust fund legislation means that the most realistic hope for reform lies in requiring victims to document their medical condition before suing for damages, lobbyists contend.

While the death rattle for the trust fund bill crafted so painstakingly by Sen. Arlen Specter, R-Pa., might extend for several weeks, the consensus of lobbyists, members of Congress and staffers is that S. 852–the Fairness in Asbestos Injury Resolution (FAIR) Act–is unlikely to be enacted.

However, although several insurance sources indicated the bill is dead, its opponents in the industry, one source noted, are “confining their celebration to the phone booth or closet.” They are concerned, the source said, that public glee would spur Sen. Specter to accelerate even further his efforts to get his bill through. “He is a resourceful negotiator whom everyone respects, and no one wants to take him on.”

The bill would have created a $140 billion trust fund administered through the Labor Department. Victims of exposure to asbestos in the workplace would have been paid based on a 10-tier scale according to the severity of their condition.

The bill, however, was sent back to Sen. Specter's committee after failing by two votes to garner the 60 needed to overcome a budgetary point of order.

Reform efforts are now focusing on an alternative approach modeled after the Texas medical criteria law, a number of stakeholders in the debate say. Florida, Georgia and Ohio are other states with laws mandating victims present evidence that their cancer or respiratory disease was caused by asbestos in order to win damages.

“We're pleased with the Senate's action as it opens an opportunity now to craft an alternative bipartisan medical criteria solution to the nation's asbestos litigation problem,” said Chris Winans, a representative of AIG, a vocal opponent of S. 852.

In addition, the Coalition for Asbestos Reform (CAR), which includes insurers opposed to S. 852, also voiced support for a medical standard. “Several factors suggest the time is right for a medical criteria solution,” said the group's chair, Tom O'Brien, who noted the vote “highlighted the deep concerns senators have over the trust fund's financial stability.”

Mr. O'Brien called for reconsideration of a redraft of legislation introduced by Sen. John Cornyn, R-Texas, that featured a medical criteria thrust and which failed to pass the Senate by a wide margin on Feb. 8.

“Positive comments from both sides of the aisle, and the openness of Sens. Harry Reid, D-N.V., and Richard Durbin, D-Ill., to working with Sen. Cornyn and others on a medical criteria approach, suggest that this may be the best option for meaningful reform,” Mr. O'Brien said.

In comments after the vote Tuesday endorsing the medical criteria model, Sen. Durbin, a deputy Democratic leader, said “the starting point is obvious for reform.” He added that changing the legal system would “make it fairer and quicker for victims to get fair compensation.”

Medical criteria legislation has already been introduced in the House by Rep. Chris Cannon, R-Utah, and has 60 cosponsors, Mr. O'Brien noted.

“The Senate made the correct decision in upholding a budget point of order against S.852–legislation that would have created a new federal bureaucracy and a $140 billion asbestos trust fund,” Mr. O'Brien said.

“From the beginning of this debate, CAR has expressed significant concerns over the fund, including its lack of transparency, how many companies will contribute, how many claims will be filed, and the likelihood that the trust fund will fail. These concerns spoke directly to the budgetary point of order,” he added.

Mr. O'Brien pointed out that opposition to the trust fund concept has been broad-based, including asbestos victims groups, insurers, conservative groups, labor, plaintiff lawyers as well as small to medium-sized defendants that make up CAR.

Insurer members of CAR include AIG, The Hartford, Chubb, Allstate, American Re, Liberty Mutual, Nationwide and Zurich Financial. However, the bill has supporters in the industry, such as St. Paul/Travelers, MetLife and ACE.

A trial lawyer source, who asked not to be named, indicated the Texas medical criteria law could be a model the trial bar would accept. However, the source pointed out that the trust fund bill only fell two votes short of the 60 needed to clear the budget point of order, with supporters–including Sen. Specter–saying that if Sen. Daniel Inoye, D-Hawaii, had been able to vote, the hurdle might have been overcome.

The decision to end floor action on the bill was crafted by an unlikely coalition of conservative Republicans and liberal Democrats. The decision was a victory for a majority of insurers who for various reasons opposed the legislation as drafted by Sens. Specter, chairman of the Senate Judiciary Committee, and Patrick Leahy, D-Vt., its ranking minority member.

Special Reports /

Asbestos Reform Debate Shifts To Medical Criteria

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