NU Online News Service, Aug. 4, 3:58 p.m. EDT

Because there is typically no coordination between asbestos bankruptcy trusts to determine whether a claimant's asbestos exposure evidence is consistent, claimants and lawyers are using the vacuum to game the system, according to a new report.

As the RAND Corporation report explains, "a claimant needs credible evidence that he or she worked with or around asbestos during the period of time when asbestos was in use."

However, while claimants have been found to submit conflicting exposure evidence to multiple trusts, the lack of coordination between trusts allows fraudulent claims to slip through the system, the report concludes.

"While legislative and judicial reforms have made it increasingly difficult to obtain compensation for nonmalignant injuries in the tort system, the large number of nonmalignant claims paid by trusts indicates that the trust system remains a source of compensation for such injuries," the report said.

Lynda Mounts, vice president and deputy general counsel of the American Insurance Association, called the study valuable, saying it is the first report of its kind to give a systematic overview of bankruptcy trusts.

"We're hopeful that this study encourages heightened attention to the problems with asbestos bankruptcy trusts from the court system and state legislatures," she said.

"AIA has been a strong advocate for increased transparency, coordination and oversight of bankruptcy trusts, so as to mitigate the problems highlighted in the RAND Institute's study," Ms. Mounts said.

"It's important that the trusts compensate those truly suffering from asbestos-related illnesses, and not enable fraudulent claims."

The report said 54 trusts have been established through June 2010, with a considerable acceleration in the number of trusts established in the second half of the 2000s.

Nine more trusts are in the pipeline, "with undoubtedly more to come," the report said.

Reflecting the influx of new trusts in 2006 and 2007, both the number of claims paid and annual value of claim payments surged in 2007 and 2008. Approximately 575,000 claims were paid, for a total value of $3.3 billion in 2008, the report said.

The U.S. Chamber of Commerce's Institute for Legal Reform (ILR) praised the study, saying it will help provide the foundation for debate over how to reform the asbestos bankruptcy trust system.

"While the bankruptcy trusts were created to compensate those with proven asbestos-related illnesses, they have become a playground for enterprising plaintiffs' lawyers who have learned how to game the system," said ILR President Lisa Rickard.

"The RAND report underscores the level of trial lawyer control over the trusts and the inability to link payments across trusts to the same individual--encouraging some to dip into multiple trusts with impunity," she said.

The report also found that a small group of asbestos plaintiffs' lawyers represents a large number of the claimants.

The report is part of a two-part study, according to officials. The second part of the study explores in greater detail abuses of the system, the authors said.

Special Reports /

Lack Of Asbestos Trust Communication Leads To Mass Claims

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